Vestas Closes 400-Megawatt Turbine Deal

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Troubled wind turbine manufacturer Vestas Wind Systems A/S (CPH:VWS) (Randers, Denmark) has secured a global supply agreement of 400 megawatts (MW) with an option of a further 1,000 MW from an unnamed energy company.

From 2011 to 2014, Vestas will supply, install, commission and service the turbines at a variety of windfarms in countries around the world. The service agreements will run from two to 10 years. Vestas claimed that the company won the 'highly competitive' bidding process because of its strong global presence in 70 countries.

The mystery deal is good news for the wind turbine supplier, which recently cut its 2010 sales revenues target from 7 billion euros ($9.1 billion) to 6 billion euros ($7.8 billion). Some analysts believe there may be another reduction in the future, although Vestas is sticking to latest 6 billion-euro prediction. In April, Vestas was awarded another massive wind turbine supply contract of up to 2,100 MW by the world's third-largest wind energy company, EDP Renováveis SA (ELI:EDPR) (Oviedo, Spain). For additional information, see April 30, 2010, article - Vestas Secures Wind Turbine Supply Contract from EDP Renováveis.

"We are very pleased to announce this important agreement, which further strengthens our global presence and confirms our leading position in the wind industry worldwide," said Peter Wenzel Kruse, the senior vice president of Vestas Wind Systems A/S. "Being the only global company focused solely on wind technology, we are fully committed to ensure our customers the best return on investment in each wind project."

This early official announcement with the unnamed buyer comes in the wake of Vestas' being reprimanded by the Copenhagen stock exchange, NASDAQ OMX, after details about a 570-MW order from Terra-Gen Power LLC (New York, New York) in California leaked out before the deal was completed earlier this summer.

This week, Vestas said: "NASDAQ OMX Surveillance Copenhagen has reprimanded Vestas for not disclosing a company announcement about the ongoing negotiations with the customer as soon as Vestas became aware that the information relating to such was available in the market. As a consequence of the reprimand, Vestas will in the future, on a case-to-case basis, evaluate if it is necessary according to the rules in force to disclose a company announcement prior to the normal time for publication, in case of tangible rumours in the market."

The company is also weathering a storm of criticism this week after a 7-metre section of blade from the first prototype of its new V112 3.0 turbine snapped off during testing in Lem, Denmark. The turbine is scheduled to be used on the building of Australia's largest windfarm project, the 420-MW Macarthur windfarm in Victoria.

"Vestas' specialists and forensic experts have analysed the root cause, and their preliminary and unambiguous conclusion is that this is a stand-alone manufacturing mistake caused by a human error during the manual production process of the blade," the company said. "Among other things, this is clearly seen from the way the blade has broken. To make sure there is no doubt about the root cause, the management of Vestas Technology R&D has decided that Vestas' internal investigation will be followed up by a third-party, external, expert investigation. Furthermore, the result of this investigation will also be communicated to the stock exchange as soon as it is concluded."

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