Wind turbine maker Siemens Gamesa narrows losses but quality issues persist
Wind turbine maker Siemens Gamesa narrows losses but quality issues persist | Windpower Monthly
Siemens Gamesa expects revenue to grow from 0% to 4% for the current financial year, the company said, but continued to post losses before special items of around €2 billion.
The turbine maker reported a loss of €434 million in the first quarter (1 September-31 December 2023) of its 2024 fiscal year, data released by the company showed, a 47.2% improvement from the €823 million loss recorded in Q1 of 2023.
The company pointed out that the continuing losses were “driven by project margins burdened by higher planned costs due to the known quality issues” in addition to rising costs “in the offshore area”.
Parent company Siemens Energy recorded profits of around €1.9 billion in the first quarter of this year, compared with a €384 million loss in the same period a year earlier.
Siemens Energy’s net income was around €1.6billion, driven by the “special items” sale of Siemens Limited, compared to a net loss of €598 million in Q1 2023.
Revenue amounted to €7.6 billion, “reflecting a 12.6% increase on a comparable basis”, Siemens Energy said, with the firm’s grids technologies business helping to drive revenue growth.
Need to re-establish confiedence
The continued losses recorded at Siemens Gamesa continued to be a key focus of its parent company Siemens Energy, CEO Christian Bruch said.
“We know that we need to re-establish some of the confidence in the market and we are all working on this step by step,” Bruch said. “I’d like to say that working through all these issues takes time. We want to do this with conscientiousness and diligence,” he said.
Bruch added: “The technical studies have been mostly concluded. The problems are now being understood."
Siemens Gamesa last year revealed widespread quality issues with components related to its 4.X and 5.X onshore wind turbines.
The OEM stopped accepting new orders for both models after reporting the quality control problems, and confirmed on Wednesday this remained the case at present. Bruch said the company was continuing to look at when it might be able to restart selling both models as it continued to address the stated problems.
Speaking at the World Economic Forum in Davos, Switzerland last month, Joe Kaeser, chairman of the supervisory board at Siemens Energy, told German newspaper Welt that Siemens Energy had fired the engineers behind the faulty 4.X and 5.X turbines.
Bruch defended the role of wind in the wider company's portfolio at the results presentation, saying: "We have a problem with wind, [but] it’s not a structural problem. I think that right now, renewables are seen in too negative a light in some areas.”
Meanwhile, the company continues to explore the potential for damages claims in relation to the supply of components for the faulty turbines.
Responding to a question on the components and whether Siemens Gamesa would pursue damages claims in relation to its suppliers, Bruch said: “When it comes to claims for damages. Yes, things are running there. There are some suppliers where we believe that we can claim damages.”
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.