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UK Offshore Wind Progress Moves Backwards

Vestas Drops Turbine Factory

Written by Swagato Chakravorty
Posted June 25, 2012 at 1:39PM

The UK is on a mission to derive 18 gigawatts of power from offshore wind turbines, and it intends to reach that production capacity by 2020.

But this effort recently suffered a major setback, as the Danish Vestas Wind Systems (PINK: VWDRY) withdrew from building a wind turbine factory in Britain.

Disappointingly, they received no orders whatsoever for the plant, which could have created almost 2,000 new jobs. The factory, situated at the port of Sheerness in southeast England, was to house a 7MW V164 offshore wind turbine.

Prime Minister David Cameron had recently often spoken of his vision to divert the UK economy toward high-tech and environmental manufacturing prospects, moving away from the financial sector, according to Reuters.

A Vestas spokesman told Reuters:

“Such a factory is conditional on concrete orders in our order book and we have not announced any signed orders at this point. We want a good pipeline of orders before we advance further and we do not have that.”

This isn’t the first such misstep in the UK’s emerging wind energy market. Just recently in April, Doosan Power Systems Ltd. scrapped a $265 million effort to create offshore wind turbines in Scotland. Their stated reason was the economic turbulence that has been roiling Europe and much of the Western world.

Despite the disappointing outcome, Chief Sales Officer Juan Araluce of Vestas told Bloomberg:

“Vestas’s strong commitment to the development of both the offshore and onshore wind industries is not affected by this decision.”

This failed venture will have ripple effects extending beyond the immediate fallout. Investors need to see that plans for clean energy plants are executed as scheduled, as such last-minute pull-outs or other cancellations don’t give the market much confidence in clean energy.

One likely outcome of this fiasco will be increased pressure on the government to decisively clarify policies that offshore wind energy developers and investors can expect to operate upon.

Vestas shares reflected the market’s mood, slipping 3.2 percent on Friday.

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