Turbine Issues Lead to Wind Energy Stock Decline

Wind Energy

As the wind energy sector prepares to report quarterly earnings, supply-chain reliability issues are a major concern. Siemens Energy, which scrapped its profit forecast earlier this year due to failures at wind turbine subsidiary Siemens Gamesa, is set to report its fiscal fourth-quarter results on Nov. 15. The company already warned on profits, and analysts at Kepler Cheuvreux suggest that it “remains vulnerable to large negative cashflow swings in the next fiscal year.”

Morgan Stanley has cut its price target for Siemens Energy, while Deutsche Bank reduced its 12-month share price forecast for Danish wind energy producer ├śrsted by 36%. Danish wind turbine manufacturer Vestas has also seen its shares plunge by around 30% year-to-date. ONYX Insight, which monitors wind turbines, revealed that supply chains and reliability are the greatest challenges to the sector, with 57% citing the supply chain as the main obstacle to their operations.

The analytics firm interviewed senior personnel at over 40 owners and operators of wind turbines worldwide and found that delays on new projects due to longer lead times for the supply of new turbines and significant price increases are common. Reliability concerns are also prevalent, with 69% expecting more reliability issues due to aging assets and 56% seeing problems associated with new turbine technology.

As the sector matures, turbines are getting older, and the failure rate of electromechanical systems is increasing with age, according to ONYX Chief Commercial Officer Ashley Crowther. The initial operating period of newer turbines is seeing a rash of failures due to shorter development cycles, new turbine designs, and a squeeze on turbine prices.

Read More: https://thecioleaders.com/