Favorable media coverage, public approval, and government subsidies aren't enough to keep wind turbine manufacturers profitable. Climate change demands, green energy transformation, and gigantic investments aren't enough to mature manufacturing quickly. Here's the latest from western manufacturers.
Wind power manufacturers outside of China are facing major losses while product demand grows. Top 5 Chinese manufacturer Zhejiang Windey Co. looks for export pricing to drop 15-20% per GWH of capacity in 2023 (BNEV) as China exports more than USD$100B of ‘clean energy’ to the planet (WM). EU manufacturer Siemens Gamesa is facing a Euro1B (USD$1.09B) quality problem in 15-30% of its installations with losses totaling more than Euro1.5B (USD$1.64B). Vestas previously acknowledged 600M in quality problems.
Chinese exports of wind power components and services threaten the viability of EU-based manufacturers. Chinese producers are looking to continue dropping export prices while EU-based manufacturers see cost pressures, huge warranty claims, and lower domestic market orders.
The four largest wind manufacturers outside China all had losses in 2022. Nordex (-Euro498), Siemens Gamesa (-Euro940), Vestas (-Euro1572), and GE (-Euro2050). Wind energy operators are reporting operating margins in the range of 15% in the same period. The pressure for renewable wind energy is not matched by the creation of a stable earnings flow for non-Chinese manufacturers.
Wind power is a key for renewable energy in plans by the UN, International Energy Agency, regional bodies (EU), national governments, and industries. Advocates (WE) claim 2022 Euro42B in EU GDP activity from 300000 employees with each wind turbine generating Euro11M of economic activity. The EU’s wind objective is 43% of 2030 electrical consumption up from 17% in 2023. The EU needs 30GW of new wind farm power every year although not reaching this in current investments.
Total global wind power installations in 2019 were less than 60GW of capacity. 2023 forecasts are for 110GW with onshore Chinese installations >60% of demand (BNEF). In 2023 China alone will install more than 61GW – more than twice EU unmet targets. China has added more than 159GW in the last three years even with a slowdown for Covid-19 (CN). Global demand for wind power installations could increase with larger governments’ interventions like the USA Inflation Reduction and Infrastructure Acts.
EU manufacturers Siemens Gamesa and Vestas were #1 and #2 in 2019. Now they see marketshare losses and huge pressures from Chinese competitors, cost increases in raw materials, and increasing manufacturing costs. Many wind deals were ordered in a landscape of lower interest rates and lower material costs even as future delivery costs climb.
EU-based Vestas has not reported high earnings even as product backlogs hit Euro19.7B and service agreements in future reached Euro31B in early 2023. In 1Q2023 Vestas booked less than 15% of global orders for products. Chinese 1Q2023 activity was 65% of global orders of 23.5GW. #1 and #3 Chinese producers Envision (3.6GW) and SANY (2.6GW) combined to almost double Vestas (3.3GW) orders.
Siemens Gamesa sees a Euro17B in future service agreements even as it works to service problems in existing installations. Siemens Gamesa has product order backlogs of Euro17.6B for future installations.
US-based GE Renewable Energy/Vernova is rebuilding with corporate GE’s restructuring. GE has decided to specialize in low-to-medium wind optimized turbines and energy services. The number are being reduced for simplicity for turbine configurations(9 -> 4), rotor styles (15 -> 4), and tower models (40 -> 9).
See EkaLore's other releases about how foreign manufacturers are Alien Invaders in the green energy transformation.
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