Vestas Says Economy Overtook CO2 Cuts as Wind Driver

The fragile world economy has overtaken climate change as the main driver of the wind industry, Vestas Wind Systems A/S Chief Executive Officer Ditlev Engel said.

“The macro environment is obviously a challenge,” Engel said today in a phone interview from the World Economic Forum in Davos, Switzerland. “Wind is now subject to the overall performance of economic growth. In the early days, it was more you were changing because you needed to replace some CO2-emitting power with green power.”

The CEO said he didn’t think “much” has changed in the global economy, suggesting no immediate recovery for turbine manufacturers struggling with declining margins due to excess manufacturing capacity. The Bloomberg Industries Global Wind Energy Index has declined 27 percent in the past year, compared with a 14 percent gain in the Standard and Poor’s 500 Index.

Engel declined to provide industry or company forecasts, citing a closed period before Vestas reports earnings on Feb. 6. Vestas has already said it expects global shipments totaling 5 gigawatts in 2013, down from about 6.3 gigawatts last year.

Bloomberg New Energy Finance in November forecast annual installations would decline 9 percent to 41.8 gigawatts in 2013, more than canceling out last year’s gains. The forecast preceded a Jan. 1 extension of the U.S. Production Tax Credit, benefitting the wind industry, and China’s plan to install 18 gigawatts of wind power this year.

The U.S. and Chinese developments are positive for the wind industry, according to Engel, who said that after U.S. President Barack Obama mentioned climate change in his inauguration speech, climate change may return as a driver of the industry.

‘Declined Considerably’

“That’s hopefully going to resurface as a discussion,” Engel said. “It’s evident that over the last few years, the climate discussions have declined considerably.”

Aside from China, other “promising” markets for wind power include Australia, Brazil, Mexico and Chile, Engel said. Traditional markets in Europe have been weighed down by regulatory uncertainty, he said, citing “overnight” changes made in Spain. Spain, once the provider of the most generous subsidies to the wind industry, a year ago halted assistance to new projects.

“It has a ripple effect: people think if it can happen there, can it also happen here?,” Engel asked. “The focus on the regulatory certainty has increased dramatically.”

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