Innovation

Becalmed: Wind orders die down

Regulatory uncertainty, subsidy cuts, grid connection woes are taking the puff out of the business.

Written by Mark Halper, Contributor July 29, 2012 at 9:56 p.m. PT

Like the air currents in this 1922 photo, the wind turbine business is hardly stirring at full force.

Global orders for wind turbines plummeted 30 percent in the first half of 2012 compared to the same period a year ago, according to a Danish research company.

Copenhagen-based MAKE attributed the decline to "weakness in core markets in Asia Pacific and Europe, in particular China, India, UK and Germany."

In addition it said that, "Regulatory uncertainty, subsidy cuts and grid connectivity issues all contributed to the weakness and offset good growth in new emerging markets."

Although the U.S. was a bright spot, the growth was illusory because companies merely rushed to install wind projects before the federal production tax credit (PTC) likely expires at the end of the year, MAKE noted.

The PTC provides tax breaks of 2.2 cents per kilowatt hour to wind producers. It first appeared in 1992, as part of that year's Energy Policy Act. A recent Marketwire press relese from Industrial Info Resources noted that Congress has frequently renewed the PTC but has also allowed it to expire three times. After each expiration, the number of annual turbine installations plunged by between 73 percent and 93 percent, according to the American Wind Energy Association.

In contrast to the slump in core markets, Latin America recorded "high order activity," MAKE noted.

Overall, MAKE predicts continuing yearly global decline through 2013, when it forecasts sales to register 5 percent less than 2011 levels. Sounding a cautious longer term note of optimism, it said that "order flow could improve in 2013 and beyond."

Photo: Courtesy Toronto Public Library, Special Collections, via Flickr.

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