Vestas Breaks U.S. Wind Market Lull

by: The Green Investor
Finally, a sleeping giant awakens! After many months of eerie calm, or even headwinds for some of the companies involved in wind energy, there are some promising developments. The same day Google (NASDAQ:GOOG) entered the wholesale renewable electricity markets with a major wind power purchase agreement (see announcement here), the world’s leading wind turbine manufacturer Vestas Wind (OTCPK:VWDRY) announced a record-setting order for 570 MW, or 190 3 MW turbines, for Terra-Gen’s Alta Wind Energy Center near Tehachapi, California, USA. Read the full Press Release.

In 2009, Vestas was the largest wind turbine manufacturer in the world and third largest in the U.S., after GE Wind (NYSE:GE) and Siemens (SI).

After a record breaking year for the U.S. wind industry in 2009, this year was always going to be a challenge and, sure enough, most wind energy-related stocks have struggled so far in 2010. The chart below shows Year-To-Date stock price performance of representative wind companies: American Superconductor (NASDAQ:AMSC), A-Power Energy Generation Systems (NASDAQ:APWR), Trinity Industries (NYSE:TRN), Vestas Wind and Zoltek (NASDAQ:ZOLT). For a more complete review of wind-related companies, read Opportunities in the Wind Energy Value Chain.
2010 YTD Wind Energy Stocks Performance
(click to enlarge)
2010 YTD Wind Energy Stocks Performance
In the best of times, wind energy gets little coverage from the media in general and the financial press in particular. Compared to the solar market, which is broadly followed and reported on, wind gets short shrift. This is rather puzzling when you consider that wind energy has the lowest initial capital costs of any alternative energy technologies, and that the so-called levelized cost of wind energy (which includes all the costs of producing the energy over the plant lifetime) already compare favorably with conventional generation technologies like coal and gas.

The wind sector underperformance can be traced directly to the weakness in the U.S. economy (the largest world market for wind in 2009) to which most companies in the chart above have a high exposure, and the ongoing lack of a U.S. energy policy. Companies and investors have been understandably hesitant to commit the capital costs for new projects and installations in such an uncertain environment.

If nothing else, the recent announcements indicate the U.S. wind market is not dead, and they might even mark a turnaround point for the wind industry.

Disclosure: No positions