U.S. wind turbine sales may dry up in 2013 unless lawmakers extend tax credits supporting the market beyond the end of next year, said Vestas Wind Systems A/S Chief Executive Officer Ditlev Engel.
The so-called production tax credit, or PTC, provides an incentive of 2.2 cents a kilowatt-hour for electricity from wind applied to operators' tax bills. In the past, the termination of such policies has shown markets can "disappear," Engel said yesterday by phone interview.
"Our concern is that if the PTC is not extended, history has shown us that these markets tend to fall off a cliff," Engel said from the company's headquarters in Aarhus, Denmark. "We should prepare ourselves for it."
The expiration of the program would be a blow to Vestas and General Electric Co., two of the three biggest turbine makers, which are struggling with falling turbine prices caused by increasing competition from Chinese rivals. Engel's comments echo concerns made by Lewis Hay, CEO of Nextera Energy Inc.
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And Engel´s worries do not stop here. The Danish daily Belingske Tidende reports today that the Vestas share price has dropped 27,6% since October 30, when the company adjusted its expectations downwards. With continuing downgrading of expectations, bad figures for the third quarter this year and mass firings, the question is, how long Mr. Engel can keep his job.
Vestas´ downward path is another example off the fact, that companies relying on government subsidies are always in danger of makíng huge losses, immediately when governments decide to remove or reduce the subsidies.