U.S. Market and Regulatory Conditions Prompt Gamesa's Decision to Freeze Installation of an Offshore Wind Turbine Prototype in The U.S.

Gamesa's Offshore Pace Globally Picks up with Activities in Europe----- The milestone to design an offshore wind turbine in Virginia has been fulfilled----- Gamesa remains poised to act quickly on future opportunities in the U.S. offshore market

LANGHORNE, Pa.--Since September 2010, Gamesa has been working with its collaboration partner, Newport News Shipbuilding, a division of Huntington Ingalls Industries, to design an offshore wind prototype, the G11X-5.0 MW, with plans to install a test turbine off the mid-Atlantic coast.

The collaborative effort has focused on turbine reliability, low maintenance and servicing requirements, civil engineering efficiencies in infrastructure development, and cost of energy. Now, Gamesa and Newport News Shipbuilding are approaching completion of the Critical Design Review (CDR). The 60 Hz version of the G11X-5.0 MW platform would enable them to build components for the wind turbine prototype.

In 2010, both companies saw the future of offshore wind as promising, with the commercial market just a few short years away. However, an analysis of current conditions indicates that a viable commercial market in the United States is still farther out, as much as three or four years away, at the earliest.

While there have been improvements to siting in federal waters, regulatory issues still affect the level and speed at which projects can be approved. The pace of growth is further delayed by the lack of an offshore grid. In addition, uncertainty surrounding the Production Tax Credit, which will expire at the end of the year without congressional action, and the lack of a federal energy policy, hamper companies' ability to secure financing for projects.

Without a mature offshore wind market in the United States, it is extremely difficult to justify the enormous expenditure of capital and utilization of engineering and technical resources that would be needed to build and install a prototype in the U.S.

With the objective of designing an offshore turbine in Virginia fulfilled, and after considerable consultation, Gamesa and Newport News Shipbuilding have agreed to suspend the development of the prototype upon completion of the CDR. Plans for installation of an offshore prototype near Cape Charles, Va., which the Virginia Marine Resources Commission (VMRC) approved in March, have been postponed.

"I want to commend Virginia Gov. Bob McDonnell and his administration, especially the VMRC, for the time and effort they put into approving the permit for this project," said David Flitterman, Chairman, Gamesa North America. "The Governor is a leader for his vision to utilize clean, renewable energy, and his team did everything in their power to fast track this offshore wind development. Gov. McDonnell understands the value of offshore wind --- a vast, untapped domestic energy resource that can power local economies and put people to work. I think we both share the same hope that the U.S. market can mature quickly so this project and others like it become a reality in the near future."

"The decision is disappointing. However, our commitment to our country's energy efforts continues," said Doug Stitzel, Newport News Shipbuilding vice president of energy programs. "Huntington Ingalls Industries' ability to design, fabricate and deliver complex, marinized, safety-related components will be required to satisfy the growing needs for energy. We look forward to future opportunities for collaboration with Gamesa and other alternative energy leaders."

The joint Offshore Wind Technology Center, opened in February 2011 in Chesapeake, Va., will wind down at the end of the year as the CDR is completed.

Gamesa's efforts in the offshore segment globally, continue to move forward at a fast pace. In Europe, where offshore programs are moving forward, plans are underway with the permitting process for installation of its G128-5.0 MW offshore wind turbine at Arinaga Quay in Gran Canary Island (Canary Islands, Spain).

Gamesa remains committed to offshore wind and, as a technology leader, will continue to play an active role in global markets, including the United States, which the company will monitor closely. Successful completion of the CDR in Virginia gives Gamesa an advantage to act quickly on future opportunities for a 60 Hz version should the U.S. market develop.

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