Vestas Secures Wind Turbine Supply Contract from EDP Renováveis

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Researched by Industrial Info Resources (Sugar Land, Texas)--The world's third-largest wind energy company, EDP Renováveis SA (ELI:EDPR) (EDPR) (Oviedo, Spain), has awarded a wind turbine supply contract of up to 2,100 megawatts (MW) to the world's largest wind turbine manufacturer, Vestas Wind Systems A/S (CPH:VWS) (Randers, Denmark), after a year-long international bidding process. EDPR is the renewable energy division of one of Europe's major electricity operators, EDP Energías de Portugal SA (OTC:EDPFY) (EDP) (Lisbon, Portugal). The supply agreement was signed on April 26 in Lisbon, Portugal. The agreement covers one of the world's largest wind turbine orders to date and the largest single order received by Vestas.

The contract includes a firm order for the supply, installation and commissioning of 1,500 MW of wind turbines that are to be delivered to Europe, North America and South America in 2011 and 2012. According to the terms of the contract, the order may be extended by 600 MW. A two-year service and maintenance agreement that can be extended to five or 10 years is also part of the contract. A technical assistance agreement for an additional period will follow the term of the maintenance agreement. The contract allows Vestas flexibility in the selection of commercially available wind turbine models and classes for each power project, provided EDPR is given prior notice.

Vestas was selected from several large players in the global wind turbine manufacturing sector, as it was considered the best global value that fit EDPR's short- and medium-term business targets. The selection process, launched in Chicago, Illinois, about a year ago, was long and demanding. The supply agreement will help Vestas achieve its "Triple 15" target, which involves achieving 15 billion in annual revenue and a 15% EBIT [earnings before interest and taxes] margin by 2015.

Ana Maria Fernandes, CEO of EDPR, said that using Vestas technology would give EDPR a competitive edge in the wind sector. The president of Vestas Mediterranean (Madrid, Spain), Juan Araluce, was equally effusive in expressing his pleasure at obtaining another opportunity to work with EDPR. He said that at the end of 2009, Vestas had installed about 2,500 MW of wind power capacity for EDPR, an amount that was equal to 40% of EDPR's total wind power capacity.

Neither company has disclosed the financial details of the contract, but analysts have estimated the value of the order to be worth about 1 billion euros.

EDPR is a world leader in the renewable energy sector. The company has an installed wind power generation capacity of 6,227 MW and another 30,310 MW of projects that are being developed or are in the planning stages. EDPR's installed facilities are in Belgium, Brazil, France, Poland, Portugal, Spain and the United States. The company is planning or developing projects in Italy, Romania and the United Kingdom.

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