Image: Wind turbine near Pipestone, Minn.
Jim Mone  /  AP
A wind turbine looms behind a farm east of Pipestone, Minn. New worries about the environment, technology advances and tax breaks extensions are empowering European wind energy companies to try their luck in the United States.
updated 4/25/2007 2:17:17 PM ET 2007-04-25T18:17:17

New worries about the environment, technology advances and tax breaks extensions are empowering European wind energy companies to try their luck in the United States.

The U.S. has led the world in installing new wind turbines for the past two years, but it still ranks behind Germany and slightly below Spain in wind power production, according to the Global Wind Energy Council. Now, America’s renewed embrace of policies to encourage energy alternatives have led companies with years of experience in Denmark, Germany and Spain to invest in U.S. shores, challenging both the U.S. market leaders and any environmental opposition to building giant turbines.

“We’re like the Saudi Arabia of wind, and we just haven’t had the big exploration boom yet,” said Michael Peck, a spokesman for Gamesa Corporacion Tecnologica SA, a Spanish company that makes wind turbines in Pennsylvania and develops wind farms around the country.

Two deals announced last month reflect the competition. Portuguese utility EDP Energias de Portugal SA agreed to pay $2.15 billion to buy Houston-based Horizon Wind Energy LLC, from investment bank Goldman Sachs, giving the company its first toehold in the U.S. And Denmark’s Vestas Wind Systems, the world’s largest wind turbine maker, announced plans to build a $60 million wind turbine blade factory in Colorado, its first U.S. manufacturing plant.

“The U.S. is a bigger area that (European companies) can look to for growth,” said Thomas Emmons, senior vice president for structured finance at HSH Nordbank AG in New York.

On-again, off-again tax credits have hampered growth here compared with a more stable climate for incentives in European countries. European companies are encouraged that a federal wind power tax credit has been extended through 2008, and 21 states and Washington, D.C. are requiring utilities to get electricity from renewable sources.

The U.S. gets less than 1 percent of its electricity from wind-powered generators compared with 20 percent in Denmark and 9 percent in Spain. Technology advances could push U.S. wind power use to 5 percent by 2010, the Electric Power Research Institute says. If the federal wind tax credit is maintained, annual installations of wind projects in the U.S. will more than double by 2011, predicts market research firm BTM Consult.

“We could have had our own homegrown wind-power companies competing for these new wind farm developments and manufacturing (plants) had we had the right policies in place,” said Ron Pernick, a principal with research firm Clean Edge Inc.

Worldwide sales of wind turbines are projected to rise to $49.4 billion by 2011 from $25.1 billion this year, with the U.S. and Canada comprising about 30 percent of sales growth, BTM Consult estimates.

Denmark’s Vestas had considered an American plant for several years, but found support for renewable energy inconsistent in the U.S. until recently, said Jens Soby, who heads the company’s Portland, Ore.-based American operations.

The company’s plant in Windsor, Colo. is expected to be complete early next year and is designed to produce 1,200 wind turbine blades per year, enough to power about 200,000 households. Meanwhile, German industrial giant Siemens AG has taken a shuttered truck trailer factory in Fort Madison, Iowa, and turned it into a factory that makes 150-foot blades for its wind turbines. And Gamesa, which bought Minneapolis wind farm developer Navitas Energy Inc. in 2002, signed a $300 million deal last summer to make 132 wind turbines for Royal Dutch Shell PLC’s wind development arm.

Investors are benefiting: Shares of Vestas more than doubled the past year, and shares of Gamesa are up about 70 percent.

General Electric Co. and FPL Group Inc., major American players, still dominate the market. Fairfield, Conn.-based GE remains the dominant U.S. supplier of wind turbines, supplying 47 percent of installed wind capacity in the U.S. last year, down from 59 percent in 2005, according to American Wind Energy Association statistics. Siemens, Vestas and Gamesa together had 44 percent of the U.S. turbine market last year. The majority of U.S. wind power projects are owned by big developers like FPL and their output is purchased by big utilities like Xcel Energy Inc.

Iberdrola SA, Spain’s second-largest power company and the biggest owner of wind farms worldwide, is poised to become a major player in the U.S. with its $22.5 billion acquisition of Britain’s Scottish Power PLC, a deal that closed April 23. That gives Iberdrola control of Oregon-based wind developer PPM Energy, a Scottish Power subsidiary and the second-largest U.S. wind farm owner.

The major challenge for the wind industry is to reduce costs, which can vary dramatically because wind is intermittent and windy spots are often located far away from big urban centers that use the most power.

Wind power costs have dropped over the past 20 years, partly due to the advent of wind turbines with giant blades that sweep a circle as long in diameter as a football field, but critics argue that the turbines threaten birds and mar scenic views.

Wind-powered electricity remains more expensive than using coal or natural gas, but cheaper than nuclear power and far cheaper than solar, according to the U.S. Energy Information Administration.

When the wind power tax credit, valued at 1.9 cents per kilowatt of power produced, expired for part of 2004, the U.S. industry went into a tailspin.

Proposed federal legislation designed to encourage renewable energy and cap greenhouse gas emissions could make tax credits or subsidies less necessary.

And a Democrat-controlled Congress appears likely to make such legislation a higher priority than Republicans have despite some strong GOP support in the past, said Randall Swisher, the U.S. wind energy trade group’s executive director.

Swisher says wind power has lots of momentum these days, but still laments the lack of a long-term tax credit — or a nationwide requirement that power companies use wind and other renewables.

If that happens, he said, “it could be so much more.”

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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