ABP presents plan to turn Port of Barrow into renewables hub
Sep 18, 2024 14:41 CESTOn December 29, 2020 GE filed a legal complaint against Siemens Gamesa Renewable Energy Ltd, the UK arm of SGRE, in the High Court of Justice of England and Wales, and was assigned case number HP-2020-000051.
This matter is an expansion of the previously filed case against SGRE in the US with the International Trade Commission (ITC) on a patent regarding low voltage ride through on wind turbines. The new twist is that GE is seeking to block the start of construction on at least two major UK projects where SGRE has been awarded lucrative supply contracts, namely the East Anglia Three and Hornsea Two projects. Collectively, these projects have an estimated project CapEx of USD 7.865 billion, and turbine supply contracts estimated at a total of USD 4.718 billion from Iberdrola and Ørsted to SGRE.
This mirrors previous UK patent litigation between Enercon GmbH and Siemens (prior to the SGRE merger) in which the start of construction on the Westermost Rough project and Gunfleet Sands demonstration site were held up pending the outcome of the litigation. An injunction against the operating London Array project was also sought by Enercon, and the total commercial liability could have totalled hundreds of millions of dollars for Siemens if the judgement went against them. While the matter was ultimately decided in favour of Siemens, the delays to start of construction were costly and noteworthy to the project developers and financiers as well as Siemens.
The new UK High Court matter between GE and SGRE centres around patent EP1590567, which is the European patent filing family member of the now infamous US patent 6921985. The patent deals with a method for how wind turbines can remain grid-connected during a temporary grid voltage drop out by utilising some power from the battery packs which typically power the pitch system.
Interestingly, the verbiage of the allowable claims of the European version differs from the US patent counterpart. Some of the weaknesses of the claim language in the US patent are avoided in the European patent filing. This could improve the chances of success in the litigation for GE, or at least compel SGRE into settlement negotiations in order to avoid costly delays to start of construction on the East Anglia Three and Hornsea Two projects like they experienced before.
More noteworthy are the commercial dynamics in play here, where GE has now signed lucrative supply contracts of their own in the US market with both Ørsted and Iberdrola. The Vineyard Wind Phase 1 project, being co-developed by Iberdrola subsidiary Avangrid in a JV with Copenhagen Infrastructure Partners (CIP) will now be using GE Haliad-X turbines thanks to a recent decision to re-submit the permit, and the Ocean Wind project in New Jersey being developed by Ørsted also just formalised their supply agreement with GE.
It is curious that Ørsted and Iberdrola would proceed with commercial dealings with GE in one market while their project development efforts were being hamstrung in another by the same commercial partner. Presumably, the ink was dry on the supply contracts in the US prior to the UK patent litigation being filed on December 29.
In the meantime, GE still has another 2 – 3 years of patent life left in global jurisdictions including Germany, France, Ireland, Spain and Sweden in addition to the UK and USA, so it is exercising its intellectual property rights in an effort to drive market behaviours and product perception in those markets where SGRE has a discernable lead. As we have noted before, this tactic could backfire and drive developers to take a second look at Vestas, as they become fed up with project delays instigated by IP litigations.
China is another market where the patent family member is also in force, but a patent litigation has not yet been filed, in spite of a huge surge in SGRE technology being deployed there through the technology license with Shanghai Electric.
Also confusingly, GE allowed the patent to lapse in Belgium and the Netherlands where SGRE has 481 units under construction or operational at the Borssele 1 & 2, Fryslan, Gemini, Rental, Seamade and Westmeerwind projects which could have come under the scope of this IP litigation as well. This may end up costing GE more than USD 124 million in royalties if their IP litigation were successful or a settlement were to be reached, but royalties are not necessary in markets where the IP is not in force.
As we have previously noted, patent infringements in the wind energy sector have threatened a total of USD 5.2 billion in commercial value since 1995 and patent infringement liabilities persist in being unchecked during project finance diligence of new projects.
One wonders how much longer financiers and insurance carriers will continue to bury their heads in the sand regarding these IP infringement risks, when sufficient commercial solutions are available to mitigate the risk completely.
ABP presents plan to turn Port of Barrow into renewables hub
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