Clouds hang over EU wind industry, but sunshine ahead

The announcement came shortly after a warning that the company's 2011 profits were "expected to amount to approx 0 per cent". It was the third time in three years that the company issued a profit warning and slashed jobs.

"I can certainly understand if employees as well as people outside Vestas consider us to be in a state of crisis," chief executive Ditlev Engel told reporters in Copenhagen.

The short lifespan of the global wind industry has until now been one of exponential growth. Twenty years ago it barely existed. In 2011, it was worth €67 billion.

Europe, keen to play the world's climate change champion, has always been at the forefront. It has more turbines installed than any other region in the world - almost twice as many as the runner-up, China.

But growth has slowed. For the last two consecutive years, less turbines were installed in the EU than the year before. Official figures for the year 2011 are not yet available, but preliminary findings point in the same direction, says Julian Scola, communications director at the European Wind Energy Association, the industry's lobby group in Brussels.

Two factors are to blame, according to Scola. First, banks these days less easily agree to lend money. Second, the market has become globalised to such an extent that turbine manufacturers from all over the world are able to compete with each other.

"As long as there is a healthy market in Europe, turbines will be made in Europe," says Scola. "It is not viable to import. Turbines are absolutely huge. But Chinese companies may come to Europe and make them here."

They appear to already be doing so. Sinovel, China's largest turbine manufacturer and the second-largest in the world, recently opened up a European office in Madrid. It was not available for comment at the time of writing, but according to an article in The New York Times from 2010, the state-owned company aims to become the world's largest in the sector by 2015, with half of sales outside of China.

There is no immediate threat, according to Steen Broust Nielsen from Make Consulting, a Danish consultancy for the wind industry.

"Competition on the international market from China is still very limited," he says. "Many Chinese projects depend on Chinese funding. On a long-term basis, China's market presence will grow, but it will not continue to fund international wind project development."

The upside for European turbine makers is that they, too, can more easily enter foreign markets - something they do "very well" according to Scola.

"Last year, Vestas installed more turbines in China than all Chinese manufacturers did outside of China," says Michael Holm, director of communications.

After rain comes sunshine

Nobody, except for maybe the workers who lost their jobs, seems very worried. On the contrary, climate change and the continuing commitments made by governments to invest in renewable energy seem to ensure a bright future for the industry.

China in January announced it aims to source 20 percent of its power demand from wind by 2050 and to have a total installed capacity of 1,000GW, more than four times the global amount installed today.

"It will be a bumpy ride the coming years," says Scola. "But we expect very strong growth in the medium term. Given the commitments made by the EU to cut emissions, it is clear that the industry will have to expand."

Broust Nielsen, too, sees "huge potential" for the wind industry in the long term. "We definitely expect the industry to continue to grow. There are continued strong fundamentals for wind: energy demand will continue to increase; fossil fuel prices will continue to rise; and we expect climate change to remain an important driver for renewable energy."

As for Vestas, it expects to remain the world's biggest turbine maker. "We expect to gain market share," says Holm.