logo
Article

Renewable power’s big mistake was a promise to always get cheaper

Bloomberg News|Will Mathis|November 7, 2022
General

Manufacturers such as Vestas Wind Systems A/S are seeing losses pile up as orders collapse at a time when they should be capitalizing on the turmoil in natural-gas markets. To blame -- at least in part -- is the industry’s insistence that clean electricity can only get cheaper, according to Henrik Andersen, chief executive officer of the Danish wind giant.


Vestas CEO says industry went too far with cheap-energy pledge; Producers are losing money even as clean-power demand grows

Renewable-energy producers have long touted the promise of cheap electricity, an assurance that’s helped them eat into the dominance of fossil fuels. But the pledge has gone too far, according to the world’s biggest wind-turbine maker.

Manufacturers such as Vestas Wind Systems A/S are seeing losses pile up as orders collapse at a time when they should be capitalizing on the turmoil in natural-gas markets. To blame -- at least in part -- is the industry’s insistence that clean electricity can only get cheaper, according to Henrik Andersen, chief executive officer of the Danish wind giant.

“It made some people make the wrong assumption that energy and electricity should become free,” Andersen said in an interview in London. “We created the perception to some extent. So we are to blame for it. That was a mistake.” 

While wind-power costs have steadily declined, to the point where many people concluded prices would eventually hit zero, ... more [truncated due to possible copyright]

     

Vestas CEO says industry went too far with cheap-energy pledge; Producers are losing money even as clean-power demand grows

Renewable-energy producers have long touted the promise of cheap electricity, an assurance that’s helped them eat into the dominance of fossil fuels. But the pledge has gone too far, according to the world’s biggest wind-turbine maker.

Manufacturers such as Vestas Wind Systems A/S are seeing losses pile up as orders collapse at a time when they should be capitalizing on the turmoil in natural-gas markets. To blame -- at least in part -- is the industry’s insistence that clean electricity can only get cheaper, according to Henrik Andersen, chief executive officer of the Danish wind giant.

“It made some people make the wrong assumption that energy and electricity should become free,” Andersen said in an interview in London. “We created the perception to some extent. So we are to blame for it. That was a mistake.” 

While wind-power costs have steadily declined, to the point where many people concluded prices would eventually hit zero, technological advances can only go so far. Now the industry needs to charge more so that it can deliver the massive scale-up needed for countries to achieve ambitious climate goals. 

Wind Woes

Soaring commodity costs and supply-chain bottlenecks have wiped out profits for much of the wind industry this year. Vestas expects its profit margin to be around -5% in 2022.

“The output from the turbine has never been more valuable,” Andersen said. “But we are losing money in manufacturing a turbine.” Vestas has raised prices more than 30% in the past year to help stem losses.

To be sure, wind power remains competitive with other energy after Russia’s invasion of Ukraine drove up prices for fossil fuels. But government auctions for new wind farms put pressure on companies to keep prices low, while costly and lengthy processes to gain planning permission continue to inhibit growth.

Cost Contest

Permitting in Europe is the “overriding biggest challenge,” Andersen said. While long-term targets for the electricity sector are set in the nations’ capitals, the actual approvals for individual projects are made on a local level in offices that are often understaffed and under-resourced. 

“You have actually right now delegated your defense and energy policy furthest away from where it needs to be,” the CEO said. “You cannot run energy and defense policy in the municipalities.”

Content truncated due to possible copyright. Use source link for full article.


Source:https://www.bloomberg.com/new…

Share this post
Follow Us
RSS:XMLAtomJSON
Donate
Stay Updated

We respect your privacy and never share your contact information. | LEGAL NOTICES

Contact Us

WindAction.org
Lisa Linowes, Executive Director
phone: 603.838.6588

Email contact

General Copyright Statement: Most of the sourced material posted to WindAction.org is posted according to the Fair Use doctrine of copyright law for non-commercial news reporting, education and discussion purposes. Some articles we only show excerpts, and provide links to the original published material. Any article will be removed by request from copyright owner, please send takedown requests to: info@windaction.org

© 2022 INDUSTRIAL WIND ACTION GROUP CORP. ALL RIGHTS RESERVED
WEBSITE GENEROUSLY DONATED BY PARKERHILL TECHNOLOGY CORPORATION