Windflow Technology says the wind turbine market in New Zealand has ”stalled” due to lower electricity demand.
Wind farm activity overall is ”stagnant” and decreasing with several very large farms still in the consenting process, while those that had been consented were not being built due to reduced electricity demand, chief executive Geoff Henderson said in a company newsletter today.
The UK market had also failed to deliver the orders Windflow’s UK distributor had expected as high demand for planning consents and electrical connections had slowed down the process and the UK Feed In Tariff review announced in February had caused ”considerable uncertainty” and the turbine market had become more competitive, Henderson said.
”The consequent immediate gap in our sales and production pipeline has resulted in staff cutbacks and a fundamental uncertainty which the directors signalled in early June,” he said.
On June 3 the company announced it was laying off 12 staff from its assembly and procurement teams, realising certain assets and seeking extra capital.
Henderson said today the company was looking to license its core technologies, IP and design, which would mean that manufacturing of the Windflow turbines, at least for some markets, would move predominantly outside of New Zealand.
”While not necessarily the best economic option for New Zealand as jobs would disappear offshore, it will likely be one of the best ways to realise shareholder value going forward.”
The company was still working towards securing orders in New Zealand in the mid term.
Discussions with major shareholder Mighty River Power were still on the go regarding options to proceed with the consented Long Gully site for 25 Windflow turbines.
The Mt Cass wind farm, which potentially could use 70 Windflow turbines, has an environment court hearing at the end of June in Christchurch but as the outcomes of these projects were beyond the company’s control Windflow was looking at opportunities in other markets in the meantime.
The company now needed to raise more capital to continue with its plans and its directors would make an announcement ”shortly”.
”Licensing enables us to more easily penetrate the more hospitable US economy and to leverage the strengths of the IP without carrying cost and complexity,” Henderson said.
It was an ”exciting” manoeuvre, he said.
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