BEN FINLEY
Fri, November 10, 2023
Two of the offshore wind turbines stand off the coast of Virginia Beach, Va., Monday, June 29, 2020. The company Siemens Gamesa said Friday Nov. 10, 2023, that it canceled plans to build blades for offshore wind turbines in coastal Virginia. It was the latest sign of struggle within the U.S.'s nascent offshore wind industry.
(AP Photo/Steve Helber, File)
NORFOLK, Va. (AP) — A European company has canceled plans to build blades for offshore wind turbines in coastal Virginia, the latest sign of struggle within the U.S.'s nascent industry.
Siemens Gamesa confirmed the cancellation in a statement Friday. The company's proposed $200 million factory at the Port of Virginia in Portsmouth would have created more than 300 jobs and aided the state in its aspirations to become a hub for offshore wind projects as part of the nation's efforts to tackle climate change.
The change in plans by the Spain-based firm comes at a time when inflation, raised interest rates and supply chain issues have cut into the profitability — and even the viability — of some offshore wind projects in the U.S.
For example, Danish energy developer Orsted recently scrapped two large offshore wind power projects off the coast of New Jersey, citing supply chain issues and rising interest rates.
A handful of other projects have been canceled. They include the Park City Wind project off the coast of Massachusetts. Avangrid, a subsidiary of Spanish utility company Iberdrola, and several Connecticut utilities scrapped a long-term power purchase agreement.
Siemens Gamesa said Friday that it had called off building the Virginia factory because "development milestones ... could not be met.” It did not elaborate.
The nixed plans, however, will not impact the construction of Dominion Energy's enormous wind farm off the coast of Virginia Beach. Those turbines will come from Siemens Gamesa facilities in Europe.
Dominion said its 176-turbine project will be the largest offshore wind farm under development in the U.S.
The administration of President Joe Biden said it wants to build 30 gigawatts of offshore wind energy by 2030 — enough to power more than 10 million homes.
The main appeal of offshore wind for supporters, including environmentalists and many state governments, is that it doesn't burn fossil fuels and thereby drive climate change. But opponents claim offshore wind is inherently unworkable without massive financial subsidies.
Robert McNab, an economist with Old Dominion University in Norfolk, Virginia, cautioned that projects being canceled now may come back — and even expand — once inflation and corresponding interest rates fall.
He noted that offshore wind isn't the only industry that's been affected. The calculus has changed for various other infrastructure projects, including those within the natural gas and petroleum industries.
“I know that some people will want to hang their hats on this and say, ‘We should ignore renewable energy,’” McNab said.
But the costs of renewable energy — wind, solar, and other forms — have been declining, while becoming increasingly competitive, he said.
“At the end of the day, as the costs of generation fall ... we’ll see projects like this come back in similar or even expanded force,” McNab said.
Siemens Energy Secures Provisional Guarantees Deal, Reuters Says
Wilfried Eckl-Dorna
Thu, November 9, 2023
(Bloomberg) -- Siemens Energy AG has reached a provisional agreement with the German government and main shareholder Siemens AG to cover billions in project-related financial guarantees, Reuters reported.
Some details of the deal, which also involves additional parties, are still being discussed, Reuters said, citing people familiar with the talks. Siemens Energy shares rose as much as 7.4% on Thursday, while Siemens traded roughly 2% higher.
A deal would end weeks of talks and pave the way for Siemens Energy to win large-scale contracts for electricity grids and gas turbines. The company has been seeking the backing after its credit rating was downgraded in July and Siemens, its former parent with a 25.1% shareholding, indicated it was no longer willing to help it weather a string of losses at its Gamesa wind-turbine unit.
Talks involved loan guarantees for about €15 billion ($16.1 billion). A spokesman for Siemens Energy declined to comment. Siemens didn’t immediately respond to a request for comment.
Read more: Germany Pressures Siemens to Support Troubled Wind-Turbine Maker
Siemens Energy’s share price has slumped roughly 45% this year, as problems at Gamesa mounted. Faults in thousands of wind turbines have left the company with a repair bill of at least €1.6 billion ($1.7 billion), though the company is still conducting a broad review of the issues to determine a final cost. Siemens Energy now expects a €4.5 billion net loss for the year.
Government officials have said the company is critical for the nation’s transition to renewable energy as it fends off green-technology competition from China.
Read more: Siemens Energy Weighs New Turbine in Bid to End Troubles
--With assistance from Petra Sorge, Kamil Kowalcze, Arne Delfs and Eyk Henning.
©2023 Bloomberg L.P.
