Source Enel's claims against Siemens Gamesa at the Kola wind farm have a double bottom. EL5-Energo (Enel), controlled by LUKOIL and Gazprom, subpoenaed Siemens Games Renewable Energy. During the construction of the Kola wind farm, as if for political reasons, there was a suspension. The appeal canceled the decision of the Murmansk Arbitration Court – the state of the construction site seemed to simply not allow the continuation of work. What stopped the work, technical difficulties or politics – Versiya understood.
The Old Man and the Sea, Ernest Hemingway
Truly, in our latitudes you can endlessly watch into three things: how fire burns, how water flows, and how …. We will talk about the last “and how” in more detail.
On December 1 this year, Enel Russia, also renamed EL5-Energo (Enel), a Russian company with a strong Italian accent, formed after the reform of the country's electric power industry, announced the launch of the first stage of the Kola wind power plant (WPP) with a capacity of 170 MW.
Initially, the commissioning of the station, the construction of which began in September 2019, was scheduled for December 2021, and at full capacity.
The postponement occurred due to a number of reasons, which the Enel press service filigree calls a combination of several exogenous factors, among which there is perhaps no “Global Flood”, namely, the impact of the coronavirus pandemic and the specific climatic conditions of the Far North, including force majeure circumstances of the project logistics, in particular, the flooding of the pillars of the bridge across the Kanentyavr River.
For a fairly understandable reason, among these factors it is not indicated that this transfer, apparently, happened to a large extent due to the fact that Enel itself did not prepare the construction site for the installation of wind power plants (WPP) in time, did not clear the roads and site from snow, and also did not provide the necessary connection to the network.
As a result, the supplier of unique turbines – a subsidiary of the Siemens Energy group – Siemens Gamesa Renewable Energy LLC (“Siemens Gamesa”) – after lengthy attempts to resolve the situation and continue work on the project, he was forced to terminate the contract.
However, first things first.
The race for the wind
Wind energy is increasingly capturing the global electricity production market. Much later than Western countries, wind energy was used to generate electricity in Russia as well. This type of energy has its advantages and disadvantages, but this is not what we are talking about now.
To date, 34 wind farms are operating in Russia. The palm in their construction and operation is held by Rosatom, which has 6 operating and 4 wind farms under construction. The country's largest, the 210 MW Kochubeevskaya wind farm in Stavropol, is also owned by Rosatom. Along with the nuclear state corporation, in terms of the scale of creating wind farms, perhaps only the Finnish state corporation Fortum can be compared, whose, until recently, a joint venture with Rosnano, is inferior to the Rosatom NovaWind in terms of total generation capacity, but exceeds the number of wind farms (8 operating and 11 under construction).
At the end of the 1910s, Enel Russia also joined the “race for the wind”. By that time, Enel (former OAO OGK-5) was merging Sredneuralskaya, Nevinnomysskaya and Konakovskaya GRES. MW in the Murmansk region and 90 MW in the Rostov region. To this end, Enel established subsidiaries – Enel Rus Wind Kola LLC and Enel Rus Wind Azov LLC.
On May 23, 2019, the first stone of the Azov wind farm was laid, and two years later, at the end of June 2021, its opening ceremony took place, and the wind farm received the right to supply the generated electricity and capacity to the Russian wholesale electricity and capacity market. The ceremony was attended by Deputy Prime Minister of the Russian Federation Alexander Novak, Governor of the Rostov Region Vasily Golubev, Ambassador of Italy to Russia Pasquale Terracciano, General Director of PJSC Enel Russia Stefan Zvegintsov, Deputy Chairman of the Management Board of the Eurasian Development Bank Denis Ilyin, as well as other representatives of government and business .
The Azov wind farm consists of 26 turbines with a total capacity of 90 MW, generates about 320 GWh per year, avoiding the annual release of about 260,000 tons of carbon dioxide into the atmosphere – in a word, an example of fruitful cooperation between two partners with deep foreign roots for the benefit of Russian energy and ecology.
In September 2019, Enel started the construction of the Kola wind farm, the largest wind farm beyond the Arctic Circle, which was supposed to be completed by December 2021. However, in the future, the period was extended, and even before the events described.
Perhaps, the main contribution to the construction of wind farms was made by Siemens Gamesa, which supplied and installed wind turbines.
At the moment, the functioning of the Azov wind farm continues in the normal mode, but with the full-scale commissioning of the Kola wind farm, problems arose, the blame for the occurrence of which Enel, it turns out, shifts entirely to its partner.
By the way, “ Enel also planned to build the Rodnikovskaya WPP in the Stavropol Territory, but in February 2022 the Board of Directors decided not to implement this project.
