Friday, 20 April 2012

"Special price only for you" - but who would like to buy a loss making wind turbine giant?

Even if the price is cheap, Vestas will have huge problems in finding  a buyer

"Vestas lost money on each dollar of sales last year as turbine prices fell and is now grappling with the loss of wind-project subsidies in the U.S., Spain and India."
Vestas, the worlds largest manufacturer of wind turbines, is up for sale. But who would like to buy the loss making Danish giant at a time when there is more than enough of good, inexpensive and clean energy (like shale gas) available? At the same time governments are either reducing or eliminating subsidies to wind energy - the only reason why turbine manufacturers have been able to show profits. 
Vestas may have trouble luring a buyer while the wind industry faces a decline in demand and excess production capacity, according to David Vos, a London-based analyst at Sanford C. Bernstein & Co. The company can manufacture more than 8,500 megawatts of turbines a year, according to its annual report. Turbine production and shipments totaled 5,054 megawatts last year, or about 60 percent of capacity.
“It doesn’t make sense for any player to add so much capacity to their operations at this point in time,” Vos said. “The major conglomerates who might have the spending power to purchase assets have overcapacity themselves, and you’re facing a structural demand decline over the next two or three years.”
Industrywide, prices of turbines sold in the second half of 2011 fell to 910,000 euros ($1.2 million) a megawatt, the lowest since at least 2008, when records began, according to Bloomberg New Energy Finance. Wind-power installations, which grew at an annual rate of about 36 percent in the five years through 2009, expanded just over 5 percent the following two years combined, according to Global Wind Energy Council data, as banks tightened financing and governments threatened to rein in support for clean-energy projects.
Spain in January declared a moratorium on subsidies to new renewable-energy plants, while India, the world’s third-biggest wind market, reduced a tax break this month.
In the U.S., the second-biggest turbine market after China, a Treasury grant program offering as much as 30 percent of development and construction costs for renewable-energy plants expired on Dec. 31. Another incentive, the Production Tax Credit, expires at the end of 2012. Vestas in January said it may cut an additional 1,600 jobs in the U.S. if lawmakers don’t extend the credit, which gives an incentive of 2.2 cents a kilowatt-hour of wind power.

Read the entire article here

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