Siemens Energy said significant quality issues at its wind turbine division would cost it 2.2 billion euros ($2.4 billion).
The challenges are expected to push Siemens Energy’s net loss for the year to around 4.5 billion euros ($4.9 billion), according to the company’s third quarter earnings report published August 7.
We’ve been reporting on significant quality issues at Siemens Gamesa throughout the Summer. Though the expected losses are well below worst-case estimates, company leadership has said the issues could take years to fix.
In June we reported that Siemens launched a technical review of Siemens Gamesa’s installed onshore wind fleet in response to a “substantial increase” in failure rates of certain components. Siemens Energy CEO Christian Bruch said the company was working to establish a mitigation plan.
During the third quarter earnings call, the group said some 4.X and 5.X wind turbines showed abnormal vibrations during regular remote monitoring. The company said only a limited part of the onshore fleet is affected but did not provide a specific number.
In order to remedy the quality problems of the 4.X and 5.X platforms, Siemens Energy has created a task force consisting of experts from Siemens Gamesa and Siemens Energy. The task force will be supported by AlixPartners, a consulting company specializing in the effective handling of complex projects.
It was not all bad news for the German energy company, as the excellent performance of the gas services, grid technologies and transformation of industry business areas, as well as a record order backlog of $120 billion were noted in the report.
Siemens Gamesa isn’t the only wind turbine manufacturer under pressure. Recent years have seen deployment dip as financial turmoil and macroeconomic pressures plague some of the largest manufacturers.
Last year, GE laid off hundreds of workers from its onshore wind unit, including 20% of employees based in the United States, as part of a strategy overhaul, according to a report from Reuters.
Rising costs, supply chain constraints, and policy uncertainty in the U.S. market has plagued wind manufacturers over the past two years.
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