Wind power may be one of the cleaner, greener energy sources available, but turbine and blade failures point to dangers that were not anticipated, says Michael Connellan

The idea was that, in the intervening years, electricity produced with renewable energy technologies would grow to the point that the shift away from nuclear would hardly be noticed. That, though, is looking increasingly unlikely. Despite a decade of massive investment and generous programs established to promote wind, solar and biomass power generation, green energy sources make up just 14 percent of the country's energy supply. Even if that were to double in the near future, the lion's share of Germany's energy consumption would have to come from elsewhere. Without nuclear power, "elsewhere" in Germany necessarily means coal-fired power plants.

The grand U.S. ambitions of Indian wind-turbine manufacturer Suzlon Energy Ltd. are facing mounting problems. The Indian company -- the world's fifth-largest wind-turbine maker by sales -- earlier this year acknowledged that 65 giant blades on turbines it had sold in the U.S. Midwest were cracking because of the extreme gusts in the region. The company is reinforcing 1,251 blades, almost the total it has sold in the U.S. Now, other problems are emerging, in part because the company quickly ramped up U.S. sales to meet burgeoning demand for alternative energy. ...

Conglomerate Siemens AG, wracked by a wide-ranging corruption scandal, will cut up to 4 percent of its work force worldwide, or about 17,200 jobs, a pair of newspapers reported Saturday. The Sueddeutsche Zeitung reported that the Munich-based company was set to shed the jobs -- mostly white-collar and administrative -- without citing any sources. ...The warning was a surprise for the conglomerate, whose diverse products include trams, turbines and telecommunications equipment, given that it had said in January that sales were expected to double the pace of the global economy.

Stocks of companies that generate electricity from solar or wind power -- or make the equipment to do so -- soared during the last three years. But the global credit crunch, higher prices for raw materials like polysilicon used in solar panels, and cuts in government subsidies to consumers, such as in Germany last month, have made investors much warier. High oil prices, analysts say, can't compensate for all that. "Some months ago, it was still true that a rising tide lifts all the boats," said Thomas Germann, an analyst at Zuercher Kantonalbank. "But investors are now scrutinizing what's going on at the company level, because cost efficiency has become more important." ..."The easy money has been made," said Jean Ryan, who oversees three funds with about €2 billion in assets at KBC Asset Management International Ltd., a unit of Belgium-based KBC Group NV.

Sapec SA, the third-largest supplier of crop-protection products on the Iberian Peninsula, plans to raise cash for construction of U.S. wind farms by selling other alternative-energy projects after they are completed this year. ...The wind farm projects in the U.S. are facing delays amid uncertainty about the extension of renewable-energy tax credits and problems getting the turbines from Spain, according to Velge. Naturener, which had planned to install 210 megawatts of capacity in Montana this year, will complete only 107 megawatts of the Glacier Wind project this year. The first project in Canada will not be completed until 2010, rather than in 2009.

Babcock & Brown Ltd. Chief Executive Officer Phil Green is under increasing pressure to sell European wind farms to stave off a possible debt review, triggered by a share collapse this week. ...A successful sale could trigger a rebound in Babcock's shares, which trade at less than three times earnings after falling 83 percent this year, said ABN Amro Holdings NV analyst John Heagerty. Failure may increase the risk of banks demanding early repayment on A$2.8 billion of debt.

Royal Dutch Shell believes the future of wind power is in North America, where it is redoubling its efforts after pulling out of the large-scale London Array wind farm project in the UK. "The European theatre has been built out,'' Dick Williams, president of Shell Wind Energy, told the FT. The growing importance of wind power originally drew Shell into what was set to be the world's biggest offshore wind farm, the 1 gigawattLondon Array, that put the UK in line to be the world leader in building offshore wind farms. But on May 2 Shell said it was selling its stake in the project to turn attention to North America. Mr Williams draws attention to the large tracts of available land in unpopulated areas in the US and Canada that enable cheaper on-shore expansion, against the more expensive option of developing offshore projects in Europe.

