Wind energy manufacturers face a tough 2023

Wind energy manufacturers are being hit by high costs, supply chain constraints and turbine breakdowns.

Why it matters: The challenges are forcing layoffs at the biggest turbine makers and dragging down quarterly earnings.

Driving the news: GE this morning reported that its renewable energy division saw revenue drop 19% in Q4, even as the rest of the company was profitable.

• The bulk of the pain was concentrated in GE's wind energy business, which is among the largest manufacturers of wind turbines and blades.
• GE's wind power struggles came amid a slowdown in new U.S. wind projects last year, per Deloitte's annual renewable energy outlook.

Zoom in: The company has reportedly been hemorrhaging money through warranty payments for unreliable turbines.

• These include blade failures and tower collapses.

Of note: GE in October planned to layoff about 20% of its onshore wind workforce.

State of play: The problems may be especially pronounced at GE. But the company isn't alone.

• Siemens Gamesa in September said it would cut about 2,900 jobs and issued a series of profit warnings.
• Vestas, another major supplier to the U.S. market, saw its profits and orders tumble last year.
• Both companies have run into their own quality-control challenges as they've raced to develop larger, more powerful turbines.

What's next: Incentives in the Inflation Reduction Act will give a moderate boost to manufacturers, per a Wood Mackenzie report last week.

• But wind is expected to see slow growth this year, with its market share in the U.S. remaining flat at 11%-12% through 2024, the U.S. Energy Information Administration projected last week.