WORLD WIND POWER TRIMS U.S.

Iberdrola Pulls Back Guidance; Cuts U.S. Development
Mark Del Franco, 3 March 2011 (North American Windpower)

"Iberdrola Renewables, one of the world's largest wind developers, says new wind capacity additions will slow this year and next, including wind farms planned for the U.S. The developer plans to install 1.5 GW this year, down from 1.78 GW in 2010.

"Iberdrola now plans to install 750 MW - 400 MW planned for Europe and 350 MW planned for the U.S. - in 2012. This is a major cut for Iberdrola…With 62 GW under development worldwide, Iberdrola boasts one of the world's largest project pipelines. Because most of its development pipeline is located in the U.S. and Spain, its future growth rates are tied to policy measures in these two markets…Iberdrola's tepid development plans underscore the need for clear [post-2012] policy in the U.S. and Spain…"

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"…[T]he investment tax credit (ITC) in the U.S. expires at the end of this year, but…will include projects in 2012 if construction begins by the end of the year…In May 2010, Iberdrola announced that it would install 1 GW in the U.S. in 2011 and 2012. At the time, the company said its U.S. efforts were significantly bolstered by $976 million in so-called stimulus funds, including a $109 million grant for the start-up of its 202 MW Penascal II wind farm in southeastern Texas.

"Iberdrola is the second-largest renewables operator in the U.S. and has a presence in 23 states. It has an installed capacity of 3.8 GW spread over 41 wind farms, with 850 MW currently under construction…[It] has a workforce of 800 employees in the U.S. and has created over 14,200 indirect jobs there since 2006. It has also made some $5.5 billion of purchases from U.S. companies over the last three years…"

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"…Iberdrola's apparent pullback greatly affects Gamesa, a major turbine supplier to Iberdrola….[because] Iberdrola is Gamesa's largest shareholder, with a stake of about 15%…"

[Dan Shreve, principal, MAKE consulting:] "The magnitude of Iberdrola's investment reduction comes as a surprise, especially given the looming 2012 expiration of key tax incentives and uncertainty regarding ITC or production tax credit extension…Order consolidation amongst GE, Siemens and Vestas is pressuring smaller players in the U.S. market…Without the strategic support of Iberdrola, Gamesa's performance in the U.S. market is certain to suffer, and [Iberdrola's decision] increases the criticality of [Gamesa's] activities in Brazil and Mexico."