(NOMINATION FOR 2016 AUREA AWARD): MK Fintel Wind - Kula Wind Farm

November 2015 saw MK Fintel Wind open a wind farm in Kula, the first power generation facility of that kind in Serbia. The Kula wind farm, with a total installed capacity of 9.9MW, consists of three wind turbines about 178 meters tall, which makes them the tallest in southeast Europe.

Power generation in this wind farm has the potential to supply between 5,000 and 8,000 households with electrical energy. Considering that wind energy has not been utilized so far, opening of the first wind farm in Serbia will strengthen the energy sector, reduce electricity imports from abroad, and contribute to overall energy security.

The very idea of using the energy of wind and leveraging untapped resources in certain regions of our country leads to a progress in the industrialization of certain municipalities and a possibility of giving unemployed people a job. Among the subcontractors hired to build this wind farm were domestic companies and architectural studios, while Erste Bank co-financed the project. Investment in the Kula wind farm totals EUR 15 million.

MK Fintel Wind is a joint venture of Italy’s Fintel Energia Spa, a company listed on the Italian stock exchange, and MK Group d.o.o. As currently the most significant investor in this field in Serbia, this company plans to build more wind farms in the future. Namely, a wind farm in Vrsac will be opened as early as in the first half of 2016, which will be followed by the construction of yet another wind farm, again in Vrsac, and the company has also obtained a building permit for a wind farm in Veliko Gradiste.

INNOVATION

The wind farm in Kula is the first power generation facility of this kind in Serbia. Given that the energ of wind has never been used before, introduction of brand new technology for power generation gives a special impulse to the development of Serbia’s energy sector.

The first wind farm in Serbia, with an installed capacity of 9.9MW, is made up of three wind generators produced by Vestas from Denmark. With a height of about 178 meters, they are the tallest wind turbines in southeast Europe. These latest technology Vestas generators are developed to utilize the energy of low-speed winds that are characteristic for this area. Turbines with a large diameter (117 meters) feature a state-of-the-arts transmission mechanism and convertor that, regardless of the wind speed, provide exactly what the power supply system requires at the exit.

It is estimated that the Kula wind farm will be producing about 27,000,000 Kwh (kilowatt hours) of green energy, which can satisfy the needs of nearly 6,000 households. Forecasts show that production in certain years is expected to be even bigger and quite enough for up to 8,000 households.

Construction of the wind farm in Kula commenced in February 2015, whereas MK Fintel Wind was established back in 2007. The very process one such project goes through, from the idea via project development to the acquisition of all necessary building and operating permits, includes a series of procedures that this investor was the first to complete in Serbia, along with the institutions it worked with. Implementation of this project has showed MK Fintel Wind and other investors the way to follow when embarking on future projects in terms of tackling the problems and unknown in this segment. A vast experience MK Fintel Wind gained while implementating this project was shared on various levels, thus additionally increasing the quality of employees and associates. People at this company particularly point to cooperation with scientific institutions in Serbia, secondary schools, faculties, research institutes, etc.

The official opening of the wind farm in Kula in November 2015 was followed by the facility reception period, while the production and supply of power to the energy system of the Electrical Power Company of Serbia (EPS) kicked off February 2016.

SOCIAL UTILITY

Given that wind energy has not been utilized in our country to date, methods to tap into natural resources have been improved with the construction of wind farm in Kula. Our planet is threatened by global warming and the emission of harmful gases, and there is also an increasing danger from the shutdown of large combustion plants such as thermal power stations. Wind energy does not pollute the environment and is unlimited because it is renewable. It neither requires fuel nor produces greenhouse gases or waste that could have an adverse effect on the environment.

Power generation in the wind farm in Kula has the potential to supply between 5,000 and 8,000 households with electricity, without polluting the environment and disturbing the local population. This project has triggered the process of tackling the problem of electricity imports from abroad, while additionally strengthening domestic energy sector and overall energy security. With the construction of the first wind farm in Serbia, MK Fintel Wind has made its contribution to an increase of the share of renewables in final power consumption, thus bringing our country closer to the target 27% share of renewables in gross final power consumption by the end of 2020.