Knee-deep in mud and up to your ears in snow
In May 2022, an active stage of the dispute between Siemens Gamesa and Enel began regarding the failure to fulfill contractual obligations on the part of the latter. Work at the Kola wind farm has been suspended. As the basis for the decision to cancel the contract with Enel, Siemens Gamesa points to systematic, lasting more than one year, violations of its obligations. In addition, Siemens Gamesa is currently having difficulty making payments to its suppliers and subcontractors due to Enel's failure to pay for work performed and wind turbine components delivered.
The consistency of the positions of both sides of the conflict, which has passed to the consideration of the arbitration court, is still in question, and it fell to the judge of the Arbitration Court of the Murmansk Region to resolve it.
However, the editors have at their disposal photo and video materials of the condition of the roads leading to the wind turbine, crane platforms and the construction site itself. Numerous photographs taken at the construction site show the conditions under which Siemens Gamesa, its suppliers and contractors were forced to bring wind turbine components to the Enel-owned construction site and install them.
The turbines and construction equipment supplied to some sites handed over to Siemens Gamesa began to sag, which began to pose a threat to the life and health of its employees, subcontractors, and suppliers.
The sites could not even withstand the weight of the workers, and there is nothing to say about machinery and heavy equipment. Everything was literally buried in mud. And this was only in the summer, and there is nothing to say about what happened in the polar winter: the volume of snow and the intensity of its removal by responsible persons resembled a task akin to cleaning the Augean stables.
Meanwhile, as far as we understand, in the contract between the parties it was written in white and white that it was Enel who undertakes to ensure the availability of serviceable roads, pedestrian decks, fences and railings, to carry out work to clean snow, ice, precipitation and dirt at the construction site, and also to provide unhindered access to crane platforms.
As we can see in the photographs, at the time when, under the terms of the contract, Siemens Gamesa was supposed to deliver wind turbine components to the site and proceed with their installation, neither the road, nor the construction site, nor the crane platforms were clearly not ready not only for their installation, but even to the unloading of the supplied materials for construction and installation work and to their safe storage.
Thus, the freight transport delivering the blade to the site got stuck on turns in dirty snowdrifts several meters high.
It turns out that Enel, having not properly prepared the construction site, wanted Siemens Gamesa, knee-deep in mud in summer and up to its ears in snow in winter, to heroically assemble multi-ton turbines, when they, including tools and equipment, yes and people, and to deliver something to the place of work was, to put it mildly, unsafe. Is it worth it in this case to talk about the quality of the result of the work of Siemens Games, if it builds ninety-meter wind turbines on a similar foundation?
When Siemens Gamesa refused to work in such conditions, Enel made a very successful “knight's move” in order to, having shown a remarkable “art of substitution of concepts”, to ward off any claims for failure to meet construction deadlines and the commissioning of the Kola wind farm.
Upside down or the art of a shifter
From October 2021 to May 2022, Siemens Gamesa continued its sophisticated efforts to bring the customer “to life” by insisting that he fulfill his obligations while doing the best possible supply and installation of turbines.
After which, seeing that the issue of creating acceptable working conditions is not resolved in any way, and, fearing that the customer can make her “guilty without fault” for failing to deliver the finished project, Siemens Gamesa announced its withdrawal from the contract.<br/
After the statement by Siemens Games about the cancellation of the supply contract, Enel from June 2022, it turns out, closed its employees access to the construction site, forbade the export of property located there, including equipment, materials, tools, personal belongings, and inspired a lawsuit in the Murmansk Arbitration Court (case A42-7285/2022) with a demand to prohibit Siemens Gamesa from initiating legal proceedings in the International Arbitration Court at the International Chamber of Commerce in Vienna, to invalidate the unilateral refusal of the turbine supply contract dated December 5, 2018 and recover from it in favor of Enel of all funds under the supply contract in the amount of 22.9 billion rubles of losses, motivating that the project is not completed and has no value. The amount is fabulous, especially by the standards of the Murmansk region.
This motivation, frankly speaking, is doubtful, since on December 1, 2022, Enel itself announced that the company had received permission to put the Kolskaya WPP into commercial operation. This is understandable, because by that time Siemens Gamesa had supplied all the components of wind turbines for the installation of 57 wind turbines and more than 80% of their installation work had been completed.
In the statement of claim, Enel claims that “the supplier’s unilateral refusal to fulfill the supply contract was not caused by the violation of the terms of the supply contract by the buyers, but “is a direct consequence of the position of the Siemens group of companies regarding the conduct of a special operation of the Russian Federation and support for unilateral restrictive measures of countries committing unfriendly acts against the Russian Federation, Russian individuals and legal entities.”
Graceful, isn't it?
Turning the situation on its head , putting all its mistakes almost to its credit, Enel turned an ordinary economic dispute into a purely political plane. : “Is it true that the salary of Soviet engineers is only 120 rubles?” to which she received a reasoned answer: “But you have blacks being lynched.”
