In the last few year, the big three Western wind turbine makers have taken bold steps to become competitive across wind’s three-legged stool of revenue: onshore, offshore and services.
After acquisitions, reshuffles and some raising of the stakes on the technology front, GE, Vestas and Siemens Gamesa have more comparable businesses. There’s not much consolidation left to be squeezed out in the sector. So if we’re now entering the endgame for Western wind manufacturers, which company will come out on top?
Siemens Gamesa underwent a reshuffle at the top last year, with Andreas Nauen, the head of its market-leading offshore unit, taking over as the CEO of the group in June. His strategy, revealed at an analyst day in August, was simple: replicating the best of the offshore unit’s processes and behaviors across the business. The firm had already acquired the services business of bankrupt manufacturer Senvion in multiple territories, which helped close the gap in its services revenue compared to Vestas.
Vestas was also leading on the onshore front, but the fast-growing offshore wind sector was a challenge for MHI Vestas, its 50-50 joint venture with Mitsubishi Heavy Industries. In October Vestas bought out MHI, which took a 2.5 percent stake in Vestas in return for their portion of the JV.
GE launched the 12+ megawatt Haliade-X platform in 2018 and declared that it planned to become the market leader for offshore wind turbines.
The world’s largest overall wind turbine maker, Vestas has now made its play.
Vestas to be back on an even keel with offshore rivals soon
Vestas announced its full-year results on Wednesday with very few surprises. It hit guidance, with some larger-than-usual preannounced warranty provisions. The big news, no pun intended, was the launch of what will be the world’s largest wind turbine, the V236-15MW.
That 236-meter rotor diameter takes it just ahead of Siemens Gamesa’s 222-meter giant, launched last May, which is rated at 14 MW with the ability to dial it up to 15 MW. Vestas said serial production will start in 2024, with a prototype to be installed in 2022.
The launch brings Vestas back into full-on competitive mode in the offshore segment, having conceded publicly that without a new offshore wind platform, its smaller 10 MW turbines won’t be in the running for the next wave of projects.
Shashi Barla, Wood Mackenzie's principal analyst for the global wind supply chain, said despite the competition's head start, there are plenty of existing projects that could book soon.
“I think that they're behind the competition by at least two years,” said Barla. GE Renewable Energy launched the Haliade-X platform in March 2018. Barla said Vestas could accelerate the development process if it pours in more investment.
During the company’s full-year results, Vestas CEO Henrik Andersen said annual capex for its offshore wind business would be around €250 million ($303 million) annually from this year out to 2025.
Andersen also said talks with potential clients had begun and it expects a “few large orders” in 2021 and 2022.
Barla said there are a few doors open for Vestas here. Permitting delays in the U.S. mean that gigawatts' worth of opportunities still haven’t gotten to the stage of signing turbine agreements. Meanwhile, in markets with no hefty penalties around install dates, Vestas could immediately compete, even if production is three years away and installation four.
“It gives room for players like Vestas to go and pitch their next-generation turbine,” said Barla, adding that many projects awarded contracts in Germany’s 2017 tenders have still to sign turbine agreements.
Offshore to propel Siemens Gamesa to No. 1
Siemens Gamesa’s latest results are very encouraging. Revenue for the quarter was up 15 percent compared to the same period last year. (Siemens Gamesa reports full-year results for a financial year of Oct.-Sep.)
Onshore orders for the year topped €1.62 billion ($1.96 billion), down 8 percent down year-on-year. But between COVID-19 and the company’s switch from chasing higher returns over volume, it’s a good start to the renewal, with earnings before interest and taxes rising to 5.3 percent for the quarter, compared to a negative 6.8 percent for the same quarter last year.
Barla expects Siemens Gamesa, the current leader in the offshore turbine segment, to usurp Vestas and become the leading turbine player globally. He expects the next five years will see Siemens Gamesa's share of the offshore market to rise from less than 20 percent of gigawatts sold globally to more than half of global sales, a shift that will also swell revenue.
“When it comes to installations and activity in the next four or five years, Siemens Gamesa is going to assume the commercial leadership position, when both onshore and offshore are combined, even in terms of revenue,” Barla said. “Vestas has a little bit of [a challenge] to catch up simply for the fact that they're behind on introducing this next generation offshore technology. Had they introduced this two years ago, then probably they would have been in a much comfortable position today.”