Canada forecasts record year for wind energy

Call it a tale of two continents: the world’s biggest maker of wind turbines announced that it will lay off nearly a third of its workforce because of a weak outlook for the European wind energy market in 2011, while Canada is expecting a year of record growth.

Denmark-based Vestas A/S on Tuesday posted a 24 per cent drop in third-quarter earnings and said it will lay off some 3,000 workers in Denmark and Sweden to adjust to lower demand in Europe.

The company said it shipped a total of 719 wind turbines in the quarter, or 27 per cent less than a year earlier, and CEO Ditlev Engel said growth in the European wind farm market next year will be below earlier expectations.

"When we look into 2011 we see a lot of uncertainty in a number of European markets which, for instance, the Danish factories have been servicing," Engel said in an interview posted on the company’s website Tuesday. "So you could say we have maybe been too optimistic for too long."

But the weaker outlook for European demand is having no impact on optimism on the other side of the Atlantic. Robert Hornung, president of the Canadian Wind Energy Association, said over 1,000 megawatts of new wind farm capacity is expected to be installed in Canada next year — exceeding the record 950 megawatts of capacity that was installed in 2009. One megawatt is equal to one million watts.

"We are quite confident that we’re entering a period of sustained strong growth for the wind energy industry in Canada, and we think that’s going to provide some significant benefits, both environmental but also economically, to the country," Hornung said in an interview.

Contracts have already been signed for 6,000 megawatts of new wind power capacity to be installed over the next five years, and Hornung said he expects that number will increase to 8,000.

Canada currently has 3,499 megawatts of installed wind energy capacity, and the wind energy association expects that to increase to 4,073 megawatts by the end of the year — enough energy to power more than 1.4 million homes annually.

Every province in the country generates some wind power, and there are commitments to build new capacity in every province except Newfoundland and Labrador over the next few years, Hornung said.

The biggest areas of expansion will be Quebec, with contracts in place for 3,000 new megawatts of capacity by 2015; Ontario, with contracts for 1,500 megawatts; and British Columbia, with contracts for 800 megawatts.

Currently, only about 1.5 per cent of Canada’s total energy demand is met by wind power, but Hornung said this is expected to increase to five per cent by 2015.

This demand is primarily being driven by government policy. Many provinces are working to reduce their reliance on polluting sources of energy like coal and are encouraging increased use of clean energy sources like wind. The development of wind farms is also helping to boost the economy of some regions.

Quebec, for example, is developing wind farms on the Gaspe Peninsula, an area that has been hard hit by declines in the fishery and forestry industries, Hornung said.

And Ontario is encouraging job creation within the province through a new green energy plan that requires companies to have a certain percentage of their project costs come from Ontario goods and labour.

Hornung acknowledged that the global recession slowed the growth of wind energy in some markets, but others are still expanding rapidly.

China, for example, expects to install 17,000 megawatts of wind power capacity this year alone, making it the world’s largest wind market by the end of the year.

Several Canadian companies are well positioned to take advantage of a growing market for wind power. Many of the major energy companies, including TransAlta Corp. (TSX:TA), TransCanada Corp. (TSX:TRP) and Enbridge Inc. (TSX:ENB) produce some of their power from wind.

And other companies like AAER Inc. and Linamar Corp. (TSX:LNR) manufacture wind turbines for local and international markets.