WIND’S LIFELINE

Wind Power Faces Zero Margins, U.S. ‘Boom and Bust,’ Suzlon Says
Natalie Obiko Pearson (w/Amanda Jordan and Reed Landberg), November 14, 2011 (Bloomberg BusinessWeek)

"Wind-turbine makers have seen profit margins wiped out, and the potential end of tax credits in the U.S. will see its “boom-and-bust” market persist, Suzlon Energy Ltd. Chairman Tulsi Tanti said…[He estimates that the U.S. may add as much as 12 gigawatts of capacity in 2012 before the tax credit runs out, and about 5 gigawatts in 2013]…

"Tanti’s remarks add to concerns voiced last week by the heads of Vestas Wind Systems A/S and Gamesa Corp. Tecnologica SA, Suzlon’s rivals in Europe, about the health of the world’s second-biggest wind-turbine market. The companies already are coping with slimmer margins caused by cuts to subsidies across Europe and the growth of Chinese competitors led by Sinovel Wind Group Co., which benefit from state funding to expand abroad."

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"U.S. tax credits, which give an incentive of 2.2 cents per kilowatt-hour of wind power on payments by turbine operators, expire next year…[Unless the tax credits are extended,] the market for 2013 [remains in doubt]…[India’s] Suzlon…got 19 percent of its sales from the U.S. in the year through March 2010 and less than 5 percent the following year…It stopped manufacturing rotor blades and nose cones at its Pipestone factory in Minnesota at the end of 2010, and will only resume U.S. production ‘if we get five-year visibility’ on policy, Tanti said…

"Among U.S.-based companies, renewable-power producer NextEra Energy Inc. said its growth targets for 2013 and 2014 aren’t factoring in any new wind projects at home. Its forecast for annual earnings-per-share growth of 5 percent to 7 percent through 2014 assumes no U.S. wind additions, CEO Lewis Hay said last week…Some investment will continue in the U.S. because the cost of wind power has become competitive with other sources, Tanti said. For utilities with cash, it’s a good time to snap up cheap turbines…"