Vestas inks Tower Supply Agreement with undisclosed party to supply towers for North American wind power projects

This week Vestas announced signature of a Tower Supply Agreement to supply towers for a number of non-Vestas wind power projects over the next two years. The name of the developer or manufacturer which signed the Tower Supply Agreement with Vestas was not released.

The Tower Supply Agreement will see Vestas ramp up at its tower factory in Pueblo, Colorado, USA. Vestas soon will begin manufacturing the first phase of the Tower Supply Agreement that could use up to 25 percent of the production capacity. The agreement will create more than 100 jobs by the end of the first quarter of 2013. The Vestas facility can produce almost 1,500 towers a year, Vestas Chief Operating Officer Jean-Marc Lechene said this week.

Vestas is branching into tower manufacturing for external customers to boost revenue after overcapacity among turbine producers wiped out profit at the Danish company. Vestas and its competitors have cut jobs and withdrawn from weaker markets to reduce costs as wind-industry growth slows.

The Tower Supply Agreement, announced yesterday, marks the first time Aarhus, Denmark-based Vestas has sold the support structures to a competitor. The deal is with a single client, an American company with multiple projects, Lechene said, declining to identify the client or disclose financial terms. Vestas has also secured smaller deals for metal-cast components with non-wind customers, he said.

“Vestas is continuously evaluating its manufacturing footprint and opportunities to utilise the current production capacity better. Producing components for third parties is part of this strategy, and although we have had other smaller orders, this new agreement is the first major step in realising this plan,” Lechene said.

“Our tower factory employees are very excited about this new order,” said Tony Knopp, Vice President of Vestas Towers America, Inc., in Pueblo. “The extension of the Production Tax Credit (PTC) at the beginning of the year also was an important factor in securing this contract, and we are now in the process of evaluating our ramp-up plan.”

Sources: Bloomberg, Reuters, Vestas Press Release