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Wind turbine maker Vestas warned of supply chain issues and slow approvals for new wind power projects as it returned to a quarterly loss, underlining the challenges facing the sector.
Henrik Andersen, chief executive of the Danish manufacturer, said supply chain disruptions were “easing off” but blockages would take several months to clear, while a lack of wind farm approvals was weighing on the industry.
Andersen said there had been “almost a slowdown” in approvals for new wind farms over the past few months, despite an increase in global government targets for clean energy. “We talk a lot about what we need more of but we do so little about it,” Andersen told the Financial Times.
“People talk about targets like they [are a] reality but it’s not [the case] — in the past few months we have seen almost a slowdown in permitting rather than [an] increase.
“We are a strategic tool for any politician who wants to bring electricity prices down,” he added.
The wind sector is battling soaring costs as a result of rising interest rates and supply chain disruption triggered by the war in Ukraine. Vestas was plunged into a steep loss in its 2022 financial year, which it said was marked by “unforeseen geo-political uncertainty, high inflation, and supply chain constraints”.
Swedish developer Vattenfall halted plans to develop a new wind farm off the east coast of the UK last month due to the surging cost of turbines, labour and financing. Vattenfall said the project was not viable under the low fixed electricity price agreed with the government.
On Wednesday Vestas posted a pre-tax loss of €130mn in the second quarter, having notched up a profit in the first three months of the year. However, the result was an improvement on its pre-tax loss of €139mn in the same period in 2022 and came after the company raised prices for its turbines and worked through a backlog of less profitable contracts.
Vestas increased its average selling price for both onshore and offshore turbines to €1.04mn per MW in the second quarter, up from €0.97mn per in the same period last year. Orders for Vestas turbines rose to a value of €2.5bn, from €2.1bn at the same point last year, an increase of 8 per cent in MW.
Revenues climbed slightly to €3.4bn, up from €3.3bn in the same period last year.
Vestas said its warranty provisions — costs associated with repairing old or broken turbines — were up 39 per cent year on year in the quarter. But they amounted to 4.5 per cent of revenue for the first half of the year compared with 5.5 per cent in the first half of 2022.
Andersen said he was “pleased” with the half-year figure, although it was aiming to bring it down over the longer term.
The update comes after Dax-listed rival Siemens Energy this week revealed it was taking a €2.2bn hit due to technical problems with turbines at its Siemens Gamesa unit. Those issues helped push Siemens Energy to a loss of €2.9bn for the third quarter, and it now expects to make a €4.5bn loss this year.
Vestas shares in Copenhagen climbed more than 3 per cent to 184.6DKr.
