Windflow warns of more losses to come
Christchurch-based wind turbine developer Windflow Technologies said the company will deliver another loss next year due to an "inevitable" production gap and low demand growth in the electricity sector. The scope of the loss was not declared.
The gap will take place in the first half of 2011, between the completion of the fourth batch of turbines for NZ Windfarms and the expected uptake in orders from the UK, made worse by production times for key nacelle assembly components, the company said in its annual report, published today.
Windflow is also facing a tough operating environment, with low demand growth for electricity locally and downward pressure on turbine prices due to an oversupply world-wide.
“The New Zealand market is tough at the moment,” John Hunter, Windflow’s chief financial officer, told BusinessDesk.
“As Mighty River indicated, domestic demand for power is weak at the moment, which makes demand for alternative electricity generation very low.”
Yesterday Mighty River’s chief executive Doug Heffernan said growth in electricity demand in the last three years has been well below the historic average of 2%, with virtually no growth since 2007, according to press reports.
The company also flagged the strength of the New Zealand dollar as a concern, with the kiwi dollar recently touching on an 11-month high of 75 US cents.
Windflow’s only customer to date is Windfarms, which runs the 65-turbine Te Rere Hau project in the Manawatu. MRP withdrew as an investor in another project using Windflow turbines, Long Gully behind Wellington, earlier this year.
The company has recently pinned its hopes of winning orders from the UK after the government there launched an incentive scheme to drive alternative energy generation and will favour wind projects using turbines like Windflow’s 500kw model.
Wind projects in the 100 - 500 kilowatt range using new turbines are guaranteed a payment of 18.8 pence per kilowatt hour for 20 years and in addition will be offered a minimum of three pence per kilowatt for any electricity exported to the grid.
In August the company appointed Scotland-based Ventus Green Energy as the exclusive UK distributor of its Windflow 500 turbine, one of the only 500 kW turbines in production in the world.
“We’re optimistic about our prospects there as the incentive makes the demand for alternative generation very strong,” said Hunter.
“It gives us confidence that we are going to do well in that market.”
Hunter said no orders had been received to date, but he expected them to start to come through from the end of October. He said details of the loss would be quantified “shortly” when Windflow releases details of a planned capital raising.
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