The chief executive officer of Suzlon Energy Ltd., the world's fifth-largest wind-turbine producer by sales, has resigned amid growing questions about the Indian company's fast-paced growth. Andre Horbach, a former senior executive for General Electric Co. in Europe, stepped down on Friday, 16 months after taking the job. ...Suzlon has benefited from a global shortfall of turbines from more-established producers like GE and Denmark's Vestas AS, the world's largest producer in terms of sales. ...But Suzlon is also facing headwinds. Blades on turbines that it has sold to power producers in the U.S. have begun cracking. The company says only 45 blades have been affected, but it plans to spend $30 million on repairs and to strengthen almost all the blades it has sold in the U.S. Suzlon's efforts to upgrade its technology have also run into problems.

But, like most weather reports, the outlook for large windmill projects is anything but predictable, plagued as they are by noise complaints, endangered species and fickle commercial backers. In the United Kingdom, a giant wind farm planned for the Thames River estuary now appears to be in jeopardy after Dutch oil giant Shell announced it would pull out of the project. ...The company has said it will continue to pursue wind power projects in the United States. Yet U.S. wind power projects have run into some snags of their own.

In a filing with the U.S. Securities and Exchange Commission in February, Edison Mission Energy, a unit of Edison International, said the 144-foot-long windmill blades it recently bought from Suzlon have begun to split at three wind-power sites it operates in the Midwest. Suzlon has recalled 1,251 blades from its top-of-the-line turbines, which represent the majority of blades the company has sold to date in the U.S.. Its troubles don't end there. A year ago, the company bought a controlling stake in a large German turbine manufacturer, REpower Systems AG, in one of India's biggest overseas acquisitions. ...Now, Suzlon can't get its hands on the blueprints. Hamstrung by a German corporate law, Suzlon must offer to buy out minority shareholders before it can demand REpower's designs. It's unlikely that the company could make a tender offer until 2009, say people with knowledge of the companies. ...Mr. Kher blamed the cracks on the Midwest's unexpectedly violent changes in wind direction. Though Mr. Tanti says that only 45 blades have cracked, Suzlon says it will add an extra lamination layer to almost all of the blades it has shipped to the U.S. To repair cracked blades and reinforce the rest, the company expects to spend $30 million.

Iberdrola SA (IBE.MC) Friday said it increased its stake in Gamesa SA (GAM.MC) to nearly 24%, getting another 4.63% of the Spanish wind- turbine maker previously in hands of an investment vehicle it partly-owned. Iberdrola, based in Bilbao, northern Spain, is the world's biggest wind-power generator. Gamesa, also from Bilbao, is Europe's second largest wind-turbine maker after Denmark's Vestas Wind Systems A/S (VWS.KO). Gamesa accounts for around 15% of all wind-turbines sold in the world.

When the decision of whether to pay more is expressed in terms of real currency, the survey found even greater reluctance to go green. The European Commission estimates that it would cost each household the equivalent of $220 per month to cut greenhouse gas emissions and use more renewable energy. When faced with that number, strong majorities of bill-paying adults in all six countries said they would be unlikely to pay the higher amount, the survey found. "Until people are forced to do so, or the price for renewable energy comes down considerably, people will not make the ‘green' choice," the Harris Interactive survey said in commentary on the findings. "This is especially true as economies around the globe tighten. When it comes to food or solar power, food will win for the consumer each time."

In what implies a Rs.1 billion ($25 million) hit on its balance sheet for the current quarter, leading wind power equipment-maker Suzlon Energy will refit wind turbine blades for a project in the US, the company said Monday. “The company will do a retrofit programme to resolve blade-cracking issues discovered during the operations of some of its S88 turbines in the US,” the company informed the Bombay Stock Exchange Monday.