Germany To Bail Out Siemens’ Struggling Wind Turbine Division
Editor OilPrice.com
Fri, November 10, 2023
Reuters reports the German government, Siemens AG, and other parties will provide billions of euros in project-related guarantees to support Siemens AG's struggling wind turbine division. This financial assistance comes just weeks after the company warned about mounting losses amid a meltdown across wind and solar industries.
Three people familiar with the talks said that Siemens Energy's top shareholder, Siemens AG, with a 25.1% stake, is prepared to provide some guarantees. Details are still scant, and nothing has been decided, as an agreement needs to be formally drawn up and supported by all stakeholders.
Last month, Reuters said Siemens Energy was discussing state guarantees with the German government.
Here's more on the report:
As a result, Siemens Energy fears it will struggle to secure guarantees from banks, and has approached the government and Siemens to obtain a guarantee framework, business news weekly WirtschaftsWoche said.
The weekly, which first reported the talks along with Spiegel magazine, said Siemens Energy is seeking up to 15 billion euros in guarantees.
The German state would assume liability for 80% of an initial 10 billion euro funding tranche, while banks would be liable for the remaining 20%, WirtschaftsWoche said.
A Siemens AG spokesperson said the company remained in "very constructive talks to define the best possible solution in the interests of all parties involved."
Siemens Energy shares in Germany have crashed more than 70% since mid-June as it has abandoned its 2023 profit outlook after a review of its wind turbine unit revealed a billion euro problem. Shares were up 5% on Reuters' report today.
Meanwhile, a financial crisis continues to accelerate across the wind industry, with the world's largest offshore wind farm developer, Ørsted, pulling out of major US projects due to soaring inflation costs and a high-rate environment. And the renewable energy meltdown in wind has spread to solar as several solar power company stocks crashed on sliding demand.
And so, hot on the heels of Germany's bailout of Siemens, Bloomberg reports that the UK government is preparing to offer significantly higher subsidies for new offshore wind farms to get the country’s clean-power strategy back on track after developers shunned a previous auction, because the price was too low for offshore wind to be viable.
Denmark’s Orsted A/S, the world’s largest offshore wind builder, will decide by December whether to proceed with a UK development, while Sweden’s Vattenfall AB shelved a giant project off the English coast earlier this year in response to soaring costs.
While higher subsidies in the next auction round, known as AR6, may well reinvigorate offshore wind development, it will likely feed through to increased electricity costs for consumers still burdened with sky-high bills in the wake of last year’s energy crisis.
The energy transition to renewables across the Western world is cracking. Remember, the Biden Administration's Inflation Reduction Act was all about 'sustainable' wind power... Time for another bailout?
By Zerohedge.com
NORFOLK, Va. (AP) — A European company has canceled plans to build blades for offshore wind turbines in coastal Virginia, the latest sign of struggle within the U.S.'s nascent industry.
Siemens Gamesa confirmed the cancellation in a statement Friday. The company's proposed $200 million factory at the Port of Virginia in Portsmouth would have created more than 300 jobs and aided the state in its aspirations to become a hub for offshore wind projects as part of the nation's efforts to tackle climate change.
The change in plans by the Spain-based firm comes at a time when inflation, raised interest rates and supply chain issues have cut into the profitability — and even the viability — of some offshore wind projects in the U.S.
For example, Danish energy developer Orsted recently scrapped two large offshore wind power projects off the coast of New Jersey, citing supply chain issues and rising interest rates.
A handful of other projects have been canceled. They include the Park City Wind project off the coast of Massachusetts. Avangrid, a subsidiary of Spanish utility company Iberdrola, and several Connecticut utilities scrapped a long-term power purchase agreement.
Siemens Gamesa said Friday that it had called off building the Virginia factory because "development milestones ... could not be met.” It did not elaborate.
The nixed plans, however, will not impact the construction of Dominion Energy's enormous wind farm off the coast of Virginia Beach. Those turbines will come from Siemens Gamesa facilities in Europe.
Dominion said its 176-turbine project will be the largest offshore wind farm under development in the U.S.
The administration of President Joe Biden said it wants to build 30 gigawatts of offshore wind energy by 2030 — enough to power more than 10 million homes.
The main appeal of offshore wind for supporters, including environmentalists and many state governments, is that it doesn't burn fossil fuels and thereby drive climate change. But opponents claim offshore wind is inherently unworkable without massive financial subsidies.
Robert McNab, an economist with Old Dominion University in Norfolk, Virginia, cautioned that projects being canceled now may come back — and even expand — once inflation and corresponding interest rates fall.
He noted that offshore wind isn't the only industry that's been affected. The calculus has changed for various other infrastructure projects, including those within the natural gas and petroleum industries.
“I know that some people will want to hang their hats on this and say, ‘We should ignore renewable energy,’” McNab said.
