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Vestas drowning in Chinese Competition gets EDF Energies Nouvelles Lifeline – Order could reach 2000 MW Wind Turbine

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Vestas the Danish Wind Turbine provider which was upstaged by Sinovel as the biggest wind energy company in the world has just got a lifeline.Note Vestas has been facing tough headwinds in the last few quarters as wind energy turbine orders dried up in the developed countries.The company has been bleeding red ink forcing it to fire expensive workers at its home base in Denmark.Note the rise of China as the most important wind power market in the world has made Chinese WEG Companies bag 7 of the top 15 Wind Turbine Producer ranks.Foreign companies have faced tough times in penetrating the 18 GW Chinese market which has been seeing fierce price wars between Wind Turbine Companies.Even Sinovel the biggest Wind Energy Company has been facing problems recently canceling payments to a US supplier American Superconductor.With the Chinese companies turning their attention to foreign markets like India and USA,life is going to get tougher for Vestas.Note Vestas does not have cheap financing sugar daddies like Chinese companies to support it.

Vestas has been getting bigger orders and has been streamlining operations,however its stock price has continued to go down as investors see bleak future prospects wit hthe entry of Korean shipbuilders into the industry.Other heavyweights like Gamesa and Suzlon too have faced massive losses as margins have evaporated in the face of declining topline and prices.But now Vestas has got a lifeline from the renewable energy subsidiary of the French giant utility EDF.The order from EDF Energies Nouvelles could reach 2000 MW of Wind Turbines over the next few years.While pricing was not disclosed,it would be certainly be at a discount to the normally premium prices charged by Vestas.This given order visibility to Vestas and provides price safety for EDF.The next frontier for Wind Energy Companies is going to be Offshore Wind and Siemens has stolen a march.Vestas is not going down without a fight recently introducing a 7 MW wind turbine for this segment

Landmark turbine deal powers Vestas shares

Vestas said the French renewable energy company would buy at least half its onshore wind turbines in Europe, and at least 30 percent of future onshore turbines in the U.S., from Vestas for delivery in 2012 to 2014.The deal included an immediate firm order for turbines with 180 megawatts (MW) of capacity.

But Vestas Chief Executive Ditlev Engel said on Thursday the deal had potential to bring in orders for turbines with total capacity of 2,000 MW or more.Vestas does not disclose the value of orders, but a rule of thumb is that turbines cost 1 million euros ($1.45 million) per megawatt, meaning it could be worth 2 billion euros or more.

PG

Abhishek Shah

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