![]() ![]() The time between the order intake and the commissioning of a wind turbine can take up to 18 months (especially when supply of materials is short)." Consequently wind turbine orders were not necessarily indexed to inflation. "A main problem for the OEMs is that not all countries had indexed their renewables auctions. rising electricity prices, etc.)," Zipf explained. This comes on top of the challenging inflationary environment all European businesses are operating in (i.e. The price of both skyrocketed after the invasion. "OEMs were sourcing some material from Russia (mostly nickel) and Ukraine (mostly steel). WindEurope estimates that the rise in commodity prices has increased the price of wind turbines by up to 40% over the last two years. These manufacturers have since endured a further shock from soaring inflation and input costs as Russia's invasion of Ukraine disrupted markets and aggravated supply chain disruptions. The ensuing supply chain problems then hampered OEMs. The industry was hit hard by the Covid-19 pandemic, as resulting lockdowns depressed industrial activity and reduced global energy demand. The Statistical Review of World Energy report published last week revealed that wind and solar power accounted for 12% of the world's power generation last year, with wind power output increasing by 13.5%. The introduction of competitive auctions has also been a driving factor in this cost reduction," Zipf added. "This means that turbines have become bigger as well, posing challenges to components (quality, materials, longevity). He said that 20 years ago, a typical wind turbine would have 1 million watts of capacity today, European original equipment manufacturers, or OEMs, are testing 15 MW turbines. "These cost reductions have been achieved with innovations in turbine technology and by pushing the boundaries of engineering," Christoph Zipf, spokesman for industry body WindEurope, told CNBC via email. The wind industry has expanded rapidly over the past two decades, lowering costs to rival - and sometimes undercut - those of fossil fuels, while boosting efficiency with ever-bigger turbines and reducing reliance on state subsidies. The company's shares have recouped some losses, but remain down over 33% in the last month. Siemens Gamesa's board is now due to conduct an "extended technical review" into the issue, which is expected to incur costs in excess of 1 billion euros ($1.09 billion). It wasn't that Siemens Gamesa is a bad operator as such, it's that actually some of the normal protocols and time in use, operational data in use, is relatively limited." "Although it's hard to tell at the moment, my best guess is that this probably actually is an industry-wide issue. "We have to acknowledge that putting brand new machinery - whether it's on-shore or even more difficult off-shore wind farms - and the pace of change in that machinery has put us into slightly uncharted territory," he said. Nicholas Green, head of EU capital goods and industrial technology at AllianceBernstein, told CNBC that the pace of expansion, and the fact that many components of larger turbines haven't actually been in use for very long, means there could be inherent risks throughout the sector. Siemens Energy stock plunged by around 37% on June 23, while other wind companies also saw shares retreat as investors worried that the problems at Gamesa might be a symptom of a wider issue for the industry. Siemens Energy CEO Christian Bruch told journalists on a call Friday that "too much had been swept under the carpet" at Siemens Gamesa and that the quality issues were "more severe than thought possible." Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit ![]()
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