EDF Energies Nouvelles (Paris: EEN.PA) and Vestas Wind Systems A/S (OTC: WESYF.PK) have come to terms on a conditional wind turbine supply agreement [pdf].

The contract calls for EDF to receive a minimum of 50% of its turbines for onshore wind installations in Europe and 30% of its turbines for American wind projects from Vestas.  The agreement is binding from 2012-2014.

EDF says it selected Vestas not only because of its extensive experience siting, installing, and operating wind farms, but also because of the diverse portfolio of turbines it offers.  Ditiev Engel, President and CEO of Vestas, says the partnership with EDF could generate as much as 2,000 MW worth of manufacturing the Danish company.

In its recent interim financial report, Vestas stated that it generated €1.06 bilion in revenue in the first quarter of 2011-- a 25% increase from 2010's first quarter.  Despite increased revenue, the company realized a growing loss compared to Q1 2010.  It's earnings before interest and taxes (EBIT) margin increased from -4.6% to -6.5%. 

Financially, it has been a difficult 12 months for Vestas. After releasing its Q2 financial report, which showed it had realized a €160 million loss, the company saw its stock drop 20% in one day; on the whole, Vestas' shares dropped 47% in 2010. 

Share prices rebounded, however, through the first three months of 2011, rising to a high of $44.30 in April -- a 41% increase in value from the share value at the start of the year.  However, since the high in April, Vestas' shares have been on a steady decline. Today's share price of $24.95 represents a five-year low for the manufacturer.

Nevertheless, Vestas expects to break even against its 2010 EBIT loss of €219 million by the end of the second quarter of 2011.  This will be achieved by an intake of 7,000-8,000 MW of turbine orders.  Still the world's largest manufacturer of wind turbines, Vestas' American business had its best year in the United States in 2010 when it installed 1,883 megawatts worth of wind turbines.

France-based EDF Energies Nouvelles has 3,422 megawatts of renewable energy in operation across across the globe, 85% of which comes from wind energy.  Although Europe represents the company's major market, the America's is one of its fastest growing business segments. 

EDF's American operations are run through its subsidiary, enXco.  So far the company has installed 72.5 MW of wind energy in the United States in 2011, and it has another 153 MW under construction.  In it latest financial statement [pdf], EDF shows that revenue through the first quarter of 2011 has grown 59.6% in North America, while it has dropped 16.2% in Europe.  In April, EDF signed an agreement to purchase two Mexican wind projects totalling 324 MW.  Additionally, enXco has three wind farms totaling 491 MW under development across the U.S.

David Corchia, EDF Energy Nouvelles CEO , says this agreement will play a major role in increasing EDF's business growth in the United States and across the globe: "[This partnership] gives us both the visibility we need in order to pursue our respective developments.  There is no doubt that this is a major and crucial deal that will enable us to provide competitive renewable energy solutions."

 

Photo by http://www.smartpower.org/.