Q&A: Vestas' Morten Albaek - Part 2

This is the second part of a two part interview with Morten Albaek, the chief marketing officer globally for leading wind turbine manufacturer, Vestas. The first part can be found here.

In the transcript below Albaek discusses:

-- A new market segment Vestas has identified of large corporations outside the power sector who are interested in investing in their own wind farms.

-- Issues around community support for wind power and the effort of the anti-wind farm lobby to link wind turbines with health problems.

A new market niche for wind turbines – carbon conscious corporations outside the power sector

TE: So, what brings you to Australia? What are the reasons that you would fly out to this far flung country?

MA: It's a global campaign that we've been running which we call the Energy Transparency Campaign, which is about providing transparency to corporations about the benefits of investing in renewable energy and especially in wind energy. We have been in Rio and we have been in London, we have been in New York and now the final stop on that campaign tour was Sydney where we hosted, together with Bloomberg New Energy Finance, a large event at their premises in Sydney last Wednesday.

TE: And so, what's the point of transparency around corporates and their attitudes to renewable energy? How is that a benefit for you as a company considering generally the buyers for your equipment and the people that do renewable energy are generally energy companies responding to a government obligation or a government incentive?

MA: We have seen the emergence of a new customer segment in the business of wind which we call the carbon conscious corporations. It is corporations that do not have power generation as a core business, but nonetheless are investing directly through equity financing into wind power plants or the signing of long-term PPAs as a part of financing the projects. And this emerging customer segment is growing fast and we have high expectations for it commercially in the coming years, but already this year in 2012 we have closed a deal with Ikea in Sweden of 90 megawatts which is a pretty big deal. We have also announced a deal in Mexico for approximately 400 megawatts where the PPAs and a part of the financing came from Heineken and Coca Cola FEMSA. Google have also bought Vestas equipment this year.

We do believe that there are a lot of corporations out there that could see significant benefits by turning energy around from a cost to an investment with a return, which is actually what you do when you start becoming an owner or co-owner of your own power generation.

TE: It might be a bit of a surprise to people in Australia that there would actually be any kind of appetite and market for investing in wind projects on a voluntary basis.

MA: Yes. But now I can confirm that's a fact. And the reasoning for that is threefold. There is hedging of energy costs because that's actually what you do when you get your energy from, wind energy, then you have a certainty for the price plus 20 years ahead. You can't get that from many other energy sources.

TE: Can you just say why that is?

MA: Because almost all of the cost for wind is upfront and you have no ongoing fuel cost and output from wind is quite predictable. So, there will be no volatility over 20 years. The certainty of your energy costs, even though that it may be a little bit higher than what you could get you could say day trading, is a value that big corporations really, value a lot.

Then there is energy… securing your energy supply. In certain parts of the world you can't be certain that you can actually get access to the energy that you need to run your business, so that's the second driver.

And then thirdly, there is the consumer demand for corporations, especially business to consumer corporations, consumer brands, for greening up their business models and making sure that the products that they put to the market are not ruining the planet that the consumers are living on.

TE: Is there any firm interest at this stage from some Australian companies in investing directly?

MA: No. Not any formal negotiations going on, but we've only just launched the energy transparency campaign in Australia.  We invited 200 Australian corporations to be a part of the corporate renewable energy index; in other words, to be 100 per cent transparent about what type of energy they are using to run their business and 21 chose to disclose, so that is a little bit more than 10 per cent and I think it's very courageous of these corporations to be the first movers in creating this energy transparent reality. 

Globally, it is 400 corporations that are part of the corporate renewable energy index and it's an increase of 100 corporations from 2011 to 2012 that have chosen to disclose.

Now, is that the same as an interest in direct investments? Yes, we also see that there is an increasing interest globally in investing directly, even though that it is still primarily RECs and carbon offsets that the corporations are using to make sure that they are as green and as sustainable as possible. 

And that brings me to a point that I also made earlier, which is when you buy RECs, which is certainly better than nothing, but it's a cost.  Whereas if you turn the cost of buying RECs around and make it into equity finance, into buying either full or a part of a wind power plant, then you are going to get a return on that investment nine, 10 years down the road. 

