Bloomberg Environment
By Francois de Beaupuy
Alstom (ALO) SA, the third-largest power- equipment maker, expects higher sales for its wind turbines this year and next, buoyed by growing demand in Brazil and offshore bids inEurope.
“We’ve improved all our financial indicators this fiscal year” ending March compared with last year, including sales, order intake and operational performance, Alstom renewable unit chief Jerome Pecresse said in a March 15 interview. “We’re expecting growth to continue next year.”
“We’re seeing strong growth of the Brazilian market this year,” Pecresse said at company headquarters near Paris. Alstom will announce a “significant” order in Brazil this week, and Electricite de France SA has picked Alstom’s turbines for a 150- megawatt farm in Morocco, he said.
“We’re also seeing the pickup of the offshore wind industry in Europe,” which should account for “several gigawatts of new installs per year” within five years.
Alstom entered the wind market through the purchase of Spain’s Ecotecnia in 2007. It has yet to crack the top 10 global suppliers in the industry though today it’s inaugurating a prototype for offshore farms to gain market share at a time when the land-based wind market is suffering from overcapacity.
A half-decade boom in onshore wind-farm installations in the U.S., Europe and Asiafueled competition among turbine makers, forcing them to cut prices. Denmark’sVestas Wind Systems A/S (VWS), the world’s biggest producer, and Suzlon Energy Ltd. (SUEL) reported wider-than-expected losses last month.
‘Significant’ U.S. Drop
The company is predicting stable markets in Europe and China next year, a “significant drop” in the U.S. if a tax credit for wind power isn’t extended in 2013, and “growth in the rest of the world,” Pecresse said.
Any reduction of wind farm financing by banks “isn’t noticeable for now,” he said.
Competition among manufacturers and improvement in costs will allow land-based wind power to reach “grid parity” without government subsidies in some European countries in three to five years. Brazil’s latest bids show onshore wind power has reached grid parity there, he said.
“There are overcapacities in many geographical areas,” the Alstom executive said. “In the long run, that will progressively translate into the concentration of the industry” as building offshore wind turbines requires “significant” balance sheets and “a good deal of customers will focus on a limited number of suppliers.”
Wind Is Profitable
Alstom’s wind business has remained profitable even as prices slumped thanks to the company’s global footprint, which allows it to buy parts such as forgings in India and China, and “established” relations with utilities, Pecresse said.
The company doesn’t provide specific figures for its wind business. The operating margin of its renewables unit, which includes hydropower equipment, fell to 7.3 percent of sales in the April-September period from 9 percent a year earlier, hurt by price erosion in wind. Renewables orders in the April- December period climbed 26 percent to 1.3 billion euros ($1.7 billion).
Pecresse said it’s his duty to examine acquisition opportunities in all renewable industries including wind, hydro and solar power. He declined to say whether Alstom looked at Suzlon’s unit.
Alstom, which has wind turbine plants inSpain, Brazil and Texas, may seek a partner to develop its business in Asia, where it has no wind footprint, Pecresse said.
Still, “offshore, Latin and North Americaare the priorities,” he said. The plant in Amarillo, Texas, only has “a few small contracts” amid a “very competitive backdrop” in the U.S.
French Factories
Alstom has said it will invest about 100 million euros in France in factories that will make tower, blades, generators and nacelles if the EDF-led consortium it’s a member of wins more than half of the French bid to build 3,000 megawatts of offshore wind power. The result of the tender is due in April, the government said.
Alstom will also bid to supply turbines for 3,000 megawatts of offshore wind to be built in France by 2020, Pecresse said.
The 6-megawatt turbine inaugurated today near Nantes in western France has 73.5-meter (241-foot) blades, the biggest prototype for offshore wind farms assembled, he said.
Its gearless technology, also chosen by Siemens AG (SIE) for its planned 6-megawatt machine, eliminates the “Achille’s heel” of existing rival machines of smaller sizes, Pecresse said.
To contact the reporter on this story: Francois de Beaupuy in Paris atfdebeaupuy
To contact the editor responsible for this story: Benedikt Kammel atbkammel
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