Page 5 - AfrElec Week 47 2021

AfrElec RENEWABLES AfrElec

Wind power must not become too

cheap, says leading turbine maker

GLOBAL WIND power could become too cheap, trim- squeezed by supply chain delays and escalating
ming the profit margins of component manu- prices of commodities such as steel and resin.
facturers too much, said Andreas Nauen, chief “We need to change auction systems in the
executive of Siemens Gamesa, in an interview future,” Nauen said. He suggested job creation
in Copenhagen with Reuters. Spain-based Sie- should be considered as a criterion in awarding
mens Gamesa is one of the world’s leading man- contracts instead of just a low electricity price.
ufacturers of both onshore and offshore wind Siemens Gamesa as well as Vestas, another
turbines. leading wind turbine manufacturer, has been
Wind and solar power are often cheaper passing on higher costs to its customers and has
than their fossil fuel rivals, a boon as the world slashed profit forecasts for the rest of the year.
transitions to renewable energy and away from Earlier in November, Vestas cut its 2021 out-
sources with high carbon emissions. look for a second time in less than 12 months,
“What we’ve clearly achieved is that wind and now predicts an operating profit margin of
power is now cheaper than anything else. But I 4% instead of 5%-7% – and in sharp contrast
believe we shouldn’t make it too cheap,” Nauen to its long-term target of a 10% margin, said
told Reuters. Reuters.
According to Bernstein research, in Europe For its part, Siemens Gamesa has now said
renewable energy is often cheaper than conven- that it will not hit its long-term margin target of
tional fossil fuels, including natural gas, noted 8%-10% until 2024 or 2025, delayed from its pre-
the news service. vious estimate of 2023.
In Europe, wind and solar are currently sig- GE, in its third-quarter earnings, said its
nificantly cheaper than coal, natural gas and renewable energy division has not turned a
nuclear power, according to Bernstein research. profit. GE CEO Larry Couple told Bloomb-
“We have probably driven it too far,” Nauen erg after the conglomerate announced its
said. But continuing to cut costs at the same rate third-quarter earnings: “We’re fighting like hell
will hurt wind manufacturers’ ability to invest in to get to break-even next year. But I think that
new factories, and in research and development that’s a lower probability outcome today than I
of new technologies, he said. thought it would be at the beginning of this year.”
Competition is high as countries move Earlier in 2021 GE had forecast that GE Renewa-
from subsidising wind projects to competitive ble Energy would achieve positive profit margins
auctions or sales. Margins have been further in 2022.™

Week 47 25•November•2021 www. NEWSBASE .com P5