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Wind energy companies in contract dispute of over $400 million

As alternative energy companies continue to work on ways to grow in a competitive market, they have to ensure that contracts are honored. In this case, a Dallas-based wind tower manufacturer is suing a wind turbine builder for breach of contract due to hundreds of millions of dollars in unfulfilled purchases.

Trinity Structural Towers Inc., a subsidy of Trinity Industries, sued Suzlon Wind Energy Corp., the North American subsidy of India-based Suzlon Group, for failing to comply with a contract that called for Suzlon to purchase $501.1 million worth of wind towers through 2013.

In its lawsuit filed in district court in Dallas County, Texas, Trinity says that Suzlon has only purchased $88.6 million worth of wind towers. It accuses Suzlon of breaching the original deal, which was for $377.3 million in purchases through 2011, and that Suzlon does not have production space ready for the 2012 and 2013 purchases that raised the total of the original deal.

The company says that the $412.5 million in wind towers yet to be delivered represents nearly 44 percent of its backlog, and that Suzlon's failure to comply with the contract is damaging the company. The company, however, says that it still wants to complete the agreement.

Suzlon says the contract dispute is a result of the sluggish market in the United States, and that it wants to work with Trinity on an agreement. The company had to idle a plant in another state in 2010 after it stopped receiving orders.

Trinity is correct in wanting its contract enforced. Despite the downturn in the economy, Suzlon should have made a good-faith effort to honor the contract, and should have worked toward a mutual solution if it knew it wouldn't be able to comply.

Source: India West, "Dallas, Texas Firm Sues Suzlon over Wind Power Supply Deal," Jan. 11, 2012