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Comparing the length of wind turbine blades with international landmarks is a favourite pastime of manufacturers.
Take Denmark’s Vestas, which said on Thursday it would build a factory in Poland to make offshore turbine blades that are taller than the Statue of Liberty.
Vestas’s announcement is indicative of the fierce competition among turbine makers in recent decades to build ever more powerful machines. Yet constraints on cash flows and the need to improve profit margins mean the sector urgently requires a truce in the size war.
This race was partly driven by wind farm developers, which pushed for more efficient devices to drive down costs. Devices installed at the world’s first offshore wind farm had a capacity of just 0.5MW. The machines to which the Vestas blades will be fitted will be 15MW. Onshore devices have evolved in a similar way, although their capacity is more limited.
Reliability problems have crept in. Repairs required on some of its onshore wind turbines forced Siemens Energy to issue a profit warning last summer. It later sought a €15bn rescue from the German government.
Wind engineers say sizing up is now bringing diminishing returns. Bigger components need hefty investments in new factories and ships, plus more testing and design hours. R&D costs easily run into the hundreds of millions of euros.
That is unaffordable at a time when the industry is recovering from a sharp rise in commodity prices and other supply chain costs since the pandemic. Vestas’ free cash flow was minus €874mn in 2022, although analysts are forecasting a recovery in 2023 to €791mn, according to Visible Alpha.
Some European developers have privately pushed for a capacity cap on turbines. Such a cap, however, would risk Europe falling behind in innovation, said Ben Backwell of the Global Wind Energy Council.
International rivals such as GE and China’s Mingyang are working on machines in the region of 18MW. Siemens, whose largest device has a 14MW capacity, is also planning a prototype of what it claims will be the world’s most powerful wind turbine in Denmark. It has insisted it will decide if it commercialises the larger machine only after “careful testing”.
For the next few years at least, most European developers will probably concentrate on meeting strong demand with the current range of devices. Vestas’ fourth-quarter order intake, of 7GW, was 50 per cent higher than expected, said Jefferies.
The race to build bigger is not over. But if the sector has any sense, it should be less frantic.
This Lex note has been amended to correct the capacity of the Siemens Energy turbine.
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