Vestas employs over 8000 people in Denmark which is its home base out of the 22000 employees worldwide.The comppany now plans to fire 3000 workers mostly from Denmark even as it hires workers in places like India and UK.Vestas has to cut a lot of flab as Chinese companies destroy higher priced competition in the Wind Energy Industry.Like the Solar Industry,where European companies like Q-Cells and Solarworld are facing an existential crisis from low cost Chinese competition ,Wind Energy now faces similar dynamics.Like Q-Cells and REC which relocated their manufacturing to Asia,Vestas has to do a similar act.Despite a record order book of 6.5 GW in Q310,Vestas has to fire Danish workers who are more than 10x more expensive than similar Asian workers.In a globalized world,companies don’t have the luxury of employing expensive workers in developed countries if similar wokers can be employed elsewhere.Note competition is increasing in Wind Energy with big players like Hyundai,Samsung,Northrop and smaller players entering the industry.
Wind Energy Companies in the Developed Markets have taken it on the chin in 2010.Companies dependent on the Wind Energy Markets in the West like Vestas,Gamesa,Suzlon,Iberdola Renewables etc. have had a very bad 2010 as their stocks price keep finding new lows.A Combination of Tough Financing Markets,Low Gas Prices and Declining Electricity Demand has made the livers of Wind Executives hellish in recent times.More competition in terms of Chinese heavyweights like Sinovel,Goldwind and Koean shipbuidlers precludes an easy recovery.Green IPOs in recent times have faced huge volatility with some managing success while others have led to huge losses.China’s Ming Yang Power which is a Chinese Turbine Manufacturer has seen a 30% erosion of its IPO stock price of $14 as it was priced a tad too aggressively.First Wind which is a bit different being a Wind Energy Developer similar to renewable energy developers like Enel Green Power,EDF Novellas might face a frosty reception as well.Its not a good time to be in the wind energy business as increasing competition and declining demand cause problems.Note John Deere sold off its Renewable Energy Arm for a bargain as US Climate Change Legislation seems stuck in an everlasting limbo.Without a Federal RPS and an expiring 30% Treasury Cash Grant for Wind Farms,2011 is very uncertain for Wind Energy in the USA.
The JV with the Adani Group is a win-win for both companies.Adani Group is setting up 16000 MW of Thermal Based Plants in India over the next few years and has also planned a 100 MW Solar Plant in Gujarat.It has started a company Adani Renewable Energy to take forward its Green Energy initiatives.The tie-up with Siemens will allow it to access cutting edge Green Technology while Siemens will get a huge customer for its Energy Equipment.Renewable Energy in India is a huge growth opportunity considering that India will have to increase its Renewable Energy by almost 45 GW over the next 10 years if it has to meet 15% of its Electricity Requirements from Green Sources as mandated by the CERC.
South Korea has said that it would reduce its dependence on China for rare earth minerals.The Country has reduced imports of Rare Earth Minerals from 7398 tons in 2005 to 2655 tons in 2009.Note most of the reduction came after South Korean Chaebols Samsung and LG shifted their production from CRTs to LCD and Plasma Display Panels.The country now imports 65% of its REE requirements from China and most of the rest from Japan.The country plans to increase cooperation with traditional ally USA and Japan to meet future demand for these commodities.However I have my doubt whether South Korea can reduce its dependence.South Korea has embarked on a major Green Stimulus which is the biggest as a percentage amongst Developed Countries.This is going to mean increased demand for rare earth minerals which are essential for Magnets in Wind Turbines and Batteries and Catalytic Converters for Electric Vehicles.Japan is already planning huge investments into developing alternate supply sources,perhaps South Korea needs to show that urgency as well
Wind Energy in India is the biggest Green Industry currently with around 1 GW of Wind Power Capacity being installed in a year on average.The Growth in Wind Industry has been driven by states like Tamil Nadu who have heavily subsidized and promted Wind Energy.India at around 10 GW of Wind Capacity is the world’s 5th largest Wind Energy Producer.However India remains far behind China in terms of Wind Energy Growth .Last Year China installed nearly 13 GW of Wind Energy which is more than India’s total installed capacity of Wind Energy.With a target of around 230 GW by 2020,China is on track to install 20 GW of WInd Capacity a Year in the next 10 years which would make India a Pygmy.Also two of the largest Wind Turbine Producers Sinovel and Goldwind are from China.India despite producing a world class company Suzlon in the early states of Wind Industry Development is struggling.Suzlon has fallen on very hard times running big losses while other Wind Companies are of hardly any decent size.
The Transmission Line will give a huge boost to Offshore WInd Energy in the United States.The Government has estimated a 4000 GW Offshore Wind Potential which is almost 4 times bigger than the current 1000 GW Electricity Generating Capacity . However note the load factors for wind is usually 1/4th to 1/3rd that of normal Fossil Fuel Energy so it would be incorrect to say that Offshore Wind could generate 4 times the current US Electricity like some websites are doing.However this is not to takeaway from the fact that this will help wind energy and green jobs considerably.US is seriously lagging behind countries like China and South Korea in the upcoming Green Industry.Lack of US Climate Legislation and indifferent individuals and companies are creating massive roadblocks in Climate Mitigation.Tranmission Costs are a big hurdle for Offshore as well as Onshore Wind Energy.Note the bigger the consumer area for Renewable Energy the less the adverse affects of intermittency.The Tres Amigas Transmission SuperHub is another example of Private Initiative in the Electricity Transmission Area.While the dollar benefits to the investing companies might be uncertain,the Green Benefits of this move are immense.The US Electricity Regulator has already given a thumbs up and the US Administration also seems very supportive recently approving the Cape Wind Offshore Wind Farm in Federal Waters in Nanutech Sound.