Vestas: Will the Wind Business Ever Be Brisk Again?

"Wind is all we do," says Martha Wyrsch, the president of Vestas Americas.

That's great for the planet -- wind energy is part of the solution to the climate crisis. It hasn't been good for the company's bottom line, at least not lately. But Vestas sees better days ahead.

Vestas, as you may know, is a global company, based in Denmark, and the world's largest manufacturer of wind turbines. (It installed 5,581 MW of capacity in 2009, which represents 12 percent of the global market.) Two of its biggest wind industry competitors -- General Electric and Siemens -- also make plants and equipment to burn coal and natural gas, and they are diversified beyond the energy business as well. They aren't as "green," at least in the environmental sense of the word, but they don't depend on wind.

Vestas does, and so the company has taken a hit because of a global slowdown in the wind industry, driven in part by the 2009 recession and credit crunch. Low natural gas prices are a problem for wind-turbine manufacturers, because utilities build gas-fired plants instead. So are the continuing uncertainties of energy policy in the U.S. -- an investment tax credit that is crucial to wind projects is set to expire this year. Another worry for the biggest players: China, a huge market, has become intensely competitive, with dozens of local competitors entering the fray.

As a result, in the first quarter of 2010, Vestas took a hit. The company booked revenues of 755 million Euros, down from 1,105 mEUR in 2009. It reported a loss of 96 mEUR, which compares with 76 mEUR in EBIT during Q1 of 2009. The stock is down by more than 20 percent in the last year.

Wyrsch says things are looking better for the year ahead. "We see orders picking up again," she says. The company operates three factories in Colorado, and it plans to open a fourth this year. It has estimated that its U.S. business will grow by 25 percent annually between now and 2014, although given the absence of carbon regulation, such projections should probably be viewed with some skepticism.

Martha WyrschI visited with Martha Wyrsch last week in Washington. (We'd met in April at FORTUNE's Brainstorm Green conference, where she spoke on a panel that I moderated about renewable energy.) Martha, a lawyer who is 52 but appears younger, is a newcomer to the wind business who joined Vestas in May 2009. She'd previously worked as general counsel for Duke Energy and then, when Duke spun off its pipeline business, as the No. 2 executive at Spectra Energy.

Her roots are in the business, too; she grew up in Wyoming, where gas and coal are the big industries, and her father was an executive with PacifiCorp., a utility now owned by MidAmerican Energy (which is itself owned by Berkshire Hathaway). She told me when a headhunter called to ask her about working at Vestas, she didn't know the company at all. Since then, she's become a true believer. "Wind should be on a par with oil and gas as an energy source," she says.

So why isn't it? Price is the biggest obstacle. "We have an obligation as a wind industry to become cost competitive," Wyrsch says. "We have to stand on our feet and compete." Wind currently generates about 2 percent of the electricity in the U.S., far less than coal, gas or nuclear power.