The Oracle of Omaha’s latest green power play is a sign that the winds of recovery are blowing through one US renewable energy sector. MidAmerican Energy, the electricity unit of American investor Warren Buffett’s Berkshire Hathaway, has put in a US$1 billion-plus order to Siemens for wind turbines, the supplier’s biggest order to date for land-based wind equipment.
The investment could indicate that wind power is at last becoming genuinely profitable and can compete under its own steam after government subsidies end next year.
On top of that, MidAmerican plans to close some US coal-fired plants in 2015 as the price of wind power continues to slide. The cost of wind turbines has fallen more than a quarter worldwide since the first half of 2009, according to data compiled by Bloomberg.
Wind power is also emerging from a two-year slump in Europe. And it’s on the up in China, thanks to the National Energy Administration’s pledge in September to cut “curtailment”, available wind-generated energy that is not allowed to be fed into the grid.
Nevertheless, excess capacity will remain a hurdle. Wind power plants are much quicker to build than reliable grids for alternative energy, and many wind turbines are left idle as a result.
The international resurgence comes at a good time as some Chinese equipment makers hope to get around the overcapacity problem by expanding their footprint overseas. One development that could lower the cost of doing this is the decision earlier this month to admit the China Electric Power Research Institute (CEPRI) into the Measuring Network of Wind Energy Institutes. The membership means CEPRI is now qualified to carry out assessments and certify industry players so they will be recognized in the US and Europe.
In the past, Chinese firms have had to employ overseas assessors, making the certification process costly and lengthy. It could take up to two years for a mainland firm to qualify, Xinhua quoted Xinjiang Goldwind media relations head Hou Yuhan as saying.
Last year, Xinjiang Goldwind, Guodian United Power Technology, Sinovel Wind Group (601558.CN) and Guangdong Mingyang Wind Power Industry accounted for around 22 percent of the market worldwide, according to US consulting firm MAKE.
In terms of stock prices, wind power plays have done quite well this year, especially in the second half. Wind farm operator Huaneng Renewables (00958.HK) is the best performer of the bunch, gaining 157 percent since January. China Longyuan Power (00916.HK) is up 80 percent and China Datang Corp Renewable Power (01798.HK) added 53 percent during the period. Turbine supplier Xinjiang Goldwind Science & Technology (02208.HK) has also managed a 131 percent rise.
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