While the current U.S. administration has been reluctant to admit the need for – much less promote – green energy, the European green energy sector has been growing by leaps and bounds.  The wind energy sector has been seeing double digit growth over the past few years.  Unfortunately, it looks as if the days of rapid growth are ending.

Frost & Sullivan Research Analyst, Gouri Nambudripad, stated:

The industry seems to be heading from the overheated undersupply state into a supply-demand equilibrium if not into a state of having spare production capacities and thus having to fight rigorously for the new orders still remaining in the market.

What this means is that the price of wind turbines should be dropping, as the cost of raw materials drops.  Delivery times should also drop.  Of course, this assumes that there are still people and businesses out there that can afford to purchase turbines.

This is good news for those looking for bargains on wind turbines and turbine parts but means more competition between manufacturers and suppliers of wind energy components and installations.  As in other sectors of the economy, wind turbine companies and parts suppliers will need to tighten their belts and develop strategies to produce better lower-cost products.

Other factors in this equation are the dropping costs of labor and raw materials.  Lead times at steel mills have lessoned dramatically with the dearth of current orders as have labor costs to assemble and install wind turbines.

Henry Ford once stated that he had to pay his workers enough so that they could afford to purchase and drive the cars that they were building.  A similar dynamic needs to happen here.  Governments have already offered tax incentives for the purchase of wind turbines.  These tax incentives will continue to provide demand albeit less demand than previously expected.

President Elect Obama’s plan to invest in a green U.S. economy may help the U.S. green energy movement to be more competitive during these troubled economic times.

Even though the European wind sector is slowing down, it isn’t in any danger of disappearing.  It may go through a few contractions as less prepared manufacturers and suppliers disappear.

Related:

Entry was posted on Monday, November 24th, 2008 at 5:00 pm under Green Technology, Opinion, Politics.

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