Wind power industry in crisis

In the midst of the energy transition, the wind power industry is slipping into a crisis. The wind power manufacturer Nordex is closing its plant in Rostock, Siemens Gamesa is slipping deep into the red and at Vestas the workforce is on strike. Although the economics minister wants to more than double the number of wind turbines in the next 8 years, the manufacturers of wind turbines are losing orders ( Handelsblatt: 11.11.22 ).

 

 

At Siemens Gamesa and Vestas, orders fell by more than a third in the third quarter compared to a year earlier. The market leaders are deep in the red and are shedding thousands of jobs. Jochen Eickholt, CEO at Siemens Gamesa, therefore even called for financial support from Brussels. "I would advise EU politicians to introduce similar support measures for the ailing wind power industry as the US does," he said when presenting the quarterly figures. In the USA, the Biden government supports the climate-neutral industry with 400 billion euros. The expansion with solar, wind and hydropower alone is to be supported with 260 billion dollars.

 

 

Eickholt sees the energy transition in Europe threatened by problems in the supply chains and inflation. Unpredictable record raw material prices and supply chain problems caused by the Ukraine war would put a heavy strain on the wind power industry's business. With the fixed price contracts that have already been concluded, wind turbine builders simply no longer earn any money, on the contrary: they are even in the red.

 

 

To counteract this, companies are trying to cut costs. Nordex closed its factory in Rostock and relocated production to China. The business should actually be doing well, because investments are being made in the expansion of renewable energies worldwide. “The problem: the manufacturers are still not getting the orders processed with the costs that they actually should have. Finally, the technical problems were added to those of the supply chains and Corona. And at Vestas the strike,” says Dirk Briese from the market research agency Trendresearch.

 

At the Danish wind turbine manufacturer Vestas, employees have been on strike for several days to force management to enter into collective bargaining. But Vestas only wants to conclude an agreement with the works council. "The wage-price spiral is another dilemma facing turbine manufacturers, also against the background of the ever-increasing shortage of skilled workers," explains Briese. 

 

 

Siemens Gamesa made a loss of almost one billion euros in the past fiscal year and sales fell by four percent. Even the world's largest wind turbine manufacturer, Vestas, has only turned over 9.7 billion euros after nine months of the current year. A year earlier, sales in the same period were still eleven billion euros. In the current year 2022, Vestas has already made a loss of almost one billion euros, while a year earlier it was still making a profit of 135 million euros.

 

 

There has been a tough price war on the market for years. Above all, the switch from fixed state remuneration to free tendering systems, in which only the cheapest gets the contract, has driven the turbine manufacturers into ruinous competition. At the same time, the German market, one of the main sales markets, has collapsed in recent years. It is becoming increasingly difficult for the market leaders Vestas, Siemens Gamesa, Nordex and Enercon to find financiers who want to invest in wind turbines.