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The world’s biggest wind turbine maker says plans for a potential new factory in the UK depend on clear long-term demand, warning that the government needs to do more to support wind farm development.
Henrik Andersen, chief executive of Vestas, said it had looked at a couple of locations, including in Scotland, for a factory that could employ about 1,000 people, but decided there was “no need to build a new factory for the next 10-20 years in the UK if the demand cycle is not clear”.
It comes as the UK government is preparing to publish the draft terms for its next annual auction of renewable energy subsidies after wind developers shunned the most recent round in September, complaining that the support on offer was too low to offset rising costs.
Andersen told the Financial Times he hoped the UK government would adjust the terms to reflect rising costs or bring forward the next round, saying: “If [that] allows our customers to bid for offshore [wind farm] construction . . . that’s a natural first step of starting the factory.”
He added: “After the not so successful [auction round] we said we are considering and pausing our plans.”
If the situation changes, he said: “We have a couple of locations, at least one of them in Scotland, and that [would mean] in excess of 1,000 direct employees . . . But if there’s no [demand] in the UK, it’s difficult to argue for that.”
Copenhagen-based Vestas, which has factories around the world and made revenue of €14.5bn in 2022, already supplies wind farms off the UK coast and in Europe from its existing UK factory in the Isle of Wight.
Andersen made the comments as Vestas reported third-quarter profits of €70mn and said it was on track to be profitable in 2023, compared with a €1.6bn loss in 2022, a more positive sign for the wind industry, which has suffered a series of setbacks.
Wind turbine makers have struggled with high costs and supply chain challenges for the past few years, while this year developers in the US and the UK have halted or walked away from some projects that have become uneconomical.
Ørsted, the world’s largest wind developer, abandoned two projects off the New Jersey coast in the US last week, while Sweden’s Vattenfall halted work on its Norfolk Boreas project in the North Sea in July.
Meanwhile, Siemens Energy revealed last month it was in talks with the German government over funding support as its wind turbine division, Siemens Gamesa, struggles with technical problems with its products.
In a more positive sign, Andersen said supply chain pressures had eased during the third quarter, with supplies arriving on time to its factories worldwide, which was a “huge relief”.
Vestas said it was now on course to make an annual profit margin of up to 2 per cent. It took orders for 4.5GW of wind turbines during the quarter, 138 per cent higher than the same quarter in 2022.
The company is focused on “strengthening our commercial and operational discipline”, Andersen added.