Breakdowns of towers and blades have bedeviled manufacturers in the US and Europe.
From: Sustainability/Businessweek from Bloomberg
By Ryan Beene and Josh
Saul
January 23, 2023 -- On
a calm, sunny day last June, Mike Willey was feeding his cattle when he got a
call from the local sheriff’s dispatcher. A motorist had reported that one of
the huge turbines at a nearby wind farm had collapsed in dramatic fashion.
Willey, chief of the volunteer fire department in Ames, 90 miles northwest of
Oklahoma City, set out to survey the scene.
The steel tower, which
once stood hundreds of feet tall, was buckled in half, and the turbine blades,
whose rotation took the machine higher than the Statue of Liberty, were splayed
across the wheat field below. The turbine, made by General Electric Co.,
had been in operation less than a year. “It fell pretty much right on top of
itself,” Willey says.
Another GE turbine of
the same model collapsed in Colorado a few days later. That wind farm’s
owner-operator, NextEra Energy Inc., later attributed it to a blade flaw
and said it and GE had taken steps to prevent future mishaps. A spokesperson
for GE declined to say what went wrong in both cases in a statement to
Bloomberg.
The instances are part
of a rash of recent wind turbine malfunctions across the US and Europe, ranging
from failures of key components to full collapses. Some industry veterans say
they’re happening more often, even if the events are occurring at only a small
fraction of installed machines. The problems have added hundreds of millions of
dollars in costs for the three largest Western turbine makers, GE, Vestas
Wind Systems and Siemens Energy’s Siemens Gamesa unit; and they could
result in more expensive insurance policies—a potential setback for the push to
abandon fossil fuels and fight climate change.
The race to add
production lines for ever-bigger turbines is cited as a major culprit by people
in the industry. “We’re seeing these failures happening in a shorter time frame
on the newer turbines, and that’s quite concerning,” says Fraser McLachlan,
chief executive officer of London-based GCube Underwriting Ltd., which
insures about $3.5 billion in wind assets in 38 countries. If the failure rate
keeps climbing, he says, insurance premiums could increase or new coverage
limits could be imposed.
Vestas, GE and Siemens
Gamesa have confirmed in statements to Bloomberg and in recent calls with
analysts that the push to rapidly develop more powerful turbines has led to
challenges. The companies say they are focusing on improving manufacturing
operations and have acknowledged that it’s time to tap the brakes on the
introduction of designs. “Rapid innovation strains manufacturing and the
broader supply chain,” GE CEO Larry Culp said on an earnings call in October.
“It takes time to stabilize production and quality on these new products.”
There’s no publicly available
industrywide data on turbine failures, making it tough to paint a complete
picture of changes in their performance over time. But Vestas and GE have said
the shares of their machines in the field that are unable to produce power are
elevated, even if it’s still a small proportion of their installed fleets.
Siemens Energy revised its earnings outlook for 2023 downward this month, citing higher-than-expected
costs caused by flaws in Siemens Gamesa’s installed turbines.
Because wind farms
often generate power from scores of turbines across a site, they can continue
to produce electricity even if one or more machines go down, limiting the
fallout. Still, examples of the machines going awry have garnered public
attention. A massive 784-foot-tall turbine in Germany collapsed in
September 2021. A big new turbine in Lithuania fell in March 2022.
And a blade partially detached on one in Sweden last July.
Orsted A/S, the world’s largest developer of offshore wind farms, asked
authorities in April to stop maritime traffic near some of its sites
after blades fell from one of its turbines off the coast of Denmark. Shares of Siemens Gamesa, the manufacturer,
tumbled on the news.
Larger turbines have
helped propel a global expansion that’s seen the installed wind generation
capacity surpass 840 gigawatts in 2021, up from less than 100 gigawatts in
2007, according to BloombergNEF data. With builders designing blades as long as
a football field to capture more wind energy, developers can install fewer
turbines to generate the same amount of power. That’s helped keep project costs
down, which is a big reason the price of wind electricity has fallen
dramatically in the past decade.
But soaring
material costs and supply-chain woes have recently squeezed the balance
sheets at leading manufacturers, threatening to slow investment and
potentially hobbling the development of the US offshore wind industry before
it really gets going. The quality stumbles add to the turbine makers’
challenges.
Siemens Gamesa
encountered issues that led to design changes and delays while ramping up
production of its largest onshore wind machine, known as the 5.X. In a
statement, Siemens Gamesa said it’s addressing the quality and reliability of
its products in order to “improve the value proposition to customers.”
Vestas Wind Systems A/S
saw annual warranty provisions jump from roughly €600 million in 2019 to almost
€1.2 billion in 2020 and 2021. The Danish company says the supply chain wasn’t
ready to handle the pace of product introductions by manufacturers, which has
contributed to project delays, cost increases and quality challenges. “We need
a profitable and scalable wind industry to create a net-zero future, and this
requires we continue to mature the entire value chain of renewables,” the
company said in a statement.
GE, which reports
fourth-quarter earnings on Jan. 24, took a $500 million charge in the third
quarter to cover warranty costs and repairs on its turbines. The company has
installed turbines capable of producing 40 gigawatts of wind power since 2017,
introducing several more powerful machines along the way.
These days
manufacturers are focused on producing machines with better reliability, at scale.
In an interview this month, Henrik Andersen, the Vestas CEO, said
that turbines are big enough for now, and that increasing production will be
the key challenge of the next decade. Siemens Gamesa’s CEO Jochen Eickholt has
told investors the company is working to increase standardization among its
products, to prune a portfolio that had become too broad. GE’s Culp said in the
October earnings call that his company is likewise shifting to “workhorse
products, so we and our suppliers can implement more repeatable manufacturing
processes.”
The pressure to invest
in green projects is so intense that breakdown fears haven’t yet slowed the
flood of money into wind farms, says Oliver Metcalfe, head of wind research at
BloombergNEF. The failure issue has become a concern for bankers and other
creditors, however, who may begin to demand higher interest rates, he says.
“There’s a hesitancy among insurers and lenders about these big models that
haven’t been tested yet,” Metcalfe says. “The technology alarm bells are
ringing.”
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