Global wind experiencing growing pains

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Despite the ongoing growth expected in global wind power installed capacity, the tides could change as a result of several challenges, according to GlobalData.

The global wind market faces its share of obstacles. Credit: SMUD

Manufacturing overcapacity, falling subsidies, and uncertainty in some wind power sectors are all causing growing pains in the wind turbine market. Even the world's largest wind turbine manufacturer – Vestas -- expects weaker sales in 2013.

Is the key to success frugality?  GlobalData's Senior Energy Consultant Jennifer Santos believes it is.

"Costs must be kept as low as possible. Cost-saving programs initiated by Vestas last year, including rationalizing its manufacturing base and reducing headcount, seem to have paid off and saw the company earning a positive cash flow in the fourth quarter of 2012," she said. "Similarly, revenues and operating profits before special items reached their highest level in the same quarter of last year. Gamesa expects to continue with its cost-cutting program this year by closing more than a third of its offices and further reducing its debt," she said.

The U.S. and China account for 60 percent of the global wind power market, but industry uncertainty could change that dynamic.

"Although the Production Tax Credit was extended for another year in the U.S., the lack of a long-term, subsidy-free approach will prevent the U.S. wind power sector from fully taking off in 2013," Santos said. "China, on the other hand, is dominated by numerous local manufacturers who all want to take a piece of the pie."

Offshore wind will also face its share of obstacles, including supply chain constraints, grid connection issues and technology problems.

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