Wind power giants buffeted by write-downs and losses 

Orsted, the world's biggest offshore wind project developer which also has major projects in Ireland, has announced job cuts following a review

The wind energy industry faces losses and delays.

The world's three biggest wind power groups — Siemens Energy, Orsted, and Vestas — have given a sober view of the year ahead for an industry buffeted by project delays, equipment problems, and inflation.

Siemens Energy, the world's largest maker of offshore wind turbines, expects a 2024 loss before special items of around €2bn at Siemens Gamesa. The wind division has had to deal with the cost of addressing quality problems affecting some onshore models.

Siemens Energy chief executive Christian Bruch said the overall energy sector had strong fundamentals, but noted "that the speed at which grids and renewables are expanding is still not sufficient".

He said the current expansion, most of which is happening in China, put the world on track to increase global renewable capacity two-and-a-half-fold by 2030, below the three-fold target agreed at last year's COP28 climate summit in Dubai.

In addition, rising prices for raw materials and components as well as regulatory delays have caused write-downs and losses across the wind industry despite robust demand for renewable technology. Turbine makers have been particularly hit.

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"You see the terms and conditions of the projects being too difficult for investors and project developers to take. So we are in a standstill," said Danny van Doesburg at Dutch APG Asset Management. 

"The market is not functioning anymore," he said, calling for a stronger role for governments to help deliver a market model that distributes profits throughout the value chain.

Anders Schelde, chief investment officer at Danish fund Akademikerpension, also said market conditions in offshore wind needed to be reset to make the sector profitable again.

Vestas, the world's top maker of wind turbines, swung to a fourth-quarter profit, but said it would not pay a dividend for 2023, and its CEO Henrik Andersen said challenges would continue to weigh on the sector this year. He said the company was working closely with developers and governments to ensure a fair split.

Orsted, the world's biggest offshore wind project developer, announced a review as well as job cuts following major write-downs on delayed US projects. The Danish group which has significant projects in Ireland said it aimed to reduce fixed costs by 2026, which would include 600 to 800 job cuts globally, flagging around 250 redundancies in 2024 as part of the review.

"In order to improve our competitiveness, ensure value creation, and ensure our ability to attract capital to the renewable build-out, we will make Orsted a leaner and more efficient company," CEO Mads Nipper said.

Norwegian oil and gas group Equinor said it remained committed to offshore wind and other renewables despite lower returns, in line with its long-term plan to diversify its income. 

Reuters