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U.S. wind market may ‘fall off a cliff’ in 2013, Vestas CEO says

The U.S. wind turbine sales may dry up in 2013 unless lawmakers extend tax credits supporting the market beyond the end of next year, said Vestas Wind Systems A/S Chief Executive Officer Ditlev Engel.

The so-called production tax credit, or PTC, provides an incentive of 2.2 cents a kilowatt-hour for electricity from wind applied to operators’ tax bills. In the past, the termination of such policies has shown markets can “disappear,” Engel said today by phone interview.

“Our concern is that if the PTC is not extended, history has shown us that these markets tend to fall off a cliff,” Engel from the company’s headquarters in Aarhus, Denmark. “We should prepare ourselves for it.”

The expiration of the program is another blow to Vestas and General Electric Co. (GE), two of the three biggest turbine makers, which are struggling with stagnant sales and increasing competition from rivals from China. Engel’s comments add to concerns made last week by Lewis Hay, CEO of Nextera Energy Inc. (NEE)

Hay said he expected no new wind projects in 2013 and 2014. The American Wind Energy Association is lobbying for congress to extend the tax measure. Until that’s done, the market for 2013 “has a question mark over it,” AWEA Chief Economist Elizabeth Salerno said Oct. 25.

Vestas in 2010 delivered 1,093 megawatts of turbines to the U.S., or 19 percent of its total sales, according to its most recent annual report.
Political Debate

The House of Representatives is considering a draft bill that would extend the credit, though that measure may get tied up by politics surrounding the presidential election next year. Congressional Republicans are focusing on probing loan guarantees granted to Solyndra LLC, a solar manufacturer that went bankrupt in September.

Engel said Vestas plans aren’t based on the the credit being extended.

“We won’t take it for granted that it will happen,” Engel said. “We probably won’t know before we pass the presidential election in November and we have a new congress, and then it is too late to adjust Vestas for an American market in 2013 without the PTC.”

A total of 5,116 megawatts of wind power capacity was installed in 2010, according to AWEA. In its 2010 annual report, the organization said 221 megawatts of Vestas turbines were installed that year, giving the Danish company 4.3 percent of the U.S. market, less than a 10th of GE’s 49.7 percent share.