Canary in a coal mine: oxygen too low for developers

Wind industry addicted to high subsidies prepares to pay price

When tears are streaking down the cheeks of wind cheerleaders, those eternal “blue sky” folks, the rest of us should sit up and take notice. That’s when you know something is seriously wrong in the wind industry.

Let’s re-cap the recent bad news here in Maine: the Bowers project is dead. So is First Wind’s financing deal with Emera. And the Critical Insights poll in April showed that the more Mainers know about industrial turbines, the less they like them.

Now even the industry itself is sounding the alarm about financial fears. Can you imagine the financing difficulties for wind companies if at least 30% of the proposed wind projects in this country die? Last month there was a conference in Las Vegas hosted by the American Wind Energy Association. And that’s where a high-ranking official of the world’s fifth largest wind turbine supplier made his prediction, as reported by the London-based online newsletter RECHARGE, “one of the most authoritative publications in the renewable-energy sector.” TEXT:

US wind ‘shakeout’ looms: execs

By Karl-Erik Stromsta in Las Vegas, Thursday, May 08 2014

Updated: Thursday, May 08 2014

Large amounts of wind capacity nominally under construction in the US may not actually get built, with senior turbine executives warning that a “shake out” is looming for the US project pipeline.

The American Wind Energy Association claims there was more than 12GW of wind capacity under construction at the end of 2013, with nearly 11GW of that entering construction in the final quarter of the year alone.

The “worst-case scenario” of a 50% attrition rate on that figure is unlikely, but “I’d bet you’ll see at least a 30% fall out”, says Duncan Koerbel, the Denver-based chief technology officer for India’s Suzlon Group.

Koerbel made his prediction while speaking Thursday at AWEA’s Windpower conference.

Many developers were forced to rush their projects last year to meet the Production Tax Credit requirements before it was allowed to expire at the end of 2013. In some cases the power purchase agreements they signed are at prices that may prove economically unviable.

“The tagline is there’s more wind under construction in the US than in the history of wind. But there are a lot of deals out there that are pretty thin,” says Koerbel, and many projects simply “won’t pass muster”.

While declining to make precise predictions of their own, other turbine executives agreed that a significant chunk of that 12GW figure will not get built.

Daniel McDevitt, chief executive of Nordex USA, says that many developers baked unrealistic expectations about how much turbine prices will come down into their projects.

“We’ve seen situations where developers come in in and give you [their target for turbine prices], and say, ‘This is what I assume it’s going to be.’ And some who might have been too aggressive are now finding themselves with a problem.”

David Hardy, vice president for sales at Vestas, says that the “artificial end date” created by PTC meant that wind projects that were not “actually mature enough” were forced to press ahead anyway.

The lack of policy certainty is "such a strain on our industry”, Hardy says. “It’s so painful.”