Once-trendy biofuels like ethanol produced from corn are now being derided by the authorities, who say the fuels have little value in the fight against global warming. Vital components for windmills and solar cells have run short over the past year, requiring expensive projects to a halt. Meanwhile, subsidies for renewable energy remain at the whim of politicians, creating a boom and bust cycle for wind farms and solar projects, particularly in the United States. Such a risky environment means some bankers are placing bets on projects that are unlikely to develop into serious, profitable alternates to fossil fuels, and could ultimately slow investment flows "Some of these green investments are going in the wrong direction," said Yvo de Boer, the executive secretary of the United Nations Framework Convention on Climate Change. "Very well-intentioned projects can go awry, particularly where government policies on cutting emissions aren't clear." ..."The world is repricing risk, and these are risky assets," Liebreich said, referring to renewable energy investments.

As energy costs continue to soar, and an increased reliance on traditional oil and coal is questioned, alternate sources of energy are examined more closely. Many in the five largest countries in Europe and in the United States like the idea of renewable energy, but do not want to pay any more for renewable energy sources. A majority of adults who have some form of responsibility for paying household energy bills in Great Britain (54%) and Germany (50%), pluralities in Italy (44%), France (42%) and the U.S. (40%), as well as just over one-third of adults responsible for paying household energy bills in Spain (35%), all say they would be willing to pay nothing more for energy if it was from renewable sources.

Prospects for the solar power sector are puzzling investors juggling on the one hand a possible dot-com-style bust and on the other fresh support in Europe, home to one-third of the world's market. The solar power industry uses the same raw material as the semiconductor industry, silicon, and may share a similar boom-bust path, according to some analysts. The semiconductor industry collapsed in 2000 amid a dot-com bust that pulled demand for electronic chips. Solar companies saw their share prices skyrocket last year, but many endured a steep fall in January, halving in the case of one market leader, Renewable Energy, which is based in Oslo. Such falls reflected a view that solar power valuations had run ahead of themselves.

GWEC figures wind power's capacity in 2005 was about 24%-that is, wind turbines spin 1 hour out of 4, year-round. That will improve, but slowly. Bigger and taller turbines, in more favorable locations-especially offshore-will make wind turbines more efficient. But it will be a long time before wind power's paper strength starts to be reflected in real electricity generation. GWEC's own figures point to wind power creeping toward 30% efficiency over the next twenty years. Wind power may be the most mature horse in the renewable-energy stable. But even a thoroughbred is going to have a tough time catching up with the supertanker that is the fossil-fueled energy establishment.

Tom Murley, head of UK private equity group HgCapital's renewable energy team, has warned clean energy stocks could be about to fall. At a conference held by Financial News last week, he said: "We are at the peak of inflated expectations." ...Murley, who heads the largest team of renewable energy specialists in the UK private equity market, said long-term prospects for quality clean energy companies are bright. But he compared the soaring price of clean energy stocks with the technology bull market of the late 1990s and argued innovation leads to overexuberance in stock markets. This is followed by disillusionment as competing products develop and investors realize profits will disappoint. A steady rise out of the trough follows as quality companies start to make headway.

...global investment bank Lehman Brothers agreed to advise and finance the $700m Cape Wind project, the US’s first offshore wind farm located near Nantucket Island and a landmark cause for many environmentalists. This March, Goldman Sachs sold its investment – redubbed Horizon Wind Energy – to Portugal’s largest utility, EDP, for more than $2.1bn, making a profit of $900m. But Lehman Brothers’ project, despite early state-level approvals, has been stuck in bureaucratic purgatory from which it is unlikely to emerge soon. The problem: Nantucket’s millionaire residents oppose the wind farm, which they claim would ruin their ocean views. The contrast between the outcome of the Zilkha investment and the Cape Wind project illustrates the unpredictability of the clean technology sector. “There is no doubt in my mind that renewable energy is like other tech start-ups, where some will succeed and many will not.”