VESTAS: It’s a win(d)er

The wind has been used as a resource by humans for several thousands of years. One example is sailing, dating back to a disc found in Kuwait from 5000-5500 BC. For me personally, growing up in a flat landscape close to the sea, I developed a rather annoying relationship with the wind during my youth. However, I became fascinated by the wind as a source of energy when a wind farm was built not far from my hometown. One company in our portfolio, both closely related to the wind and contributing to the renewable shift, is Vestas Wind Systems. We will take a closer look at the company in this article.

The industry was born in the 1970s by producers of agriculture equipment. The first years of the industry were characterized by trial and error in order to develop a viable windmill, while the growth phase first took off in the 1980-1990s. When countries started prioritizing developing renewable resources, they typically set a goal for the number of gigawatts (GW) developed by a specific year and supported this development by subsidies due to high Levelized-cost-of-energy (LCOE) in the industry. LCOE is the minimum constant price at which electricity must be sold for the project to break-even over its lifetime. LCOE has decreased over the years, in part due to contributions from the manufacturers of equipment (OEMs) such as Vestas, and new wind projects onshore in developed markets are now typically auctioned without subsidies. This is a tendency, as of recently, also seen in the most highly developed offshore wind markets. Seen from an LCOE standpoint, onshore wind and solar photovoltaic (PV) are among the most cost-efficient energy sources, as can be seen by Exhibit 1 and Exhibit 2. However, as one support mechanism has been phased out, countries have on several occasions extended the existing mechanism or phased-in a new mechanism in order to support new development goals.

EU has introduced the Green Deal aiming to reach net-zero greenhouse gas emissions by 2050, and a 750 EURbn recovery plan where 30% of all spending will be earmarked for green investments. The European Commission says Europe needs up to 450 GW of offshore wind by 2050, and Wind Europe has estimated Europe needs to install 20 GW of wind capacity per year to stay on track for the European Green Deal, compared to 2018 cumulative installed offshore wind capacity of 22 GW. Exhibit 3 and Exhibit 4 shows cumulative installed wind capacity for onshore and offshore wind.