Just when things were starting to look up for wind power, new troubles are pulling it back down.
In recent years, soaring inflation, supply-chain chaos and rapidly rising interest rates shocked turbine manufacturers and their customers, upending a business model that depended on cheap financing to compete with fossil fuels.
Companies across the industry suffered steep losses and saw investors flee, despite the promise of huge growth as governments try to deliver on pledges to prevent a climate calamity.
This year appeared to promise a return to stability and profitability, with turbines’ main input — steel — getting cheaper, inflation cooling and interest rates starting to fall.
But a recovery is proving elusive. The bad news started in recent weeks just off the coast of Nantucket, Massachusetts, when a turbine blade plunged into the sea, sending debris onto the beaches of the billionaire-inhabited island.
Then, last week, two industry titans — Denmark’s Orsted A/S and Vestas Wind Systems A/S — both informed their shareholders about unexpected losses.
In all three cases, the problems appear relatively contained compared with the disasters of years past.
GE Vernova Inc., maker of the fallen blade, said it was a manufacturing fluke. Orsted’s issue was caused by unforeseen soil conditions that delayed onshore work by their partner for a wind farm planned off the coasts of Connecticut and Rhode Island.
And Vestas’ problem turned out to be less serious than it first appeared because of accounting rules that disproportionately affected second-quarter results.
But after years when business fundamentals have appeared under threat, the industry can little afford missteps.
“Financially, I’m sad,” Orsted Chief Financial Officer Trond Westlie said on a call with analysts. “Just coming out of that sort of loop with impairments is going to be challenging.”
—Will Mathis, Bloomberg News
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