But the costs of renewable energy — wind, solar, and other forms — have been declining, while becoming increasingly competitive, he said.
“At the end of the day, as the costs of generation fall ... we’ll see projects like this come back in similar or even expanded force,” McNab said.
Siemens Energy Secures Provisional Guarantees Deal, Reuters Says
Wilfried Eckl-Dorna
Thu, November 9, 2023
(Bloomberg) -- Siemens Energy AG has reached a provisional agreement with the German government and main shareholder Siemens AG to cover billions in project-related financial guarantees, Reuters reported.
Some details of the deal, which also involves additional parties, are still being discussed, Reuters said, citing people familiar with the talks. Siemens Energy shares rose as much as 7.4% on Thursday, while Siemens traded roughly 2% higher.
A deal would end weeks of talks and pave the way for Siemens Energy to win large-scale contracts for electricity grids and gas turbines. The company has been seeking the backing after its credit rating was downgraded in July and Siemens, its former parent with a 25.1% shareholding, indicated it was no longer willing to help it weather a string of losses at its Gamesa wind-turbine unit.
Talks involved loan guarantees for about €15 billion ($16.1 billion). A spokesman for Siemens Energy declined to comment. Siemens didn’t immediately respond to a request for comment.
Read more: Germany Pressures Siemens to Support Troubled Wind-Turbine Maker
Siemens Energy’s share price has slumped roughly 45% this year, as problems at Gamesa mounted. Faults in thousands of wind turbines have left the company with a repair bill of at least €1.6 billion ($1.7 billion), though the company is still conducting a broad review of the issues to determine a final cost. Siemens Energy now expects a €4.5 billion net loss for the year.
Government officials have said the company is critical for the nation’s transition to renewable energy as it fends off green-technology competition from China.
Read more: Siemens Energy Weighs New Turbine in Bid to End Troubles
--With assistance from Petra Sorge, Kamil Kowalcze, Arne Delfs and Eyk Henning.
©2023 Bloomberg L.P.
Germany To Bail Out Siemens’ Struggling Wind Turbine Division
Editor OilPrice.com
Fri, November 10, 2023
Reuters reports the German government, Siemens AG, and other parties will provide billions of euros in project-related guarantees to support Siemens AG's struggling wind turbine division. This financial assistance comes just weeks after the company warned about mounting losses amid a meltdown across wind and solar industries.
Three people familiar with the talks said that Siemens Energy's top shareholder, Siemens AG, with a 25.1% stake, is prepared to provide some guarantees. Details are still scant, and nothing has been decided, as an agreement needs to be formally drawn up and supported by all stakeholders.
Last month, Reuters said Siemens Energy was discussing state guarantees with the German government.
Here's more on the report:
As a result, Siemens Energy fears it will struggle to secure guarantees from banks, and has approached the government and Siemens to obtain a guarantee framework, business news weekly WirtschaftsWoche said.
The weekly, which first reported the talks along with Spiegel magazine, said Siemens Energy is seeking up to 15 billion euros in guarantees.
The German state would assume liability for 80% of an initial 10 billion euro funding tranche, while banks would be liable for the remaining 20%, WirtschaftsWoche said.
A Siemens AG spokesperson said the company remained in "very constructive talks to define the best possible solution in the interests of all parties involved."
Siemens Energy shares in Germany have crashed more than 70% since mid-June as it has abandoned its 2023 profit outlook after a review of its wind turbine unit revealed a billion euro problem. Shares were up 5% on Reuters' report today.
Meanwhile, a financial crisis continues to accelerate across the wind industry, with the world's largest offshore wind farm developer, Ørsted, pulling out of major US projects due to soaring inflation costs and a high-rate environment. And the renewable energy meltdown in wind has spread to solar as several solar power company stocks crashed on sliding demand.
And so, hot on the heels of Germany's bailout of Siemens, Bloomberg reports that the UK government is preparing to offer significantly higher subsidies for new offshore wind farms to get the country’s clean-power strategy back on track after developers shunned a previous auction, because the price was too low for offshore wind to be viable.
Denmark’s Orsted A/S, the world’s largest offshore wind builder, will decide by December whether to proceed with a UK development, while Sweden’s Vattenfall AB shelved a giant project off the English coast earlier this year in response to soaring costs.
While higher subsidies in the next auction round, known as AR6, may well reinvigorate offshore wind development, it will likely feed through to increased electricity costs for consumers still burdened with sky-high bills in the wake of last year’s energy crisis.
The energy transition to renewables across the Western world is cracking. Remember, the Biden Administration's Inflation Reduction Act was all about 'sustainable' wind power... Time for another bailout?
By Zerohedge.com
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