It's not winter that's coming. It's summer, and with it, homeowners are dusting off the sprinkler systems to ensure that their lawns are lush and green during the next few months. Officials may be less enthusiastic, however, curbing the extent to which the water stays on. The problem is that half of the country is currently experiencing some sort of drought conditions, with nearly 15% of the country suffering from extreme to exceptional drought.
One industry stands to potentially profit from the crisis: the wind industry. Although more water seems like the most logical solution to the crisis, the wind industry can also play a substantial role. To some extent, it already has. The American Wind Energy Association estimates that in 2013, wind power saved the country from consuming 35 billion gallons of water.
The U.S. forecast: dry with little chance of rain
Climate change debates aside, the drought conditions are incontrovertible. Worse, experts believe that there is no relief in sight. Taking this under consideration, utilities may increasingly turn to wind power. Consuming virtually no water, wind turbines are a logical solution to the energy needs of drought-stricken states. Interestingly enough, some of the areas which are suffering the greatest from the drought conditions are areas that are best-suited for the adoption of wind power.
The installation of utility-scale wind farms is dependent on a variety of factors but none as significant as the average wind speed for the area. For this reason, the installation of wind farms in a majority of the Southwest is not a logical solution. For the Midwest and Texas, however, the conditions exist to make wind power a viable solution.
Nebraska, Kansas, Oklahoma, and Texas are states that are severely affected by the drought and states in where the conditions are conducive to wind power. Already the nation's leader in wind farm development, Texas has more installed wind capacity through 2013 than any other state: 12,355 MW. California, the state with the second largest installed capacity, lags far behind with 5,830 MW. Nonetheless, the state still greatly benefits from its wind power facilities. California conserves 2.8 billion gallons of water per year thanks to its wind power facilities.
Who stands to benefit
Most likely to benefit from increased interest in developing wind power facilities are the wind turbine manufacturers. Vestas Wind Systems (NASDAQOTH:VWDRY). Earlier in May, Vestas installed its first V110-2.0 MW prototype turbine in Denmark. The turbine is intended for installation in low-wind environments, meaning that it would be an excellent choice for drought-stricken states which are not suitable for traditional turbines. The model has already received considerable interest in the United States.
According to Chris Brown, President of Vestas' sales and service division in the United States and Canada, "The turbine has been very well received by the market since being launched in 2013, particularly in the United States, with firm orders approaching 800 MW." In general, Vestas is committed to the U.S. market -- in the first quarter of 2014, the U.S. accounted for 25% of the company's total orders.
Siemens AG (NASDAQOTH:SIEGY) is another major player in the U.S. wind power market, having already installed a significant amount of wind capacity in drought-plagued states. In Iowa, MidAmerican Energy selected Siemens for a massive order -- the largest onshore wind turbine order in the world -- of 1,050 MW. Siemens also recently received a 28 turbine order totaling 68 MW for the Windhorst-2 Wind Power Plant in Texas.
Also in Texas, Siemens will be supplying the 182 MW Panhandle 2 facility with 79 turbines. In California, Siemens has finalized a contract worth 112 turbines with Pattern Energy (NASDAQ:PEGI) for the Ocotillo Wind power project in southern California. The deal includes a two-year service and maintenance contract.
Owning and operating 11 wind power projects in the United States, Canada, and Chile, Pattern Energy has partnered with Siemens on two other projects in locations suffering from the drought as well. Located in northern California, Pattern Energy's Hatchet Ridge facility is comprised of 44 Siemens turbines. In Nevada, the Spring Valley Wind facility is comprised of 66 Siemens turbines.
The Foolish conclusion
One of the most widely known politicians of the twentieth century, Winston Churchill once said, "Never let a crisis go to waste." The drought plaguing much of the United States has certainly reached crisis-like levels in some areas, and Vestas, Siemens, and Pattern Energy are three (of what may be many) companies interested in not letting this go to waste.
Scott Levine has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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