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Vestas December orders hit monthly record in rush for U.S. tax credits
Turbine maker Vestas Wind Systems has received its highest ever monthly total of orders in December as wind farm developers in the United States rushed to meet a year-end deadline to qualify for a tax credit.
The Danish company booked orders for capacity of 1,346 megawatts (MW) in December and is set for its second-best sales ever in the United States this year, according to Nordea Markets analysts.
The Unites States has been offering a Production Tax Credit (PTC) to help finance wind farm projects to promote renewable energy. Last January, the U.S. congress extended the credit for one more year.
While the wind energy sector is seeking a further extension, many developers are keen to ensure they qualify now for the credit, which is worth $23 for every megawatt-hour of electricity a wind farm produces over its first 10 years.
In previous years, projects had to be in commercial operation by Dec. 31. This year, they need only to have begun.
“Vestas has had a terrific year which also means that the share price has increased explosively,” Nordea Markets wrote in a note to clients on Friday.
On Dec. 23 the wind turbine maker signed a contract to deliver 150 megawatts to the Route 66 project near Amarillo, Texas with potential for up to 568 MW more.
On Dec. 24 the company announced an order of 110 MW for another project in the United States but did not reveal the name of the customer or the new project’s name and location.
Those two deals came on top of a 350 MW order from Enel Green Power North America, announced Dec. 18 and a 220 MW order from EDF Renewable Energy announced Dec. 20. Wind turbines cost around 1 million euros ($1.4 million) per megawatt.
In 2013 announced orders have totalled 5,214 MW so far compared with 3,049 MW over the same period of last year.
The share price of Vestas, the world’s biggest maker of onshore wind turbines, has quadrupled to 160.3 Danish crowns from 31.86 at the start of 2013 .
The company has shed over 5,000 jobs, closed plants and sold unprofitable business in attempt to recover from two years of net losses.
The company is preparing to launch a new offshore wind turbine model that it expects will transform its business - the V164-8.0 MW that will have a diameter of 164 metres compared with 120 metres for the London Eye tourist attraction.
A prototype of the turbine was finished this month and will be installed in first quarter of 2014.
“We consider V164-8.0 MW as a game changer and it will make Vestas a world leader within offshore,” Vestas marketing officer Morten Albaek said.
Vestas has so far not been an important player in offshore turbines but a joint venture with Japan’s Mitsubishi Heavy Industries, announced in September, is expected to play an important role in getting into this market.
“We expect Vestas to get its first orders for the offshore wind turbine V164 over the next 12-15 months,” Handelsbanken Capital Markets wrote in a note.
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