We've come to Australia because we actually do believe that with a little bit of enlightenment and motivation and insights into the benefits and how you can do it that Australian corporations will also see the commercial opportunity.

Community support for wind and the anti-wind farm lobby

TE: One of the challenges that we're dealing with here in Australia is a perception that wind turbines could be causing health issues. Is that something that you've seen as a widespread issue and what sort of research is Vestas doing around this particular topic?

MA: Questions surface around whether it has any negative health impact, such as infrasound and stuff like that. And we take that extremely seriously because if there were any scientific proof from states or global health organisations that said that wind turbines were having a heavy impact on people's health, the ones that lived close by, then we would of course shut off the turbines. But the fact of the matter is that such evidence hasn't been produced from any national or global scientific institution.

TE: Do you see this issue come up more prevalently in some geographies versus others?

MA: And now this is really said with a wink in the eye, and I know it's a Commonwealth thing, but the UK is also pretty progressed in their anti-wind lobbying efforts. But the concern needs to be taken very, very seriously and you need to take it seriously through enlightenment and through information and through facts.

But at the end of the day if the facts were showing that wind turbines were creating significant health problems for people living in the communities that have wind turbines nearby, then responsible legislation would of course happen. But such scientific conclusions have not been drawn by any respected national government institution or international health authority.

TE: But the criticism, from the anti-wind farm lobby, is that they haven't looked for the evidence.

MA: Yes, but that's not right.

TE: I mean it's not as if wind turbines are a new thing. They've been around for a long time and been quite widespread and close to human populations in Europe. What are we seeing or not seeing in Europe?

MA: But I would say firstly, as you said, Vestas have existed for 32 years. We have installed 25 per cent of all turbines on the planet, 60 per cent more than number two, in 70 countries. There are wind turbines all over the place in Denmark, all over the place, and they have been there yet again for 30 years, installed, taken down and reinstalled. They've grown bigger. People have been living 500 metres, a kilometre away and studies have been made. 

There is no scientific conclusion that there is any negative health impact of living nearby a wind turbine. That is the fact. 

But what I'm also saying is that if the World Health Organisation comes with a report that states that there are significant health impacts of wind turbines, you can rest assured that Vestas and the whole business of wind globally of course would step up and take the necessary measures.

But I'm also just pointing to the fact such a report… Call the World Health Organisation and ask them whether they exist. Call any state health institution and ask them whether such a report exists and you'll get the same answer across the planet. And either we believe the scientific environment is corrupt, ignorant or lazy or we conclude that there is no scientific proof.

TE: The amount of wind turbines that we've installed in Australia and the proportion of our power supply is pretty small relative to say Germany or Denmark, yet I would say the level of angst … or at least media coverage of the angst seems to be of greater proportion than some of these other locations where you've had wind turbines for a longer period and are more prevalent. Do you think there's something that we could learn from say Germany or Denmark in terms of how they've approached the rollout and the planning and the community involvement that perhaps we could do better here in Australia?

MA: I think that's a part of it ….but look the Clean Energy Council carried out a study about people in Australia that actually live around wind power plants and the vast, vast, vast majority are very happy and feeling well and have seen absolutely no negative impacts of it – neither economically or socially or healthwise.

And I think just pointing to that fact, let's look to the experts here. Who are the experts here? The experts are the ones that are living like two kilometres, one kilometre, 500 metres away from the turbine and I think that we, in the two countries that you are mentioning, have been good to point concerned citizens to citizens that are living with and nearby wind power plants and let them have a dialogue. Then of course there will always be the few selected that really, really, really don't like wind energy and that is fair. 

But in Australia the fact of the matter is that while one out of five Australians don't want to have a wind turbine in sight, there's another four out of five who have no problem with it.  It seems as if that we sometimes forget that the silent majority and zoom in on the very, very loud minority.

So, there is no doubt that the anti-wind lobby, both in Australia as well as in other parts of the world, is very, very loud, but it's not big.  If you come back to the facts, 83 per cent of Australians want to see more renewable energy go into the grid the next coming five years. So, that's a very, very big support to the RET.

Together with the fact that there are actually four out of five Australians that do not have an issue with a wind turbine being in sight, that shows you this country is not as much in opposition to transforming the energy mix that you sometimes might think from reading certain media.