Murley feels the industry is in the first cycle of investment, just heading for the top of the first peak, the peak of inflated expectations. He fears the crash will be triggered by tight turbine supply, pointing to an estimated shortfall of at least 50,000 MW in manufacturing capacity over the next five years. Management and investor financial capacity also need to catch up with demand "to make it all happen," Murley says. "People are waking up to the reality that renewables has a good future, but the future is not yet. It will take longer than we expect."
Joseph Slamm of US private equity firm Hudson Clean Energy Partners agrees that wind is still at the beginning, where "expectations are very, very high. When an offshore wind farm in the EU is priced the same as onshore in the US, you have to pause and think more than twice, if we're at that tipping point," he comments.
James Knight of Augusta, a merchant bank, also places wind on the first upward curve but has a different view as to what the future holds in store. He notes that one significant driver pushing expectations higher is the "element of catch-up by industrial participants who should have been in the market earlier but were waiting to see what happens." Over the last 18 months, they have been out buying, "pushing the curve higher than it should have been because they now want to buy renewables, create platforms, position themselves," says Knight. But it can not go on for ever, he adds. It is a finite issue with a limited number of participants.
Looking forwards, Knight does not believe the crash for wind will be as severe as the Gartner curve suggests. Referring to it more as a "calming in the market," he reasons that "fundamentally this is a market where technologies can live together." There is plenty of demand for energy to go round and things will not suddenly all grind to a halt. "The EU governments especially have been very good in sustaining or delivering subsidy regimes over long periods of time to generate returns," he adds.
Bucking the trend, both David Jones, CEO of German-based Allianz Specialised Investments, and Andrew Perkins of financial advisors Ernst & Young, feel the wind industry is further along the curve and past the peak of inflated expectations. Having seen returns on investment fall steadily since 2001 -- in America they have been dipping below 6% (Windpower Monthly, May 2008), Jones believes that for equity investors the market is possibly at or near the bottom of the trough. He hopes to see more realistic pricing of assets as the entire wind business heads up the slope of enlightenment. For his part, Perkins says the business is now travelling safely up that slope on the way to the plateau of productivity. He points out that it already experienced a correction earlier this decade, when a number of companies in several countries hit financial difficulties. It was pulled out of the trough, he believes, by the effects of the Stern report on climate change, which "turned the business back onto steady(ish) growth." The few high-ticket strategic purchases of wind power owners currently seen are to be expected in a fast-growing and maturing industry, Perkins says.