Tuesday, October 7, 2008

Energy need unchanged by financial crunch-Vestas

By Karin Jensen - COPENHAGEN, Oct 7 (Reuters)

The world still needs to develop new forms of energy despite the global financial crisis and wind power firms are unlikely to merge in reaction to the crunch, Vestas Wind Systems chief executive Ditlev Engel said.

Vestas is the world's number one wind turbine maker and Engel told the Reuters Environment Summit that now is the time to keep a cool head -- things may look very different in a few months.

The fundamental need for energy has not changed and the environmental challenges facing the world are the same and requires a solution regardless of a financial crisis, he said.

"There are still challenges within the areas of climate and energy and there is still the question of energy independence," said Engel. "That's why I believe it is important to remember what the Chinese have said, that one should not look at the waves but the currents. And the underlying currents with regards to energy challenges have not changed," he added.

He pointed out that Vestas, despite its shares having dived in recent weeks, has kept its guidance for 2008 and said he believes it is important to wait and see what the next couple of months bring before drawing any conclusions.

"We are happy to see that many of the large energy corporations, the companies which are our customers, are still doing very well," says Engel.

NO CONSOLIDATION SEEN

Share prices come down around the world in recent weeks, including those of wind turbine producers, but Engel said he does not expect this to lead to a consolidation in the sector.

"At least we have not seen anything at present. It seems that everybody have their own plans and ambitions so there is nothing that indicates that we are heading that way," he said.

Vestas itself aims for organic growth, Engel said, adding that the company might be interested in acquisitions in the areas of research and development and other such areas should interesting subjects emerge.

"But a horizontal consolidation, that is companies doing the same as us, that's not the way we're going and I don't see the sector going that way either," says Engel.

GROWTH SEEN IN COMING 12 YEARS

The Vestas' head said he believes that growth within the wind energy sector will be marked in the coming 12 years.

"When using the IEA (International Energy Agency) forecasts then we believe that in 2020 wind energy will cover around 10 percent of the world's energy consumption - and that is in a strongly growing, consuming market," he said.

Regardless of whether oil prices are rising or falling there will be an increasing need for energy in coming years, Engel said, driven in particular by the so-called BRIC-countries -- Brazil, Russia, India and China - as the world's population continues to grow.

"So the underlying need for energy is there," says Engel.

And with climate challenges increasing the need for more renewable energy solutions, wind power may well be one of the winners.

According to Engel wind energy has already been around for many years and is by now well-documented as an energy source.

Not just in Denmark, where wind energy accounts for almost 20 percent of domestic power supply, but also in bigger countries such as Germany and Spain where the share of wind energy is now quite significant, he says.

"But I still think it is important to stress that we do not see ourselves as being the opposition to other renewables such as solar energy, geo-thermal," he said.