Wind-Power Sector Faces Delay of Key U.S. Support

By SELINA WILLIAMSAugust 20, 2008;

Global demand for wind energy will continue to soar despite short-term issues such as delays renewing a financial support mechanism in the U.S., and economic slowdowns in Europe and the U.S., the chief executive of the world's largest wind-turbine maker said.
"The key here is the long-term view -- there will always be ups and downs, but the global fundamentals are in place," Vestas Wind Systems A/S CEO Ditlev Engel said in an interview.
High oil, gas and coal prices, energy-security concerns, environmental worries and growing electricity consumption throughout the world are keeping demand for wind power strong, Mr. Engel added.
European Union, U.S. and China targets on expanding renewable energy use are also supporting continued investment in the sector, he said.
The sector remains dependent on government regulation and subsidies and investors have been keeping a watchful eye on a U.S. production tax credit for wind that is set to expire at the end of this year.
Although the U.S. Senate passed the tax credit in April, it is now being held up in a divided Congress and it isn't clear the measure will be renewed before a December deadline.
The wind industry is expected to grind to a halt until the issue is resolved.
Mr. Engel said Vestas, is making investments in new manufacturing facilities in the U.S. on the premise that demand for wind energy will continue to grow.
"If the PTC was already in place, then we would have already seen other European companies coming to the U.S., but someone has to take the lead in the industry to pave the way," Mr. Engel said.
Vestas, which Friday posted a 27% rise in net profit in the second quarter, is investing €620 million ($918.1 million) in manufacturing facilities in the U.S., China, Spain, Denmark and the U.K.
The investments come on top of €1.3 billion spent in the past three years as the Danish company aims to double capacity to 10,000 megawatts by 2010, when the projects are scheduled to be completed, from 5,000 MW at the end of 2007, Mr. Engel said.
"The Chinese government keeps raising their target for wind power and we'll be ramping up to meet that demand as the market there has the highest growth rate in the sector," Mr. Engel said.
Overall, the wind-power market is expected to more than double to 240 gigawatts of installed capacity by 2012 from 100 gigawatts this year, the council said.
Write to Selina Williams at selina.williams@dowjones.com