Where the Blackout Was Happy News
Aug. 14 was a day of reckoning for the energy industry's Old Guard. As tens of millions of people lost power in North America's biggest blackout ever, a record heat wave nearly shut down nuclear reactors that provide 77% of France's electricity. But breezy Denmark had no such problems. There, dozens of 100-meter-high wind turbines arrayed in neat rows near Copenhagen's airport scooped up the steady wind and pumped out 20% of the electricity used by the country's households.
Clean, cheap wind power: It's one of those technologies that has been around for decades but never seemed ready for prime time. Now, thanks to improvements and a convergence of forces ranging from Middle East tensions to the North American blackout, wind power may finally get its big chance. Countries from India to Britain are helping underwrite green energy to lessen their dependence on fossil fuels. Even former oilman President George W. Bush is prepared to offer big incentives for wind-energy development.
Nobody stands to gain more from this global trend than Vestas Wind Systems, a Danish company that's the No. 1 maker of wind turbines. Based in Ringkobing, Vestas controls nearly a quarter of the $6.5 billion international market. Its stock jumped 25% in the days after the Aug. 14 blackout. The company posted a $49 million profit in 2002 on sales of $1.52 billion and estimates that sales will jump to $2 billion this year. "Vestas is very good at spotting trends in products," says Claus Bo Larsen, an energy analyst at Deutsche Bank in London.
Business hasn't always been a breeze. While the global wind-generation market is growing at a 28% annual clip, it relies overwhelmingly on fickle government subsidies. To wit: Vestas was forced to issue a succession of profit warnings last year as the eagerly awaited U.S. energy bill stalled and stateside demand for the company's wind turbines dried up. As a result, the share price plunged 60%. "Its problems last year came from gravely overestimating the U.S. market potential," says Kitty Gron, an analyst at investment bank Alfred Berg in Copenhagen.
Now, though, Vestas CEO Svend Sigaard is feeling upbeat again. The company has been signing up new customers and accumulating market share. "Our optimism is growing based on expanding markets and our order backlog," says Sigaard. Take Germany, the world's largest wind-energy market. Despite strong competition from German wind-turbine manufacturers, Vestas has increased its market share there to 26%, passing many local players. Its popular V80 turbine, as tall as 100 meters to catch stronger gusts, is making inroads in eastern Germany. Vestas has even opened a factory in nearby Lauchhammer to raise its local profile.
In the U.S., Vestas faces a formidable rival: General Electric Co. (GE ), which bought the wind-generation business of bankrupt Enron Corp. in February, 2002, and is pouring investment into the Tehachapi (Calif.) unit. But Vestas has 40% of the market, almost three times that of GE Wind Energy. In June, Vestas landed a $110 million order for 80 1.8-megawatt turbines -- the seed for a giant wind farm in Wyoming -- from Florida-based utility FPL Group Inc. The penetration of wind energy in the U.S. remains low -- less than 1% of American consumption -- but wind players think the long-term opportunities are huge.
Wind power does have drawbacks, as any sailor knows. When there's no wind, there's no power. So wind will always be an alternate energy source. But such limits are hardly a whisper in the hurricane of Vestas' growth.
By Christina Passariello in Paris