Big turbine maker feels the breeze of growing U.S. markets
The Danish manufacturer announced turbine orders of 800 megawatts in the United States in the second quarter, which accounted for most of the 18 percent increase in total orders for the company versus last year. Vestas hired more than 2,000 people during the quarter, most of them at factories in Colorado, where it is ramping up production.
“Our U.S. sales team is busy trying to get the orders in, as there is a high activity level in the U.S.,” Vestas Chief Executive Officer Anders Runevad said in a conference call with analysts. “The U.S. economy seems to be doing fairly well, but there is no scarcity of labor. It’s not like we are struggling to hire the people that we need to take in. But, of course, it’s hard work because it’s a big ramp-up.”
Runevad said the PTC, which pays power plant operators a premium for renewable electricity, is supporting the U.S. market, and order volumes would suffer without it.
“I won’t speculate on 2015 or 2016, it is very hard to have any call on whether PTC will be renewed,” he said. “We have a lot of the interest as well as many other companies that we will see an extension, but I will not speculate whether or not that will come. In the majority of the orders that we have announced this year in the U.S., the customer had the PTC qualification.”
When the PTC was due to expire at the end of 2013, companies rushed to get orders in while they could still qualify for the subsidy, leading to 830 MW of turbines sold by Vestas in that quarter in the United States.
Boom to be followed by a bust?
“A potential PTC extension after midterm elections in the U.S. would be the icing on the cake for Vestas but is unpredictable,” said Fasial Kalim Ahmad, an analyst at Swedish bank Handelsbanken.
Fifty-four House Republicans wrote a letter earlier this month to House leadership, asking to let the PTC remain expired.
“In the U.S., the boom-and-bust cycle continues, with 2014 slated to be a gangbuster year,” said David Vos, an analyst at Barclays. “We expect some spillover into 2015, but beyond the second half of 2015 it is hard to predict what the shape of the market will be.”
Meanwhile, Vestas also eyes the fledgling U.S. offshore wind market, where it would like to sell its new giant 8 MW turbine, developed in cooperation with Mitsubishi Heavy Industries Ltd. The turbine just landed its first commercial order for a 256 MW project developed by Dong Energy off the U.K. coast.
“Larger and more cost-efficient wind turbines are key elements in the realization of Dong Energy’s strategy towards reducing the cost of electricity from offshore wind,” said Samuel Leopold, Dong’s executive vice president.
U.S. Wind Inc., a subsidiary of Italian developer Renexia SpA, won Maryland’s offshore wind license lease for as much as 1.45 gigawatts of capacity, which may present new business opportunities for Vestas in the U.S. as well as for the company’s main rivals: Siemens AG and General Electric Co. U.S. Wind has a year to submit a site assessment plan identifying wind resources, which if approved would be followed by a site construction plan.