World's biggest wind turbine-maker says global downturn slashing demand

Growth projections 15% off for top wind-power manufacturer Vestas as global financial crisis strips back demand
Terry Macalister
guardian.co.uk, Wednesday 21 January 2009 11.34 GMT


World demand for wind power down 15% from projections. Photograph: Murdo Macleod
The world's biggest wind turbine manufacturer Vestas says the current economic downturn has left it with 15% excess manufacturing capacity as demand for the technology falls short of projections. The news came as company works to restore its reputation following the discovery of fraud in its Spanish subsidiary.
Despite political impetus behind the industry, the financial crisis has cut away demand said Ditlev Engel, the Danish company's chief executive.
"Six months ago everyone (in the investment community) said we were not doing enough to meet demand growing at an expected 40% this year. "Now people are saying 'Why have you put in place plans for a 40% increase in capacity when growth levels are only going to be 25%?'," he explained.
Engel would not comment on the financial impact of the slowdown, arguing the company was in a "closed period" ahead of its 2008 financial results to be published on February 11. Nor would he say whether Vestas would cut back future expenditure or jobs. But he expressed concern about discovery of fraud inside Barcelona-based Vestas E—lica.
Vestas has said that local managers cost the company around 12m euro by issuing false invoices for nonexistent services that were paid to companies fully or partially controlled by current and former employees.
The Vestas boss said it was "a dreary and very unfortunate matter" where trusted employees apparently betrayed the responsibility they had been given.
The problem was uncovered late last year after Vestas had introduced a whistleblower system designed to detect unusual behaviour. It has been referred to the Spanish legal authorities.
The Danish company is spending 2.5bn euros over four years increasing its manufacturing capacity so that it will be able to supply 10,000MW of equipment by 2010, compared to half this amount in 2005.
Vestas has workshops in the US, China and Spain as well as research and development centres in Britain.
It is particularly bullish about prospects in America, especially after the inauguration of Barack Obama. Obama used his opening address to the American people yesterday to talk of the need to "roll back the spectre of a warming planet" through transforming the way America uses energy, harnessing "the sun and the winds and the soil".
"We hope we can positively contribute to the green initiatives that have been outlined by the new president," said the Vestas boss.
The annual financial results will be presented in New York, rather than London, this time around to reflect the Vestas focus on opportunities that side of the Atlantic. Vestas is quoted on the Copenhagen stock exchange and Engel said there were no plans to list in the US.
Engel said promises by Gordon Brown to creates thousands of new jobs in Britain and China's intention to pump $70bn on electricity grid connections also gave him confidence for the future.
Vestas already employs 20,000 people, around double the figure four years ago.
The Global Wind Energy Council estimates there are now 400,000 people worldwide employed in the sector.
It told a World Future Energy Summit in Abu Dhabi that this figure could grow to 1 billion by the end of the decade.
But there were warnings this week from Wall Street with financial analysts saying both wind and solar firms were in for a rough ride.
"We believe that the most important theme in 2009 within the alternative energy space will be a move from severe undersupply to one of at least a more balanced market and potentially serious oversupply," said Goldman Sachs analyst Jason Channell in a note to investors.