In this week’s readers’ Q&A session, Ditlev Engel, CEO of Vestas, the world’s biggest wind turbine manufacturer, answers your questions on the future of wind power.
In the second of two parts, he talks about whether wind power is inefficient and the impact of the recession on Vestas.
Next in the hotseat is Yvo de Boer, the former head of the UN’s climate change body and the man who led the UN at Copenhagen. He is now an advisor at KPMG and will be answering your questions on this site next Friday, December 10th. Send in your questions for consideration by the end of Monday, December 6th to firstname.lastname@example.org.
But for now, over to Ditlev:
How do you reconcile the inefficiency when there is no wind, the high installation cost, the land area they take up and their competitiveness against conventional energy sources or other wind technology or even tidal energy?
Gwylim Rhys Jones, director, MagPower Systems International
The important factor is what we call the cost of energy, in other words establishing what it costs to generate 1kwh of electricity over a given time period – let’s say 20 years.
First, it is about finding the right locations for wind turbines, and there are plenty of areas available on land. Every day of the year, wind is available to be generated into power at the altitude where turbines operate. We have mapped and analysed weather data for decades to get the right predictability.
Secondly, technology evolves. Vestas recently released our V112 turbine for low wind speed areas, starting to generate power at 3 metres per second.
And to kill a myth – wind turbines do not take up substantial areas of land – crops can be grown beneath and you do not have to drill or mine for wind. Additionally, the fuel in our case is abundant and free. From a customer’s perspective, they want a secure and stable business case. Wind energy is competitive, predictable, independent, fast and clean.
Are you planning to expand your business to other power generation technologies?
Vestas is a pure play wind energy company. We have 30 years of experience installing more than 40,000 turbines in 65 countries. This gives us the insight and know-how to take this industry even further. Just remember that around two per cent of the world’s electricity is generated from wind turbines. We hope to see that figure around ten per cent in 2020.
Large wind turbines
Does Vestas have any offshore turbines larger than 3MW in the pipeline?
We have announced that we will develop and launch a 6MW machine for offshore wind farms, but at this point I cannot share any more details about the technology or a release date to the public for competitive reasons.
Impact of the crisis
What has been the impact of the financial crisis on Vestas?
2009 and 2010 were challenging years for Vestas as we have had to announce layoffs and reduced guidance. Wind project financiers are more worried about lending out money to our customers. This slows down the process. But we have not seen a slowdown in the interest for wind energy and our products. In fact, financiers tell our customers that they can only get financing if they choose a wind turbine manufacturer with a proven track record. You could actually say that the financial crisis is maturing the wind industry.
You could actually say that the financial crisis is maturing the wind industry
A focus on our customers, their needs and business case is now paying off, supported by an all-time high order backlog.
In your Q3 2010 presentation you included a slide that stated that, “From a financial point of view it was the wrong decision not to reduce capacity in early 2010,” but “From a management point of view it was the right decision.” You followed this up by saying you owed it to your staff and that you do not regret your decision.
You are now ramping up staffing numbers and production in the US market to a level that most analysts/observers believe will be capable of supplying the 50 per cent of the expected US demand in 2011.
Can you explain how you prioritise shareholder return in your investment decisions – and if you have got this second capacity decision wrong, what kind of pressure do you think you would be under to resign given the shares are nearly 50 per cent down, year-to-date?
Tom Plinston, analyst, Matrix
Since August, when we announced our half-year results, we have noticed a lack of business momentum in Europe. We have, so to speak, been holding our breath for a very, very long time in this region – and not by accident. We felt confident that a recovery was underway here, and we wanted to be ready to avoid any loss of momentum.
But today, when almost all countries in the area are struggling to get their economies back together, we must face the fact that uncertainty – even by 2011 – will remain significant around Europe.