In support of its position, Enel cites Decrees of the President of the Russian Federation No. 79 dated February 28, 2022 “On the application of special economic measures in connection with the unfriendly actions of the United States of America and foreign states and international organizations that have joined them” and No. 95 dated March 25, 2022 “On the temporary procedure for fulfilling obligations to certain foreign creditors”.
The Murmansk Arbitration Court, probably not having time to sort out the details of the case, strongly supported Enel. In September, he imposed interim measures on the property of Siemens Gamesa at the Kola site, based on the fact that “the actions of the defendant to deliberately terminate the fulfillment of obligations under the supply agreement and the requirements for the transfer of the disputed property, caused by the observance by the defendant and the persons controlling him of the restrictive measures of the states, committing unfriendly actions against the Russian Federation, Russian individuals and legal entities, committed with the intent to cause damage to the applicant and the energy system of the Russian Federation, violate the energy sovereignty of the Russian Federation, since the construction of the Kola wind farm is a strategic project for the Murmansk region.
At the same time, numerous publications appeared in the media with the leitmotif that Siemens Gamesa was leaving Russia, leaving an unfinished facility, its property, employees to the mercy of fate, and “swindling” the recently become Russian side by a multibillion-dollar sum.
It should be noted that Enel's statement about leaving Russia was also covered in the media. As they say, “who lives in a glass house should not throw stones at others.”
And, although the situation we are describing has nothing to do with this, many media outlets directly give a purely economic conflict a political coloring.
Most likely, the rhetoric of the media was also influenced by the fact that PJSC Enel Russia, most recently a controlling stake in which belonged to the Italian energy holding Enel, changed its owner. Now 26.9% of its shares are owned by LUKOIL, and 29.5% by JSC AAA Capital Management, acting as a trustee of the Gazprombank-Freesia fund. In this regard, the name was also changed, and PJSC Enel Russia became known as PJSC EL5-Energo. Enel's subsidiaries are also gradually changing their name, for example, Enel Rus Wind Azov LLC, which owns the Azov WPP wind farm built by the same Siemens Games, has become quite simply called Azov WPP LLC.
Since Enel’s statement of claim contains a lot of political statements, and Enel did not provide documentary evidence of the need to take interim measures and recover funds, on November 23, 2022, the Thirteenth Arbitration Court of Appeal, having examined the situation and heard the position of Siemens Games, with did not agree with the conclusions of the first instance, canceled the judicial act, refused to satisfy Enel’s application for interim measures.
Indeed, if you look at the chronology of events that have occurred since August Since the windmills were supposed to be brought by Enel to 100% readiness for the construction of wind turbines, long before February 24 of this year, there was a clear unavailability of the construction site, which did not allow for safe work.
The actions of Siemens Gamesa, and Siemens Gamesa Renewable Energy LLC, a company registered in Russia, are in no way connected with the start of Russia's NWO in Ukraine and the sanctions of the European Union and the United States. After all, it still provides warranty and service maintenance for Azov WPP for Enel, and the project participants have no questions about this.
Having reviewed numerous photographs and reconstructed the chronology of events, we consider the position of Siemens Games to be sound that the company’s refusal to withdraw from the contract for the Cola project was a forced measure and was not caused by sanctions, but by long-term and significant violations of the contract by the customer, including including unavailability of site for installation, unobstructed access to roads and site, and lack of stable network connection. And the purpose of the statement of claim, in our opinion, is precisely the legalization through the court of the illegal retention of the property of Siemens Games at the site of the Kola wind farm, as well as an attempt to shift all the blame for the delay in the delivery of the project to Siemens Games.
Or maybe the Enel management simply wants to use the next amount of money for the project, because as they say: everyone knows when the construction starts, but no one knows when it should end.
What got « Siemens Gamesa, which, overcoming all the difficulties of the Arctic, worked on the project for almost 3 years? No money, no recognition… Except perhaps the “priceless” experience of doing business in Russia and the unwillingness to have new projects in the future on the territory of our state.
It must be that now any economic dispute with a Russian company created with the participation of foreign capital can very easily be turned into a “fight against the adversary”, by seizing other people's property and finances under the pretext of a special operation. And it doesn't matter who, to whom, what and for what.
Don't you think, dear readers, that turning into enemies those who work in the interests of our state, introducing advanced technological solutions in our country, even in conditions when our countries are not in the warmest relations, at least unreasonably? Moreover, to hide their shortcomings and miscalculations, hiding behind political slogans.
I don’t even want to imagine the global consequences that will arise if the arbitration dispute is resolved in favor of Enel, which is already controlled by LUKOIL, and as we see , Gazprom.
The editors sent requests to the press services of PJSC EL5-Energo, Siemens Gamesa Renewable Energy LLC and regulatory authorities to clarify the situation.