Siemens Energy reported losses of more than 600 million euros, while Vestas reports an operating loss of 894 million euros.
K2 Management believes that unless the relentless drive to drive down the cost of renewable energy is refined, the ambitious targets for wind energy set by European governments will not be met. By consolidating product portfolios and focusing research and development away from simply increasing GT capacity, beleaguered turbine manufacturers can begin to stem the heavy losses experienced by companies as they bear the brunt of significant inflation in commodity prices and raw materials, and impediments to development deadlines that prevent smooth, consistent order pipelines.
Wind turbine builders Siemens and Vestas report millionaire losses
Such losses were well demonstrated by both Siemens Gamesa Renewable Energy, which reported losses of over 600 million euros in the first half of its fiscal year, and Vestas, which reported an operating loss of 894 million euros in the first quarter of 2022. .
“It is clear that there is a fundamental economic imbalance when – in one of the fastest growing industries in the world, which has huge growth targets this decade – your key manufacturer stakeholders are causing such huge losses,” said Will Sheard, Director of Analysis and Due Diligence by K2 Management. “This is undoubtedly a multifaceted challenge, exacerbated by the current macroeconomic situation. But the wind industry – and the energy transition in general – may be best served by turbine manufacturers taking their foot off the accelerator when it comes to driving innovation and simply working to deliver a small portfolio of core products, in large numbers, to help developers to achieve these large-capacity goals. Turbine OEMs have said that a relentless decade-long journey to reduce wind LCOE is becoming unsustainable. With the LCOE for wind now at a highly competitive point, there is an opportunity for turbine OEMs to scale back their ambitions for new, increasingly efficient equipment and standardize offshore on machines in the order of 15-16 MW.”
Governments cannot legislate to force our industry to focus on project delivery
More broadly, the continued push towards larger turbines may also be contributing to the disruption of more in-demand methods of procuring turbines from developers, as many grapple with whether to "play it" and build designs with currently available turbines, or wait and see. if the OEMs of turbines launch bigger and more efficient machines in the future.
"Governments cannot legislate to force our industry to focus on project delivery – and indeed, many of their policies put us on this current path – so it is up to us as an industry to collectively agree on the type of machines that will be available for the development window up to 2030,” added Sheard. “Sounds drastic, but the longevity of our key manufacturing partners may depend on such measures.”
