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Alarm in the wind sector after a 47% collapse in orders for wind turbines

Date: March 31, 2023 Time: 08:26:53

The wind sector has set off all the alarms. The European employers’ association WindEurope ensures that orders for wind turbines fell 47% in 2022 compared to the collapse of the previous year as a result of high costs due to inflation, which translates into 19,300 million euros less investment. Against this backdrop, the European Union (EU) produced just 9 gigawatts of new turbine orders last year.

The association, which includes the Spanish companies Iberdrola, Repsol, Acciona Energía and Siemens Gamesa, sends out a strong message. “The latest data on orders for wind turbines in Europe in 2022 paints an extremely worrying picture,” he says. The current situation of the sector does not match the objectives set by Brussels. Under the Fit-for-55 package, the European Commission (EC) has raised the energy target by 40% for 2030, so it will need to install 30 GW of new wind farms every year until the end of the decade.

“The problem is inflation, with costs that increase at a higher rate than the expected income,” they point out from WindEurope. In addition, describe as “useless” the national interventionist measures in the electricity markets. In his opinion, it scares investors. “The EU must once again make Europe an attractive place for investment in renewable energy. The fall in investment and orders for turbines also exacerbates the problems faced by the entire supply chain,” the employers stress. .

“Last year’s market explosions have made Europe less attractive to renewables investors than the US, Australia and elsewhere. Wind turbine order numbers in 2022 have set alarm bells ringing: targets and Europe’s climates are at risk if the EU fails to ensure an attractive investment environment for renewables,” reiterates WindEurope’s CEO Giles Dickson.

PPA potential

The European association considers that the reform of the design of the electricity market “must take advantage of the potential of corporate PPAs (long-term contracts between generators and customers) and other forms of long-term contracting, such as CfDs (contracts for price difference). private, rather than displacing them with an exclusive focus on government-controlled CfDs.” Brussels arrived at its proposal in March, but on January 23 it already launched a public consultation on the document for the reform in order to gather opinions from institutions and companies.

The Commission has already advanced that it welcomes the implementation of tools that encourage long-term energy purchase contracts, as proposed by Spain, in order to “guarantee that the energy bills of consumers and companies (and income from inframarginal generators) are more independent of price fluctuations in short-term markets (often driven by fossil fuel costs).

“Europe must avoid reversing 20 years of European energy market integration overnight. Market design must take advantage of the potential of CfDs and PPAs and leave room for investors to access some market revenues so they can meet its obligations. It must avoid forcing CfD retrospectively on existing assets or on new assets. The EU must restore confidence in the functioning of the electricity market to unlock investments that are ready and urgently needed,” they argue from Europe wind.

In Spain, Siemens Gamesa does not rule out applying more dismissals if it does not increase orders. “We are going to continue optimizing the structures according to the needs that we have. Ultimately, the plans have to be based on the order book and if the orders do not arrive, then measures will have to be taken, but not I am announcing nothing,” said the company’s CEO, Jochen Eickholt, at a press conference on Thursday after presenting quarterly losses of 884 million euros.

During its first fiscal quarter, which runs from October to December 2022, Siemens Gamesa opened new orders for a value of 1,609 million euros, which represents a 35% drop, while the backlog stood at 33,698 million at the end of the period. . According to the company, new orders are shielded against inflation, product cost volatility, and logistical disruptions. The protection is “much superior” to that ensured in previous orders.

obsolete wind turbines

The Wind Energy Association (AEE) has warned that one in three wind turbines in Spain may become obsolete in the coming years and, therefore, have to be uninstalled. Specifically, 36% of the total number were installed before 2005 and are more than 15 years old, which means that more than 20,000 blades may become inoperative. As each wind turbine has three blades, some 7,500 ‘mills’ could stop working. For its part, the Ministry for Ecological Transition estimates that in this decade it will be necessary to dismantle between 10 and 12 GW of the current wind farms in Spain for their repowering.

The EU has big ambitions for offshore wind, growing from 15 GW today to over 100 GW by 2030. However, according to WindEurope, “there was not a single investment in an offshore wind farm in Europe in 2022”, except for small Projects. Several offshore wind farms were expected to reach financial close last year, but final investment decisions were delayed due to inflation, market disruptions and uncertainty about future revenues.

In our country, the Government has ready the Maritime Space Management Plans (POEM) and with this the development of this technology will begin. All that remains is for them to be approved by the Council of Ministers and the intention of the Executive is to establish the regulatory framework as soon as possible and launch what will be the first auction of this technology in the country during the first semester.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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