June 22, 2012 / 10:47 AM / in 5 years

UPDATE 3-Vestas drops UK wind plant after lack of orders

* Says factory was conditional on firm orders

* Plant would have created 2,000 jobs

* Minister says decision will hit local economy

* Shares fall 2.8 percent

By Mette Fraende and Oleg Vukmanovic

COPENHAGEN/LONDON, June 22 (Reuters) - Denmark’s Vestas Wind Systems has dropped plans to build a wind turbine factory in Britain after it secured no orders for the plant, in a blow to the UK government’s drive to boost manufacturing to help revive a stagnant economy.

Vestas said it would not proceed with plans to build the factory at the port of Sheerness, southeast England, which would have created 2,000 direct and indirect jobs, but said its commitment to the sector was unaffected.

The decision is a setback for Britain’s wind energy sector and for the government, under rising pressure to ease its austerity plans, create jobs and do more to lift the economy out of recession.

Prime Minister David Cameron has repeatedly talked of the urgent need to move the economy away from the financial sector and public services towards manufacturing, particularly in the high-tech or environmental sectors.

Vestas gave no details of why it had scrapped plans for the vast factory, the size of nearly 100 soccer pitches, but confirmed it had received no orders for the V164-7.0 megawatt turbines that would have been made there.

“Such a factory is conditional on concrete orders in our order book and we have not announced any signed orders at this point,” a Vestas spokesman said. “We want a good pipeline of orders before we advance further and we do not have that.”

Vestas signed an option agreement in May on land in Sheerness, about 50 miles (80 km) east of London, aiming to build a plant for its V164-7.0 megawatt turbines. The agreement was subject to securing a satisfactory number of orders.

“Vestas’ strong commitment to the development of both the offshore and onshore wind industries is not affected by this decision,” Vestas Chief Sales Officer Juan Araluce said.

“DISAPPOINTING” DECISION

Energy Minister Charles Hendry said the decision was “disappointing” and would hit the local economy particularly hard. Britain is already anxious about the fallout from any escalation of the debt crisis in Europe, its biggest trading partner.

But he defended Britain’s position as a global leader in green energy, pointing to Sunsolar’s decision this week to build a solar panel plant in the UK after winning a government grant.

The pullout is a bad news for what Energy Secretary Ed Davey last week described as a “strategic industry of national importance” on which Britain’s “clean energy future depends”.

Like many other countries, Britain is looking for cleaner energy sources, such as wind power, to cut planet-warming emissions. London has a target to generate 15 percent of its energy consumption from renewable sources by 2020, compared with 7.4 percent reached in 2010.

However, manufacturers say big investment in the sector may be held back until the government addresses doubts about the timing and details of planned energy market reforms.

“Investors in both projects and employment are poised to follow through on pledges but delivery on green jobs needs certainty and confidence in the market,” said Maria McCaffery, head of RenewableUK, a green energy trade body.

Shares in Vestas traded down 3.2 percent at 30.67 Danish crowns at 1241 GMT, underperforming the Copenhagen stock exchange’s benchmark index which traded down 0.4 percent.

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