January 24, 2023
It's Tuesday. Let's get to it.
1 big thing: Tough weather for wind manufacturers
Wind energy manufacturers are being hit by high costs, supply chain constraints and turbine breakdowns, Alan reports.
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.
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.