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Economic Downturn Thwarts Growth of Wind Power

turbines.jpgNew installed wind capacity will increase by only 14 percent globally this year, according to market researcher Emerging Energy Research. Accenture estimates that wind power capital expenditures over the next to years could drop by as much as 30 percent, BusinessWeek reports.

Last year, the ISE Global Wind Energy Index dropped 56 percent. Shares in Vestas and Gamesa, major global turbine suppliers, are also down by more than two-fifths over the same period.

Financing wind projects used to be fairly easy, but the global economic downturn has made banks stingier with their lending plans, pushing many independent energy producers out of the market. Demand for wind turbines falls as a result, and as in some cases in Europe, turbine producers have been forced to cut prices or take smaller profit margins to offload unsold inventory, or be forced to shut down their plants altogether.

Analysts say that until President-elect Barack Obama offers more details about his plan to invest in green energy, investors will shy away from the wind energy sector.

Just last October, demand for wind turbines was so great that some projects were even delayed due to a shortage.

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One thought on “Economic Downturn Thwarts Growth of Wind Power

  1. Financing capital intensive projects will be hard during this recession. However I’d like to make a couple of points:

    – “…turbine producers have been forced to cut prices or take smaller profit margins…” – this is no surprise as from what I understand when the global price-per-barrel of oil sky-rocketed last year wind turbine producers were able to inflate their prices and profit-margins as demand for turbines peaked in a manufacturer’s market – so a reduction in profitability in ’09 is to a certain extent innevitable as oil prices calm down due to a reduction in global demand. If however oil prices continue to fluctuate in 2009, and the US leads the subsidation of renewable energy infrastructure projects, we just might see fixed-fuel-cost renewable energies win favour with CFOs looking for predictable long-term costs as technologies like wind have the potential to achieve price-parity with coal if the legislative, economic and meteorological conditions all align.

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