Turbine troubles have sent wind energy stocks tumbling — and a slew of issues remain
A Siemens Gamesa blade factory on the banks of the River Humber in Hull, England on October 11, 2021.
PAUL ELLIS | AFP | Getty Images
As the biggest players in wind energy gear up to report quarterly earnings, supply-chain reliability issues are front and center for both stock analysts and industry leaders.
Siemens Energy made the headlines earlier this year when it scrapped its profit forecast and warned that costly failures at wind turbine subsidiary Siemens Gamesa could drag on for years.
It sparked concerns about wider problems across the industry and thrust Europe’s wind energy giants’ earnings into the spotlight.
Siemens Energy is set to report its fiscal fourth-quarter results on Nov. 15. Its shares are currently down more than 35% year-to-date.
Aside from the turbine problems, the German energy giant posted orders of around 14.9 billion euros ($15.7 billion) for its third quarter, a more-than 50% increase from the previous year, primarily driven by large orders at Siemens Gamesa and Grid Technologies. Yet the 2.2 billion euro charge due to Gamesa’s quality issues prompted Siemens Energy to forecast a net loss for the fiscal year of 4.5 billion euros.
Ahead of its fourth-quarter earnings, analysts at Kepler Cheuvreux suggested in a research note Tuesday that despite having already warned on profits, the company “remains vulnerable to large negative cashflow swings in the next fiscal year.”
“We expect Siemens Gamesa to suffer very weak order intake in H1, which will combine with extensive delivery delays and rising customer penalty payments. Challenges at Siemens Gamesa will continue to overshadow resilience in the group’s other divisions,” they added.
Morgan Stanley cut its price target for Siemens Energy from 20 euros per share to 18 euros per share, but retains an overweight long-term strategic position on the company’s stock.
“Valuation for Siemens Energy is currently factoring in a negative value for the Gamesa division, which we believe may have been over penalized,” Morgan Stanley capital goods analyst Ben Uglow said in a research note Monday.
“While we acknowledge the low visibility on Gamesa margin trajectory and that rebuilding investor confidence will take time, we remain Overweight on undemanding valuation and good fundamentals of the Gas & Grid businesses.”
Elsewhere, Deutsche Bank earlier this week slashed its 12-month share price forecast for Danish wind energy producer Ørsted by 36% ahead of its interim earnings report on Nov. 1. The stock has already halved in value so far this year.
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Deutsche had previously highlighted challenges in the wind turbine industry including supplier delays, lower tax credits and rising rates. However, Ørsted’s share price tanked further earlier this year when it raised the possibility of a 2.1-billion-euro impairment charge in its U.S. offshore wind portfolio.
Meanwhile, Danish wind turbine manufacturer Vestas — despite continuing to bag significant orders — has seen its shares plunge by around 30% year-to-date as reliability concerns plague the wider industry. Vestas publishes its interim financial report for the third quarter on Nov. 8.
Supply chain worries
ONYX Insight, which monitors wind turbines and tracks over 14,000 across 30 countries, revealed in a report Tuesday that supply chains remain the greatest challenge to the sector, with reliability not far behind.
The analytics firm, which is owned by British energy giant BP, interviewed senior personnel at over 40 owners and operators of wind turbines around the world in order to gauge the mood of industry leaders, and found that 57% cited the supply chain as the main obstacle to their operations.
ONYX Chief Commercial Officer Ashley Crowther said the lingering impacts of Covid-19 on manufacturing had just begun to heal — and then Russia’s invasion of Ukraine and the subsequent surge in inflation hit.
“Survey participants are now citing delays on new projects due to longer lead times for supply of new turbines and significant price increases,” Crowther said in the report.
“This is in line with what OEMs have told their investors, for example Vestas noting in their 2022 annual report they ‘increased our average selling prices of our wind energy solutions by 29%’. Similarly for major components, particularly main bearings on newer turbines with large rotor diameters, long delays are leaving turbines offline for extended periods.”
