Offshore wind turbines have a nice tailwind as politicians around the world clamp down on carbon emissions. But global leader
also needs to watch its back: The likes of
are raising their game.
The Spanish-German company’s latest quarterly results, published in full Friday, show a work in progress. Margins rose to 5.3%, having been negative in the comparable period, while orders and revenues disappointed, albeit primarily due to pandemic impacts and currency effects.
The company’s shares are down about 8% since headline figures were released last Sunday, but that fall comes after they more than doubled in the past year. Investors are buying into the massive rollout of renewables as countries, now including the U.S., have promised to decarbonize.
Offshore wind farms are a small part of installed renewable capacity globally, but huge growth is expected as costs continue to fall. Building on water is more complex and expensive than on land, but sea winds are stronger and more consistent and bigger turbines produce more power. BloombergNEF forecasts the installation of 19 gigawatts of offshore wind capacity in 2025, up from just five in 2020.
Siemens Gamesa makes and services wind turbines for land and sea.
who took over as chief executive in June 2020 having previously run its offshore division, has launched a plan to turn around the troubled onshore business. It is early days but there has been some progress, with the closure of two sites in Spain and job cuts in Denmark and India.
The company has an offshore order book of 6.1 gigawatts and prices seem to be holding up. It has 9.3 gigawatts in the pipeline that Mr. Nauen is “very confident” will turn into firm orders and he also plans to bid for another 25 gigawatt of projects before the end of 2021.
Competition is building, though. Although Chinese manufacturers continue to focus on their relatively protected domestic market, leading onshore turbine-maker Vestas is spreading its wings. Last October, the Danish company took control of its offshore joint venture and is thought to be working on a new turbine design.
General Electric has also stepped up its efforts. It recently introduced its new Haliade-X turbine, currently the largest in the market. It is also taking its fight to court: Since last summer, GE filed two patent infringement lawsuits against Siemens Gamesa. The U.S. company has filed similar suits against wind-turbine manufacturers in the past and Siemens Gamesa has filed a counterclaim in the U.S. While the dispute is an unwelcome distraction for Mr. Nauen, it is also a sign that GE considers his company a serious rival.
With renewable energy now a top policy priority globally, the market’s growth might be enough to keep everyone busy, but it also could get more cutthroat. Investors need to keep a close eye on those margins.
Write to Rochelle Toplensky at firstname.lastname@example.org
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