Siemens scraps profit guidance as wind turbine problems generate $1.6bn bill

Siemens Energy is now expecting the bill to fix its troubled wind division to pass the €1 billion ($1.6 billion) mark, as it scrambles to get on top of high turbine failure rates.

A review into the problems at Siemens Gamesa still hasn’t been able to put an exact figure on what it will cost to meet quality targets and the company said last week it wouldn’t know until at least August, according to Reuters, 

The prospective bill was enough for Siemens Energy to dump its profit margin outlook for the year of 1-3 per cent for the whole group. 

The company took control of the troubled wind division this month after years of sub-par financial performance.

The review into the turbine fleet and product designs was launched in January, when Siemens Gamesa revealed that faulty components blew a €472 million hole in its December quarter result.

“We are also reviewing assumptions critical to the existing business plans given productivity improvements are not materialising to the extent previously expected,” Siemens Energy said in a statement.

“In addition, we continue to experience ramp up challenges in Offshore.”

Siemens Gamesa has been one of the worst-hit wind companies by turbine parts failure rates, which are resulting in higher than expected maintenance costs and warranty call-outs as it is forced to fix faulty turbine blades and bearings. 

The review, which was launched in January revealed problems affecting between 15-30 per cent of Siemens Gamesa’s 132 gigawatts of turbines around the world, according to Reuters. 

The problems at Siemens Gamesa have also been felt at the likes of GE and Vestas, and caused by a shift away from standardised turbines and towards bigger and bigger machines and more designs allowed by advancements in materials, manufacturing and design techniques.

The average rotor diameter in the US reached 127.5 metres in 2021, and the largest in the world is a 13.6 megawatt (MW) offshore wind turbine with a rotor diameter of 252 metres.

GE has already said it is moving away from offering niche models and shrinking its design portfolio.