Siemens Energy to Face Consequences of Wind Turbine Issues

Siemens Energy, a German group, has announced a charge of 2.2 billion euros ($2.4 billion) due to quality issues related to its wind turbine unit, Siemens Gamesa. This charge will result in a net loss of 4.5 billion euros for the fiscal year ending in September 2023, significantly higher than what analysts had anticipated.

The troubles faced by Siemens Energy are a cause for concern for its investors. In June, a profit warning related to malfunctioning turbines resulted in a one-third decrease in the company’s stock market value. A customer who had purchased wind turbines from Siemens Gamesa reported frequent outages and failure to meet promised power output.

Chief Executive Christian Bruch is still working to identify the root causes of these issues. However, investors continue to show their apprehension, further reducing the company’s value by an additional 5% on Monday. The market now assigns almost no value to Siemens Gamesa, which was previously valued at 5.5 billion euros by JPMorgan analysts.

While Bruch prioritizes improving the profitability of Siemens Gamesa, this may have implications for renewable goals in Germany and beyond. Global turbine installations have already declined by 20% compared to 2021, and are 32% lower than the record year of 2020. Although Siemens is facing unique problems, concerns similar to Bruch’s may extend to other companies in the industry.

Siemens Energy’s challenges highlight the importance of addressing quality issues and ensuring the reliability of wind turbines. These problems not only impact the financial performance of the company but also have wider implications for the renewable energy sector.

Howard Rhodes