Suzlon says retrofit of U.S. blades on schedule

By Andrew Stern

CHICAGO (Reuters) - Suzlon Energy Ltd said on Monday it is two-thirds of the way through a program to replace its U.S.-installed wind power turbine blades that suffered cracking problems and hurt the company's shares.

"We're two-thirds complete. It's gone very well and we'll get this done in the next couple of months. We're on schedule," said Duncan Koerbel, chief reliability officer of the Mumbai, India-based company, the third-largest wind turbine supplier in the United States.

The company has taken a $35 million charge for the program to replace all 1,200 blades in its previous generation of blades, some of which developed cracking near the base. One blade broke off a turbine in Illinois.

"We'll put this behind us," Koerbel said in an interview with Reuters in advance of an industry conference in Chicago.

The reliability issues with Suzlon's 2.1 megawatt turbines contributed to a 40 percent drop in the company's shares in one day in October 2008. The company's stock is down 77 percent from a year ago, more than double the Mumbai market's main index, though the company's shares have rebounded to around 66 rupees since a mid-March low.

There have been no problems with the new generation of blades after two years of global use, Koerbel said.

WIND RECOVERY

The explosive growth of U.S. wind power capacity -- which had been at a 20 percent to 30 percent annual clip over the past decade -- hit a lull this year but is poised to return to trend, Koerbel predicted.

The United States produces more electricity from wind than any country, yet wind makes up less than 2 percent of its power use. Wind generates roughly one-quarter of power consumed in some European countries. Suzlon is the third-biggest wind turbine supplier to the U.S. market, and the fifth-biggest globally.

"I think the (U.S.) industry will ramp up the end of 2009 and in 2010. The fundamentals of the whole industry have not changed, which led to this explosive growth," Koerbel said.

The industry in general is predicting a revival of U.S. investment later this year and next, especially if federal requirements are enacted to mandate that all states produce more power from renewable sources.

Twenty-eight states have varying requirements to produce a percentage of power from renewable sources, but enacting a federal standard would force utilities in states without much wind power potential to buy renewable energy credits earned elsewhere, boosting revenues for large-scale wind farms.

President Barack Obama has called for a doubling of renewable energy production by 2012 and wants renewable to generate 25 percent of U.S. power needs by 2025, up from around 7 percent from wind, solar, hydropower, biomass, and geothermal sources in 2007.

Obama also helped enact a three-year extension of the federal tax credit for wind power producers.

But without a national Renewable Energy Standard, low prices for competing fossil fuels make wind less viable.