NRXXY - Vestas: Waiting For The Wind To Blow Offshore

2024-07-05 09:46:07 ET

Summary

• Vestas is a major global wind turbine maker, installer (157 GW) and servicer (149 GW of service contracts), with business in 88 countries.
• Offshore wind projects in the US, Australia, Brazil are taking shape as the need is recognised for scale up of wind power to address the climate crisis.
• Oil & gas companies talk down offshore wind and BP exits offshore wind projects.
• Vestas positioned for growth in the global wind industry despite challenges and competition from Chinese manufacturers.
• Vestas is on top of various setbacks and moving forward despite the market ignoring the developments. This is a good time to consider Vestas.

The gloom continues for the wind industry and more so for major offshore wind developments that impact major turbine maker Vestas ( VWDRY ) and more so offshore wind project developer Orsted ( DNNGY ). Vestas, the world’s biggest turbine manufacturer, has had an up and down 12 months, being down 11.5% year on year, while Orsted is down 41.4% year on year. My take on this is that we are at a key inflection point where action on climate change (or lack of it) is nearing a point of no return. All kinds of political events are conspiring against the wind industry but climate emergencies make clear what happens without substantial action. Here I present how I see the situation and why I see opportunity for Vestas.

A critical time for addressing emissions

Last year’s COP28 meeting produced some significant pledges by delegate countries to get serious about addressing the urgent climate issues. The COP28 Global Renewables and Energy Efficiency Pledge, which was signed by 133 countries, acknowledged the need to increase significantly emissions reducing efforts between 2023 and 2030. The pledge was for trebling renewables (more than 11,000 GW) by 2030 and doubling the annual rate of energy efficiency improvements (from 2% to 4%/year until 2030)....

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