Vestas woes continue as prototype blade breaks

Vestas has endured a miserable week after the news that one of its prototype wind turbines has experienced a snapped blade was followed by a slap on the wrist from the Danish stock market authorities over its failure to provide an official update on major contract negotiations.

The company confirmed this week that the tip of one blade snapped off a 3MW V112 prototype turbine that was being tested at Lem, on the west coast of Denmark.

Vestas spokesman Michael Holm insisted the accident was part and parcel of the testing process. "It's important to stress this is a prototype, and not one that's been sent out to a customer, so it's not going to affect our commercial plans,” he told BusinessGreen.com.

Vestas has now shut down the stand alone machine and is planning to replace the blade. Holm declined to comment on possible causes of the accident prior to an internal inquiry, although he did say velocity was unlikely to be the cause because wind speed was not particularly strong on Wednesday when the accident occured.

The firm also yesterday acknowledged a scolding from Copenhagen stock exchange NASDAQ OMX over its allowing rumours to leak into the market about a 570MW turbine order from the Terra-Gen project in California.

"NASDAQ OMX Surveillance Copenhagen has reprimanded Vestas for not disclosing a company announcement about the ongoing negotiations with the customer as soon as Vestas became aware that the information relating to such was available in the market,” said Vestas in a statement. "Vestas takes note of the reprimand."

Holm said Vestas had been unable to control reports of the order, which had emerged in the media following local government meetings.

In an effort to avoid future reprimands, the Danish firm announced this week that it was in talks with an unnamed firm about a potential order for over 1GW of wind turbines.

The company confirmed it is the preferred supplier for the global company to deliver 400MW of turbines between 2011 and 2014 with an option for a further 1,000MW order beyond that.

"We are very pleased to announce this important agreement, which further strengthens our global presence and confirms our leading position in the wind industry worldwide," said Peter Wenzel Kruse, Vestas senior vice president.

Holm refused to give any more details about the talks, citing a confidentiality agreement. He also played down reports that the order is for the new V112, insisting the model of turbine will not be confirmed until the sites for the wind farms have been selected.

But despite Vestas' attempt to put a positive spin on recent events, Danske Equities yesterday cut its recommendation on Vestas stock from "buy" to "reduce ", according to Reuters reports. Shares in the company dropped six per cent on news of the downgrade.

This week's travails are the latest in a string of difficulties for the firm, which last month reported that sales for the second quarter had fallen well short of analysts expectations. The company's share price slumped by over 20 per cent following confirmation that sales for the second quarter had fallen 17 per cent year-on-year to just over €1bn, while losses reached €119m.