A national renewable energy standard or federal energy policy legislation and streamlined transmission siting are essential for the U.S. wind market going forward.
On the supply front, the sudden drop in turbine demand and increased competition has created a buyer's market. Thus, turbine manufacturers are focused on lowering costs through technological innovation, such as Siemens' next-generation turbine design with direct drive technology and Vestas' new models which capture lower wind speeds.
In anticipation of better days ahead, nuclear giant Alstom (ALO.PA), Mitsubishi Heavy (7011.T), and A-Power Energy (Nasdaq: APWR) are building manufacturing plants in the US.
Longer Term Prospects Still Bright
Despite these near term challenges, most wind executives believe U.S. business will grow in 2010 (69.6%), 2011 (83%) and 2012 (84.6%).
The Global Wind Energy Coalition (GWEC) expects the North American market to grow steadily for the next two years and then accelerate again in 2012. GWEC forecasts that 63 GW of capacity will be added in the US and Canada over the next five years, an average of 12,600 MW per year. Globally, they anticipate average annual growth of 21%, resulting in global wind capacity increasing from 158.5 GW in 2009 to 409 GW by 2014.
Since much of China's capacity will be supplied by domestic manufacturers, European producers such as Vestas and Gamesa may capture only 15-20% of the market. In 2009, Vestas' revenues from the Asia region dropped 20%.
General Electric, the world's second-biggest turbine maker, expects global sales for land-based wind turbines to grow by $130 billion in the next two years. Rapidly growing markets include: Canada (40% compound annual growth); Latin America (70%); Eastern Europe (28%); China and India by 20%. Offshore turbines are expected to increase by about $100 billion during the next 10 years.
Lastly, utility Sempra Energy (SRE) is doing its part to sustain the North American wind industry. The company plans to build a massive, $5.5 billion wind farm in Baja California, with about 1200 MW in capacity. And Google (GOOG) is investing $38.8 million in two North Dakota wind farms, its first direct investment in utility scale renewable energy.
Companies that continue to do well this year include project developers Iberdrola Renovables (IBR.MC) and PNE Wind (PNE3.DE), which benefit from low turbine prices and stable electric rates. Turbine manufacturer Repower Systems (RPW.DE), unlike peers such as Vestas and Gamesa, has seen orders grow and announced its first dividend. American Superconductor (AMSC) is benefiting from its strong relationship with China's Sinovel, now the world's third largest turbine manufacturer.
Sinovel has it sights set on becoming the world's largest turbine manufacturer within the next five years, and is planning an IPO on the Shanghai Stock Exchange this year. Another Chinese manufacturer has similar aspirations - China Longyuan Power Group Corp (0916.HK) says it will spend $13 billion in the next five years to elevate it to world's top position. In December 2009, it raised the equivalent of $2.2 billion on the Hong Kong exchange in one of the largest cleantech IPO's in history.
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