While a wind turbine is capable of spinning as quickly as 60 mph, the making of turbines has slowed down considerably at Siemens Gamesa, the Spain-based wind division of Germany’s Siemens Energy, which recently became its full owner.
In June, news emerged about quality and productivity problems at Siemens Gamesa, specifically with its 4.X and 5.X onshore platforms having faulty rotor blades and main bearings.
A Siemens Energy supervisory board quickly appointed a committee supplemented by independent experts to investigate the issues at Siemens Gamesa. A special task force of specialists from Siemens Energy and Siemens Gamesa, along with turnaround pros AlixPartners, has been charged with finding solutions to the turbines’ quality problems. In addition, the company decided to exclude further deliveries from certain third-party suppliers.
Siemens, a longtime provider of turbines, has more than 60,000 installed in projects around the globe. The 4.X and 5.X turbines are its newest, and the company estimates that 15% to 30% of them are problematic. Notwithstanding the issues, the turbines can still be operated, but Siemens intends to address the problems and make repairs. Total costs are estimated in the $2 billion range.
Additional to its onshore turbine dilemma, Siemens Gamesa’s offshore business is experiencing its own set of difficulties. Higher product costs have made it impossible for the company to earn a profit on what it deems “projects already committed to contractually.”
In France, Germany, Denmark and the United Kingdom, the process of ramping up various factories for offshore production or converting them to accommodate larger turbines has also been slow, leading to a substantial backlog. According to the company, the continuing tight procurement market and the strained labor market are contributing to these burdens.
With parent company Siemens Energy predicting a third-quarter loss approaching $4.5 billion, the company is reviewing its strategy and action plan regarding Siemens Gamesa. Its conclusions will be announced in November at the Capital Markets Day.