Turbine installation to hit US record

A dawning age of austerity clouds the outlook for the industry, even as investment in wind farms continued unabated this year.

Despite the promise made by Barack Obama, the United States president, to renew tax breaks for the wind industry that expire at the end of the year, the industry is in crisis.

Installation of wind turbines is forecast to hit a record in the US this year, as investors are racing to get projects finished before the expiry date.

But turbine manufacturers are still laying off staff as orders for next year have stalled. The Danish company Vestas, the world's largest producer of turbines, recently cut 500 jobs in Colorado as part of wider cuts of 3,700 jobs across its global operations this year.

Siemens, another big player in wind turbine manufacturing, last month announced it was eliminating 600 jobs in Kansas.

It could have been worse.

If Mitt Romney had become the president and followed through with his election pledge to abolish the tax breaks, a total of 37,000 jobs would have been lost throughout the value chain in the US, according to a study for the American Wind Energy Association.

In Europe, the sovereign debt crisis has also created pessimism for wind power.

Official targets have not been revoked but favourable tariffs for clean electricity have been revised in key countries such as Germany.

As the continent heads for an age of austerity, further reductions are anticipated.

Western producers also face competition from China, which benefits from a cheap production base and state support.

Another threat to wind energy and renewable energy in general is the abundance of natural gas that will come from the shale gas revolution in the US.

As cheap gas undermines the commercial case for alternative energies and cash-strapped governments take a close look at green subsidies, wind turbine manufacturers are hoping advances in technology reduce production costs quickly.