The Institutional Investor Guide to Modern Energy - (Page 4) The Institutional Investor Guide to Modern Energy The Potential As Vast as a Prairie Breeze A fter years of waiting for the take-off moment, wind energy is going global with an astounding ramp-up in production that’s seeing a convergence of investment interest and political support even while chaos and uncertainty grip world financial markets. Clean, emissions-free wind power offers energy independence, enormous job growth potential, and a viable solution to the global warming crisis. But can it ramp up quickly enough to deliver the promised benefits? Just what share of the electricity market can it wrestle away from conventional power? Layoffs have begun to touch the industry of late, but a 20 percent E.U.-wide carbon emissions reduction plan that is well in place, and growing U.S. and Chinese support for the fight against climate change is opening up the two biggest potential markets. Leading wind turbine manufacturer Vestas Wind Systems cannot help but feel bullish about future prospects, says Finn Strom Madsen, president of Vestas Technology R&D in Aarhus, Denmark. The Danish-based company expects wind energy to account for at least 10 percent of global power production by 2020. That’s a fourfold increase to 80,000 megawatts of annual production per year over the next 11 years – a forecast which could readily turn out to be accurate. Indeed, the market is spurring the world’s oldest and largest wind turbine supplier into a growth phase unlike anything it’s ever seen before. Already by far the most globalized wind energy company, with more than 33,000 turbines in 63 countries, Vestas spent the better part of the decade rebuilding its cash flow while showering investment into new R&D tech centers and overseas production facilities. It now is on the verge of becoming the world’s first 10,000 MW wind energy company. Diagnostic Data Streams These lofty ambitions are on full display in the city of Aarhus, where the company’s new 200,000 square foot R&D headquarters sits along a gently slopping hillside. The glass walls of the ultramodern facility are splayed open in a manner that belies the secretive inclinations of a hyper-competitive industry built upon proprietary advances in turbine engineering. Here in its diagnostics and performance center, Vestas gets a mass of real-time data electronically from more than 11,500 of its turbines across the world. The analysis of this data has helped it bring down the mean time between inspections, thus ensuring that the turbines remain online longer, which means increased revenue for the customer, according to Madsen. Gone is the race toward ever-larger turbines that characterized the industry in the last decade, says Madsen. No longer is big necessarily This Special Report was prepared by the Special Projects Department of Institutional Investor. “Our customers don’t buy turbines because they’re in love with the green dream but because it makes a good business case.” Finn Strom Madsen, Vestas Technology 4 • Institutional Investor Guide to Modern Energy • March 2009
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