The very idea of using the energy of wind and leveraging untapped resources in certain regions of our country leads to a progress in the industrialization of certain municipalities and a possibility of giving unemployed people a job.

Although leading contractors for this project were companies from abroad, exclusively owing to their experience in the construction of wind farms in other countries, numerous local companies were hired too as subcontractors. MK Fintel Wind aims to employ almost exclusively domestic companies and manpower in the construction of wind farms in the future. During the construction of wind farm in Kula, there were always about 50 people of different professions working on the site: architects, environmental experts, consultants, transportation experts, etc. This made it possible for local experts in various subjects to complete a training and improve their knowledge and skills. MK Fintel Wind particularly points to cooperation with domestic companies that transported wind turbines. Transportation of wind generators by road is one of the most complicated undertakings due to very large dimensions of their elements. Local transportation and cargo lifting companies showed great business courage, knowledge, skill, and suggested a route for delivering these wind generators as well as the manner in which to do that. Although their suggestions significantly opposed the proposals of equipment manufacturers, they cut the costs of transportation substantially and opened an additional market for local transportation companies that worked on this project.

During the preparations and project development, a special care was taken of birds and bats, that is, environmental protection. Due to a large number of bird species (between 80 and 100) living in the area where wind farms were planned to be set up, MK Fintel Wind was forced several times to change the position of wind generators.

Considering that this is the company's first wind energy project in Serbia, which has proven to be a success, MK Fintel Wind plans to build more wind farms in various locations in Serbia. The first wind generators in Vrsac are planned to be commissioned as early as in the first half of 2016, which would be followed by the continuation of works on a new wind farm in Vrsac. The company has also obtained a building permit for a wind farm in Veliko Gradiste. In that way, MK Fintel Wind will further contribute to the development of local communities in the industrial segment through production and employment, as well as to the use of this important renewable source of energy.

FINANCIAL POTENTIAL

The existence of wind farm and its use lead to a growth of greenfield investments, new hires, increased budget revenue through collection of direct and indirect taxes, and a series of other benefits reflected in a boost of activities in this industry, especially given that it is the first wind farm in Serbia, that is, a pioneer undertaking in this field that already substantially reduces the risk of investing in similar projects for other investors.

MK Fintel Wind invested EUR 15 million in the first wind farm project in Serbia which was co-financed by Erste Banka as well.

Implementation of one such project is usually based on the turnkey principle, that is, a contractor (wind turbine manufacturer) is hired to take up the role of the party which hires subcontractors and carries out all necessary activities to have the wind farm built and put into operation. Although this is the safest approach for banks that finance such projects, it is also the most expensive and consequently affects the overall profitability of the project substantially. The approach of MK Fintel Wind was completely different. Credits for project development go exclusively to employees, while the construction of wind generators was divided into two phases in which two contractors took part – the first contractor worked on the construction of foundations, roads, power supply and telecommunictions installations, while the other contractor transported and erected wind generators. Savings resulting from the use of this dual approach are substantial. In this particular case, when the project value totaled approximately EUR 15 million, savings exceeded EUR 2 million, which significantly increases the investor's internal rate of return.

MK Fintel Wind is one of the first companies in Serbia to engage in the production of “green energy“ by means of wind generators and solar panels, and it is currently the most significant investor in this field in Serbia with 300MW projects.

According to applicable regulations in Serbia, the purchase price of electricity from wind is 9.2 eurocents per kilowatt-hour, and the state is obliged to buy electricity from the investor over the next 12 years. The Mining and Energy Ministry has announced that a set of three regulations will be adopted soon to define a new model of feed-in tariff contract which will ensure greater security for investors who invest in wind farms and other renewables.

If Kula Wind Farm is your favorite for the Investment of the Year Award, you can vote for this nomination at the official website of the Aurea Award.

MK-Fintel Wind d.o.o. Beograd

eKapija.com Beograd

Fintel Energia Grupa Italija

Akcionarsko društvo Elektroprivreda Srbije Beograd

Erste Bank a.d. Novi Sad

Ministarstvo rudarstva i energetike Republike Srbije

Vestas Wind Systems A/S Danska