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It was never going to be a breeze for wind energy firms. They are only charged with helping wean the world off power sources that have charged grids for decades, finding the margins to make that happen, and getting it all done quickly in a frenetic race to prevent climate change from turning the Earth into a giant windblown post-apocalyptic wasteland. Easy peasy, right?
The latest challenges for the industry — a two-pronged blitz of cyberattacks and rising material costs — have analysts worried that, even with gale-force demand, the renewable energy sector may be losing the wind in its sails.
Which Way the Wind Slows
Today’s tempest has been brewing for years. After offering generous support earlier in the century, governments from Germany to Spain and from Japan to China began winding down wind power subsidies in the late 2010s, which in turn made renewable energy tenders more expensive. The pandemic jolted materials and shipping costs, leaving turbine manufacturers with razor-thin bottom lines:
- Spain-headquartered Siemens Gamesa, the world’s second-largest turbine manufacturer, warned last week that its profit margin this year will be negative 4%. GE Renewable Energy, America’s biggest turbine maker, is set to post an operating margin of negative 16% in the first quarter, according to Citigroup. It’s also piled up $2.3 billion in operating losses since 2019.
- Increasingly non-existent margins have wind-power manufacturers shortening sails on their output. The International Energy Agency says that to keep the climate from rising more than 1.5 degrees Celsius, by 2030 the world should be adding 390 gigawatts of wind capacity annually, yet a mere quarter of that was added in 2021.
“You absolutely need to see some of these profit pictures turn around for the decarbonization goals to be achievable,” said Aaron Barr, global head of onshore wind at consultancy Wood Mackenzie.
Shields Up: Energy companies, whether in the renewable space or not, have emerged as a favorite target of hackers, state-affiliated or otherwise. Per an IBM report, after finance and manufacturing, the energy sector was the third most targeted in 2020, up from ninth in 2019. Three German wind firms — Deutsche Windtechnik, Nordex, and Enercon — have been hacked in the two months since Russia invaded Ukraine. A 2021 report by Black Kite found that roughly half of US energy companies have out-of-date systems that put them at increased risk of being hacked.