Wind turbine makers thrive on record orders and favourable political climate

The world’s largest manufacturer of wind turbines, Vestas Wind Systems, announced record first-half orders last week as profits exceeded analyst estimates. European wind turbine manufacturers including Nordex and Gamesa Corp. Tecnologica, are riding a surge in orders on the back of government efforts to reign in carbon emissions and favourable policies for clean energy. The final ruling of the US Clean Power Plan, released August 3, “rewards US states for fossil fuel retirements and renewable build occurring after 2012,” and is discussed in this Bloomberg New Energy Finance research note.

Gamesa has seen its shares climb 90% this year, followed closely by Vestas and Nordex. Wind projects, among the cheapest form of renewable energy, will jump by a quarter in 2015 to a record 60GW, forecasts BNEF.

The UK government is being especially favourable to offshore wind in a bid to reign in the country’s carbon emissions, as it turns its back on onshore wind turbines, often objectionable to the public. A GBP 269m ($425 million) offshore wind transmission link from the 389MW Duddon Sands wind farm in the Irish Sea was granted approval by the UK energy regulator last week – licensing Macquarie Corp. Holdings and 3i Infrastructure to own and operate the asset.

Following generous European subsidies to prove its technical viability, the offshore wind industry must now cut costs so that the sector can compete autonomously, according to the research note Route to offshore wind 2020 LCOE target, published by Bloomberg New Energy Finance. “We estimate the current benchmark levelised cost of offshore wind at $176/MWh”, BNEF analysts wrote in the note. The analysts forecast 18.1% cost reductions by 2020, if factors including development costs, operations and maintenance and financing all contribute.

Elsewhere in Europe, MHI Vestas Offshore Wind won a conditional 450MW turbine order for Dong Energy’s Borkum Riffgrund II project in the seas off Germany.

Wind developers are also showing greater confidence in Brazil – selling six times as much power through an energy auction last Friday as they did in a similar auction in April. This time round, contracts were won to sell power from 538.8MW of wind farms for an average price of 181.14 reais ($51.90) per MWh.

Institutions such as the International Finance Corp. and Asia Development Bank are backing wind projects in locations where the industry is more fledgling. These two institutions are backing Indo Wind Power Holdings’ $140m project in Indonesia’s Sulawesi province that will total 63MW. On the African continent, Gulf Energy of Kenya signed an accord with Meru county to build a 100MW wind plant.

Kenya also saw the first biogas plant connected to its national grid last week – Tropical Power Kenya started producing the methane-rich gas through the breakdown of organic matter sourced from VegPro Group – one of East Africa’s largest exporters of vegetables. The 2.2MW plant was built at a cost of $7.5m.

In energy storage news, General Electric announced its biggest lithium-ion battery storage deal to date, to build a 30MW energy storage system for the Imperial Irrigation District in California, which will help with load balancing and frequency regulation.

Also on the US West Coast, Tesla Motors said that it will be providing 30 free electric car charging stations at high-end Airbnb properties in the region, and expects to offer more charging points in the future.

Across the Atlantic, EON, Germany’s largest utility, and RWTH Aachen University announced plans to build a EUR 12.5m ($14m) battery storage project totalling 5MW in capacity. This will test a combination of battery types for their ability to stabilize grid operations in times of fluctuating energy supply from renewables such as solar and wind.

Also in Germany, Audi released details last week of its new electric car crossover – the E-tron Quattro – that boasts a range of 310 miles (500 km) before needing to recharge. The aerodynamic car will be unveiled next month at the Frankfurt auto show, putting pressure on Tesla to step up its game on its equivalent model – the Model S – that has a range of 270 miles.

In climate-related news, 2015 is set to surpass 2014’s record for the warmest year on record, due to El Nino enhancing global temperatures and the added effect of global warming. If this year does set a new mark, it will be the first time back-to-back records have been set since 1997-98.

Islamic clerics from 20 nations expressed their concern over climate change last week, calling for the phase-out of carbon emissions from burning fossil fuels and for renewables to supply 100% of energy, in a declaration e-mailed from Istanbul.

Source: BNEF. Reproduced with permission.