Wind Developer Siemens Gamesa Reports Quarterly
Loss Just Below $1 Billion Citing Slow Permitting, Electric Grid Constraints,
and Regulatory Uncertainty. Meanwhile Environmental Groups in the U.S. Argue With
One Another Whether Offshore Wind Development is Leading to Whale Deaths
These new
rather unsettling headlines about wind development are concerning. Siemens
Gamesa cited slow permitting, grid constraints, and regulatory uncertainty. These
are causing employment destruction and investment constraint, it was noted. They
had already faced significant losses in the hundreds of millions due to manufacturing
flaws in turbines that caused them to wear out quickly. The consensus seems to
be that they scaled up deployment of new turbine designs without enough testing
time. One would think that a wind turbine company would be profitable in an industry
buoyed by significant direct government subsidization. I am guessing high
energy costs in Europe did not help their profits either. The manufacturing
flaws will increase service and warranty costs. Other issues negatively impacting
wind component manufacturers, especially those in Europe like Siemens Gamesa
and Vestas Wind Systems, include high steel prices and supply chain issues that
lead to delays. Vestas also reported steep losses. These companies will be raising
their prices, making wind energy more expensive.
Demand for
wind is still growing and is expected to continue to grow due to governmental pressures
to meet decarbonization targets. However, it appears it will get more expensive.
In one sense the deployment of turbines is too slow due to delays, but in
another sense, it is happening too fast due to manufacturing flaws not being
worked out.
Environmentalists and wind groups have been complaining that wind deployment
is falling behind decarbonization targets, targets that many of us pragmatic
energy scholars think are far too ambitious. Unfortunately, these groups have
been given a lot of clout in determining the world’s energy future, which in
itself is concerning. In a lot of places siting problems and public opposition
have been slowing deployment, not only of wind farms but of the transmission
lines needed to carry them. The International Energy Agency states that 70-80
GW of offshore wind will need to be deployed annually to 2050 in order to meet
net-zero targets. In 2022 just 21.1 GW of offshore wind was deployed. It should
perhaps be pointed out that even with that under-deployment to meet targets,
costs are rising, supply chains are strained, and manufacturers are
experiencing problems and profitability issues.
Meanwhile an
uptick in dead whales appearing on the East Coast has one set of
environmentalists blaming wind development and other set of environmentalists
denying that is the cause. Nine whales, two sperm whales and seven humpback whales
have been found dead in less than two months. The only new industrial or human developments
in the area are offshore wind. One set of groups is calling for the industry to
slow down and study the issues and get more public input, citing the Marine Mammal
Protection Act, while another set, including the Sierra Club, is saying that
fishing and vessel strikes could be causing the deaths and that slowing wind
development will slow the stemming of climate change impacts. Other groups were
more middle ground. The Center of Biological Diversity called for slowing wind development
in the area. Incidentally, that group itself is not middle ground at all as I
have found them to be one of the more radical and biased groups despite their
pragmatic view in this case and I do not think their name fits them – they are
not a scientific group as the name appears to suggest, but a radical environmental
group. I am wondering how these issues will affect Biden’s plan to establish 30
GW of offshore wind by 2030, which is less than 83 months away from now.
References
Massive green energy company reports nearly $1
billion in losses, calls for 'further governmental action'. Thomas Catenacci.
Fox News. February 2, 2023. Massive
green energy company reports nearly $1 billion in losses, calls for 'further
governmental action' (msn.com)
Siemens’ troubles mount on wind turbine flaws. The
Star. (Bloomberg). January 24, 2023. Siemens’
troubles mount on wind turbine flaws | The Star
Wind energy expansion faces strong headwinds across
US, industry report shows. Thomas Catenacci. Fox Business. July 15, 2022. Wind
energy expansion faces strong headwinds across US, industry report shows | Fox
Business
Uptick in dead whales along East Coast sparks
intense debate among environmentalists over offshore wind. Thomas Catenacci.
Fox News. Feb. 2, 2023. Uptick
in dead whales along East Coast sparks intense debate among environmentalists
over offshore wind | Fox News
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