Vestas and Competitors Face Challenges Amidst Turbulent Wind Turbine Industry
Published · 3 min read
The wind turbine industry, once considered a beacon of renewable energy, continues to grapple with financial headwinds as leading manufacturers struggle to turn a profit in the face of escalating material costs and supply chain disruptions. Danish wind turbine giant Vestas, along with its competitors Siemens Energy and General Electric (GE), recently reported losses in their quarterly results, highlighting the industry’s need for maturity and stability.
Vestas, a market leader in wind turbine manufacturing, revealed a 4 percent increase in sales to 3.4 billion euros for the quarter. However, the company also faced a loss of 70 million euros before interest and taxes. Board Chairman Henrik Andersen acknowledged that the wind turbine industry is still in a maturation phase, aiming to achieve efficiency, quality, and scale, as he commented on the company’s quarterly figures.
This trend is not unique to Vestas. Siemens Energy and GE’s wind arm have also found themselves in the red. Despite strong sales and order books, both companies have struggled to overcome high material costs and production hiccups that are impeding their return to profitability. Vestas anticipates continued disruptions in its supply chain throughout the second half of the year, though it remains optimistic that the situation will gradually improve.
Vestas’ order book tells a different story, with orders for new wind turbines soaring by 8 percent from April to June. This boost propelled the order book to an impressive 20 billion euros. Coupled with maintenance contracts, the total order book swells to an astonishing 52 billion euros, underscoring the strong market demand for wind turbines.
The recurring production challenges in the wind turbine industry are not new. In the previous year, major players like Vestas, Siemens Gamesa, GE, and Nordex collectively recorded losses of 4.7 billion euros. One contributing factor to these difficulties is the rapid pace of innovation. Companies often strive to unveil larger turbines every two to three years, enhancing power output. Vestas’ technology chief, Anders Nielsen, admitted the need to moderate this drive for constant innovation and prioritize stability.
Siemens Energy recently announced an expected loss of 4.5 billion euros for the year, primarily due to technical problems and cost escalations within its Spanish wind subsidiary, Gamesa. A noteworthy issue facing the industry is the appearance of “wrinkles” on turbine blades, which impacts their performance. Jochen Eickholt, Chairman of Siemens Gamesa, acknowledged that the rush to market has sometimes led to insufficient testing of new turbine designs.
On the other hand, General Electric’s energy division experienced a 25 percent surge in sales during the second quarter, reaching $3.8 billion (3.5 billion euros). While the increase in sales didn’t directly translate into profits, the losses did show a decline. GE Renewable Energy reported a loss of $359 million, a decrease from the $419 million loss recorded the previous year.
GE’s Renewable Energy arm boasts the impressive Haliade-X turbine, currently the largest wind turbine on the market. Standing at an impressive 260 meters, the turbine’s 107-meter-long blades generate enough electricity from a single rotation to power an average household for two days. Despite this innovation, the industry is beginning to grapple with the balance between innovation and the stability required for sustained profitability.
As the wind turbine sector navigates these challenges, industry leaders are increasingly recognizing the need to balance innovation with rigorous testing and supply chain resilience. The sector’s journey towards maturity remains crucial not only for the manufacturers’ financial stability but also for the global transition to renewable energy sources.
