Wind Energy - more problems / losses stack up for Vesta.

Danish company Vesta Wind Systems A/S (pdf alert) are the largest European manufacturer of tower based, onshore and offshore, wind powered electricity generating systems.

In a surprise announcement today they have announced that this year they expect to make a loss of 3% of turnover contrary to an expected profit.

It is evident the company has major problems, even though sales are brisk (T/O 2005 + - Euros 3.6 –3.8 Bn).

In September they laid off 625 employees in Denmark and have commenced blade production in Tienjin, China. Nacelle production is being moved to Spain (may possibly move to Tienjin also to meet Chinese local production content criteria) and the Asia Pacific office opened in Singapore.

The Company announcement carries some startling quotes…

“The most important technological challenge for the company is to increase product reliability”

“The group has given priority to project deliveries with relatively low margins to the US market…”

“…from the shortage of key components..”

“ Currently the main focus of the technology R & D is to reduce the number of component failures in Vestas’ products.”

"In accordance with the highly inentsified focus on product reliability, Vestas has decided to postpone ... production of the V120 - 4.5 Mw turbine to 2009..."

Evidently the design, development, manufacture of these skyscraper high behemoths involves engineering / material problems which remain to be solved. Maintaining these structures in remote and hostile , and increasingly marine climates is very demanding – suggesting that projections of output may be somewhat optimistic in terms of utilization and running maintenance costs – which is what many sceptics have maintained for a long time.