Spanish Windmill makers looking at Emerging Markets

Spain’s economic crisis is sucking the air out of the windmill business.  Once a booming sector of the Spanish energy industry, manufacturers now face an uncertain outlook for demand and state subsidies.

 The Spanish government is tightening its belt-

a. Imposing  a requirement to request authorisation for new installations on windmill makers further complicating the pricess and creating delays.

b. Reduction of bonuses provided to windmills until 2013 by 35%. The draft law is expected at the end of this year, leaving the sector uncertain about its content or even the date it will come into force.

The regulatory framework combined with plunge in energy demand and the difficult financial conditions has pushed Spanish business to accelerate development internationally to survive. In the first half of 2010 installed wind capacity grew by just 727 MW compared to average annual rate of 2000MW. Over one year, Gamesa shares have lost 56% of their value, Iberdrola Renovables (the renewable energy business) 27% and Acciona 31%. Increasingly this has led windmill manufacturers to tilt for business in countries such as Scotland, China, India and Brazil.

Some examples of Spanish businesses expanding internationally:

a. The Iberdrola energy group, the world’s number one producer of wind energy, won a contract to build nine windmill parks in Brazil. The Group launched a $6.5 billion investment plan in the United Kingdom, mostly in Scotland, up to 2012.

b. Gamesa, one of the world’s leading windmill manufacturers, decided to triple investments in China from 2010-2012.

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