Sunday, November 2, 2008

Wind Actually "Feeling Much Better"

The WSJ avers that the wind industry, like the poor sod in Monty Python is "not dead yet" (only a flesh wound?) Sure, there's a pulling back, but worst-case total projected capacity additions next year of 6GW are still larger than all but four other countries' entire installed capacity. The WSJ projects consolidation:
The biggest impact of the credit crunch, then, is likely to be a be change in how the wind-power market develops rather than how fast it grows. Smaller players are being squeezed, and consolidation is on the horizon.

The probable hunters? Companies with lots of cash and predictable tax exposure who can take full advantage of clean-energy tax credits, NEF says. That includes the usual suspects like utilities, especially European power companies. But it could also include another group of companies with healthier-than-ever balance sheets which are looking for a place to put their cash: U.S. oil majors.

Of course the small players have been squeezed for several years as the turbine manufacturers, faced with a favorable supply/demand imbalance increasingly favored large "frame agreements" that provided large number of turbines to their biggest customers. Smaller players wanting a few or even a mere dozen or so turbines couldn't get orders filled.

Smaller players may end up having an easier time since the enormous funding needed by large projects is not as easily available now, but much smaller amounts may be easier to get, especially if funded through municipalities using their tax-free bonding authority.

Nonetheless, the WSJ is probably right that consolidation will occur; this is a normal stage in the development of any new industry. The oil "majors" are likely players, especially BP, Shell, Conoco and others already interested. The question is will they start to play to develop the industry and make money at it, or to retard its advance while they milk their obscene oil profits for many more years?
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