Vestas’s secret to success

Vestas Wind Systems is a Denmark-based company specializing in wind energy. With roughly 35% market share around the world, Vestas has managed to build a real business in alternative energy alongside giants, such as General Electric and Siemens. Vestas posted more than $3 billion in revenue for 2004, up more than 50% from the year-ago period. Although the company posted a net loss for the year, results were hurt by one-time costs. Still, the company does have positive EBITDA (earnings before interest, taxes, depreciation, and amortization) - something that many alternative energy players around the Globe can only dream about. In addition, Vestas booked more revenue in 2004, as compared to American independent fuel cell companies have managed in total.

So, what's the secret behind Vestas? For starters, it has not endeavoured to change the world. Instead of crafting technology that forces everyone else to adjust to it, it manufactures products that fit into existing systems. What is more, the technology is also cost-competitive. While wind energy is not practical everywhere, in those places where it is appropriate (after all, wind is essen-tial), it does very well. In fact, at an approx. rate of $0.06 per kilowatt-hour, wind energy is equivalent in many cases to existing coal or gas-fueled electricity, and that without any special government handouts or programs. Furthermore, optimism about renewable energy is all well and good, but the usage of basic economics still wins out in the end. In other words, no matter how cool the technology may be, it also has to make financial sense for the intended end users, other-wise it is merely a fancy science fair project. Vestas’ secret: a solid business plan and products that are not only economically competitive, but also innovative.