Last week, Ditlev Engel, the CEO of Vestas, the world’s biggest wind power company, got an emergency call at the company’s headquarters in Randers, Denmark. Could he get to a suburb of Cleveland, Ohio, the next day?
Engel couldn’t, so he missed the chance to meet Barack Obama. On his way from Chicago to Washington, Obama stopped in a town called Bedford Heights to visit Cardinal Fastener & Specialty Co., a supplier to Vestas that makes bolts for wind turbines.
“Renewable energy isn’t some pie in the sky,” Obama said. “It’s not part of a far-off future. It’s happening all across America right now.”
He got that right, and there’s no better example than Vestas of a clean energy company that can help power the U.S. economy and create new jobs.
Consider this: In 2004, about a year before Engel became CEO, Vestas employed 10,000 people around the world. By the end of this year, it will have about 20,000 employees.
Its U.S. business is ramping up, too. Vestas opened its first U.S. wind-turbine manufacturing plant last spring in Windsor, Colorado, not far from Denver. It is building two more factories in nearby Brighton. The company employs about 1,300 U.S. workers, a number that is expected to grow to 4,000 by 2010.
Despite the global recession, Vestas expects revenues to grow 25% this year. I spoke with Engel today at the World Future Energy Summit, a big conference and exhibition sponsored by the Masdar Initiative, Abu Dhabi’s clean energy company.
“Obviously, the financial market poses a challenge for any company today,” Engel told me. “But we have believed all along that changes were coming to the U.S. The United States has some of the best wind resources in the world.”
Ah yes, changes coming to the U.S. It’s interesting to be here in Abu Dhabi on the day of the Obama inauguration. Even as the slumping global economy casts a pall over the renewable energy business, companies from all over the world are looking to Washington for help.
But unlike many clean tech industries— electric cars, for example—that are mostly about the promise of tomorrow, Vestas and its wind business are thriving now. Vestas has installed over 33,500 wind turbines in 63 countries. It builds a new wind turbine, on average, every five hours. It generated revenues of $3.5 billion euros (about $4.8 billion) and profits of $195 million euros ($257 million) during the first three months of 2008.
Big U.S. customers for its turbines include Horizon Wind Energy, Duke Energy and ENEL North America. Besides the Colorado factories—which ship big turbines to anywhere in the country by rail—Vestas has a U.S. headquarters in Portland and a Chicago office dedicated to assembling a made-in-the-USA supply chain of companies like Cardinal Fastener.
“It doesn’t make sense for us to ship components from Europe or Asia,” Engel said.
Not incidentally, the U.S. passed Germany last year to become the No. 1 wind-energy nation, as measured by installed capacity, according to the American Wind Energy Association. That’s a Vestas installation near Evanston, IL.
While Vestas has been around since World War II, it didn’t build its first wind turbine until 1979. (Before that, the company made household appliances and agricultural equipment.) The business has really taken off in the last decade as turbines grew larger and more efficient, scale reduced manufacturing costs and government rules required utilities to buy renewable power in much of Europe.
A wind turbine “looks quite simple—a tower and three blades turning around. How difficult can it be?” Engel says. “The technology challenges are actually pretty big. We are at the end of the beginning of technology development.”
He predicts the wind power can account for 10% of the world’s electricity supply by 2020, and says it can compete with the costs of new nuclear plants or coal-fired generation. Denmark today gets 20% of its electricity from wind.
“Wind is the only energy source that, in the future, will be on par with oil and gas.” The value proposition for wind – he calls it the Vestas “high five” – is that wind power is clean, competitive in price, a source of energy security, predictable in its output and quick to install.
Wind has one more advantage over coal or nuclear-powered generation that isn’t as well known. Not only does wind generate fewer greenhouse gases than fossil fuels, it uses dramatically less water than other forms of energy.
Says Engel: “Green energy and greenbacks go hand in hand.”