Although supply chain issues are creating problems for operators, the most direct impact has been on OEMs like Siemens Gamesa and Vestas, Crowther noted, as has been evident in recent financial results.
“Major western OEMs have recently reported losses or profit warnings and announced major restructuring projects in order to address the challenges they are facing. Some are even re-thinking their approach to the aftermarket which was always seen as the most profitable part of the business,” he added.
Reliability issues
Those surveyed by ONYX also expressed reliability concerns, with 69% expecting more reliability issues due to aging assets and 56% seeing problems associated with new turbine technology. Just 22% expected fewer reliability issues due to new turbine technology improvements.
“As the sector matures, turbines are getting older and the failure rate of electromechanical systems are increasing with age,” Crowther noted.
“Likewise, the initial operating period of newer turbines are seeing a rash of failures due to shorter development cycles, new turbine designs, and a squeeze on turbine prices. This is resulting in machines that are not durable enough.”
During an initial boom in the wind industry a number of years ago, OEMs faced huge market demand and, in turn, created a variety of turbine designs delivered on short cycles to a customer base seeking to generate more energy with greater efficiency at lower cost, Crowther explained.
“Fast-forward to the present and between the perfect storm of supply chain issues and too many turbine designs to support, OEMs have been losing significant amounts of money, including those paid out in liquidated damages (LDs),” he said.
“Manufacturers have been locked into a price competition spiral, attempting to produce larger turbines for more competitive pricing. But with bigger turbines produced in shorter production cycles, it’s no surprise that manufacturing quality has diminished.”
Just like it says on the tin – retailers are advertising killer deals on the fun-to-drive Kia Niro EV, with one midwest auto dealer reporting more than $10,000 off the sticker price of the Niro EV Wind. That’s nearly 25% off the top line price!
SKIP THE STORY: get straight to the deals.
The Kia Niro EV gets overshadowed by its objectively excellent EV6 and EV9 stablemates – both of which are currently available with substantial lease cash and 0% APR financing, in fact – but that doesn’t mean it’s not an excellent little electric runabout in its own right.
The last time I had a Niro EV tester, my kids loved it, I liked that it was quicker and more tossable than I expected it to be, and my wife liked the fact that “it doesn’t look electric. It looks normal.” And, with well over 200 miles of real world range (EPA-rated range is 253 miles), it was more than up to the task of commuting around Chicago and making the trip up to the Great Wolf Lodge in Gurnee and back without even needing to look for a charger.
It’s not the primary family hauler I’d choose – but as a second car? As a primary car for a slightly smaller family (1-2 kids, instead of 3-4)? The Kia Niro EV Wind, with a $42,470 MSRP, seems like a solid, “can’t go wrong” sort of choice. You know?
You won’t even have to pay that much, though. Raymond Kia in Antioch, Illinois is advertising a $42,470 Niro EV for $32,431 (that’s $10,039, or about 24% off the MSRP), and several others are advertising prices in the $33,000 range.
And, while we’re at it:
Kia Niro EV gallery
SOURCE | IMAGES: CarsDirect, Edmunds, Raymond Kia.
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Many school districts who used EPA funding to help purchase Lion Electric school buses are now stuck with broken down or unsafe vehicles – but Lion’s new Canadian investors seemingly have no plans to make things right.
“All four Lion buses that we own are currently parked and not being used,” Coleen Souza, interim transportation director of Winthrop Public Schools, told Jay Traugott over at Clean Trucking. “Two of them are in need of repairs which would cost us money which we are not willing to invest in because the buses do not run for more than a month before needing more repairs.”
The story is much the same at other US school districts who deployed Lion Electric buses over the last few years – and the trouble they describe isn’t isolated to a single component or system. One district we spoke to had onboard chargers that failed almost immediately after being plugged into a L2 AC charger. Another that spoke to Traugott reported emergency door gaps, power steering failure, loss of power, and braking issues.
As bad as the revelations of safety and drivability issues and $250 million in unresolved debt have been, it’s the objectively stupid design choices that have been the most shocking.
