Cold winds blow for future of green energy

They call North Dakota the "Saudi Arabia of wind energy".

By Tom Leonard in West Fargo, North Dakota Last Updated: 6:22PM GMT 09 Mar 2009

Wind turbine: Companies producing green energy are suffering in the economic downturn Photo: BLOOMBERG

The howling prairie gales that blow almost continually across this flat and empty state could, it has been estimated, light up a quarter of America.
If there was one industry whose bright future looked assured, it was green energy, and particularly wind, which is widely regarded as the most promising alternative to fossil fuels.
However, just as its fortunes soared last year, so they are on the wane now.
Encouraged by Barack Obama's support for green power and by soaring demand, DMI Industries, one of the world's two biggest manufacturers of wind turbine towers, undertook a $30 million (£21 million) expansion of its West Fargo factory last summer.
But just months later, in a dramatic turnaround that has been repeated across the renewable energy industry, DMI had to lay off 20 per cent of its 430 staff after the credit crunch hit its customers and orders dried up to a trickle.
Rich Mattern, West Fargo's mayor, said he wouldn't have been surprised if the town's other major employer, a maker of construction vehicles, had been forced to sack staff, but not DMI.
"They did the lay-offs on a Sunday afternoon. I knew some of those who lost their jobs and, quite frankly, I was shocked," said Rich Mattern, West Fargo's mayor.
"It never dawned on me that a company like that would have lay-offs. I really believed this industry was bulletproof."
The 40,000-sq ft DMI factory, one of three run by the company, last year made more than 500 towers. Huge two-inch thick steel sheets are rolled into 15ft diameter cylinders and then welded into 270-ft high, cone shaped towers strong enough to cope with all weather conditions.
The 130ft long fibreglass blades which are attached to each tower are made at another North Dakota company, which has also had to lay off workers.
Some of the DMI workforce had barely finished their training before they were fired. "This hit us fairly suddenly," said Phillip Christiansen, the general manager.
Stefan Nilsson, DMI's Swedish president, stressed that every company in the wind power industry had suffered job losses. "It's just a question of whether it's been announced," he said.
He would not say how much his company's order book had been damaged but said he said could understand why outsiders were so shocked at the layoffs.
"So many positive things have been said about renewable energy, but when the banks have problems, it has an impact on us too," he said.
Of the job losses, he said: "It's not something you want to do. We spent a lot of time hiring people and training them."
The recent rise and fall of wind and solar power (solar panel makers have also been hit badly) is as dramatic as in any area of the economy.
After the US wind industry's capacity grew by 50 per cent – and some $17 billion – in 2008, trade organisations are now predicting it could shrink by 30 to 50 per cent this year.
Around 18 banks and other lenders were financing wind and solar projects before the economic meltdown. Now, there are only four.
Both wind and solar power depend on subsidies. Barack Obama has called for a doubling of America's renewable energy production in three years and has earmarked a significant chunk of his $787 billion stimulus package for investment in clean fuel or energy efficiency.
However, there is some unease as to whether he will be able to make good his intentions while industry experts say that green energy tax credits will only offset the worst effects of the orders freeze.
The economic slowdown has dried up investment in cleaner energy to the point that analysts now say that its growth is no longer on track to save the world from the worst impacts of climate change.
Mr Nilsson said it was too early to tell whether the US president would "go cold on his passion for green fuel" but he conceded that politicians tended to pay more attention to his industry when oil prices were high.
North Dakota, a conservative state bordering Canada whose population come from Nordic and German stock, has much riding on alternative energy.
The second biggest corn-producing state, many of its farmers switched to ethanol only to be hit hard by falling oil prices.
Everyone in West Fargo is optimistic that investors will return and that, when they do, wind power will still be the energy of the future.
"In the stimulus package, there's money for alternative energy – everybody realises that it's the way to go," said Mayor Mattern.
"It's not like the Carter years when oil prices went down and they all forgot about renewable energy," he said. "Everybody, from my local university to Congress, has gone too far to let it drop."
* See our correspondents' reports on the effects of the recession around the world at www.telegraph.co.uk/news/worldnews