The pace of wind installation growth fell last year for the first time since 2018. — Bloomberg
SYDNEY: Wind energy is meant to thrive in turbulent conditions. In 2023, the companies that seek to harness it are battening down the hatches.
Siemens Energy AG has confirmed it was seeking German government support for loan guarantees to help it win contracts, sending the shares plummeting 35%.
The total decline has been 68% since late June, when the maker of wind and gas turbines forecast a 4.5bil (US$4.8bil) annual loss stemming in part from faulty products at its renewable unit Gamesa.
It’s not the only one caught in squalls. Xinjiang Goldwind Science & Technology Co, the biggest turbine manufacturer, reported the following day that third-quarter profits fell 98%.
On Wednesday, General Electric Co said losses from its wind unit in 2023 and 2024 would total about US$2bil.
Problems have been building for the best part of two years. The pace of wind installation growth fell last year for the first time since 2018. No offshore bids were submitted in the UK’s latest wind auction in September.
New York regulators this month blocked developers’ request to alter contracts for 4GW of projects off the coast of Long Island to accommodate higher costs.
BloombergNEF now expects US offshore wind capacity to be just 16.4GW by the end of the decade, not much more than half of the Biden administration’s 30GW target.
The wrenching recovery from Covid-19 has been a perfect storm for wind.
Expenditure for renewables is almost all upfront, meaning the sector is unusually sensitive to borrowing costs.
That meant it thrived in the long bull market for bonds, when the popularity of debt pushed down interest rates – but it’s been hit as credit markets sagged since 2020.
A 3.2 percentage-point rise in the cost of capital can lift the price of German offshore wind by 26%. — Bloomberg