“Lion built an auxiliary diesel heater to heat the bus, essentially writing the manual as they went,” explained a school superintendent in the midwest, who asked not to be named. “It was fascinating to watch but there were design flaws with the heater. For example, the intakes pointed downward and we’re driving across rural roads and the intake sucks in that dirt.”
“Using a diesel-powered heater to warm an electric bus also somewhat defeats the purpose of going 100% zero-emissions,” added Traugott.
Despite a new electric school bus rebate and a fresh cash injection from Vincent Chiara, president of Quebec real estate powerhouse Groupe MACH, and Lion director Pierre Wilkie, however, it seems like no help is coming.
It just gets worse and worse
Despite early speculation – some of it my own, in fact – that the new investors would take the Canadian government up on its offer to help subsidize more electric school bus production and honor the company’s outstanding warranty claims, it appears the only vehicle line the new investors are interested in reviving are the the Class 8 electric semi manufacturing operations in Saint-Jérôme, Quebec.
The US school districts who spent tens of millions of taxpayer dollars in the hopes that Lion buses would help decarbonize their fleets and reduce students’ exposure to harmful diesel emissions? Many of them are back to using diesel, while others are trying to get their deposits back so they can buy something else.
Here’s hoping any school districts on the fence for electrification recognize that their are very real, very well-engineered, and very financially sound electric school bus manufacturers out there who can deliver on their promises.
SOURCES: Chicago Tribune, Clean Trucking, Electrical Business.
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Mitsubishi is partnering with Ample and Yamoto Transports to deploy an innovative new battery swap network for electric cars in its Japanese home market — but it’s not just for electric cars. Mitsubishi Fuso commercial trucks are getting in on the action, too!
Despite a number of early EV adopters with an overdeveloped concept of ownership, battery swap technology has proven to be both extremely effective and extremely positive to the overall EV ownership experience. And when you see how simple it is to add hundreds of miles of driving in just 100 seconds — quicker, in many cases, than pumping a tank of liquid fuel into an ICE-powered car — you might come around, yourself.
That seems to be what Mitsubishi thinks, anyway, and they’re hoping they’ll be your go-to choice when it’s time to electrify your regional and last-mile commercial delivery fleet(s) by launching a multi-year pilot program to deploy more than 150 battery-swappable commercial electric vehicles and 14 modular battery swapping stations across Tokyo, where the company plans to showcase its “five minute charging” tech in full view of hundreds of commercial fleets and, crucially, the executives of the companies that own and manage them.
A truck like the Mitsubishi eCanter typically requires a full night of AC charging to top off its batteries, and at least an hour or two on DC charging in Japan, according to Fuso. This joint pilot by Mitsubishi, Mitsubishi Fuso Trucks, and Ample aims to circumvent this issue of forced downtime with its swappable batteries, supporting vehicle uptime by delivering a full charge within minutes. The move is meant to encourage the transport industry’s EV shift while creating a depository of stored energy that can be deployed to the grid in the event of a natural disaster — something Mitsubishi in Japan has been working on for years.
Trucks like the eCanter already serve a number of roles throughout the global truck market, including municipal waste collection, regional delivery support, and more.
The pilot is backed by Tokyo Metropolitan Government’s “Technology Development Support Project for Promoting New Energy,” with local delivery operator Yamato Transport testing swappable EVs for delivery operations on both its eCanter light-duty trucks and Mitsubishi Minicab kei-class electric vans.
Electrek’s Take
Electrifying the commercial truck fleet is a key part of decarbonizing city truck fleets – not just here in the US, but around the world. I called the eCanter, “a great product for moving stuff around densely packed city streets,” and eliminating the corporate fear of EV charging in the wild just makes it an even better product for that purpose.
Here’s hoping we see more “right size” electric solutions like this one (and more battery swapping tech) in small towns and tight urban environments stateside somewhat sooner than later.
SOURCES | IMAGES: Mitsubishi, Fuso.
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