Only big and strong wind turbine OEMs will survive, Siemens board member Michael Sen told a German newspaper earlier this year in what now sounds a prophetic statement.
Just two months later, Germany-based Senvion filed for insolvency under self-administration, a process similar to Chapter 11 proceedings in the US.
Senvion now must quickly find fresh financing or a solvent buyer to prove Sen wrong – and before customers and suppliers dump the loss-making company.
"Senvion has a fundamentally sound and strong business model," chief executive Yves Rannou insisted, adding that his company – which has been loss-making since 2015 – is taking the right measures to return to stability.
There are some early indications that steps taken last year, such as focusing on new, fast-growing markets, are bearing fruit.
Thanks mainly to large projects in Chile, Argentina and Australia, turbine installations during the first quarter of 2019 have more than doubled compared to a year earlier, when only 167MW was erected, sources close to the company told Recharge.
But the intake of new orders has slowed, hobbled by the high-profile financial woes of the company.
And there are doubts over the restructuring strategy outlined by Rannou last month. The OEM is set to withdraw from 30 markets and concentrate on a remaining 20 core countries, including key markets in Europe and Latin America, as well as Australia and India. It also wants to shrink its product portfolio.
"That raises some questions: the Indian market and even the US to an extent prefer turbines in the 2.XMW class, while, for example, Latin America is showing a rapidly growing preference for turbines in the upper 3MW and 4MW range. The question is now: what products do you remove?" Indra Mukherjee, Global Wind Power Analyst at IHS Markit, told Recharge.
Senvion currently offers onshore wind turbines from 2 to 4.5MW, an up to 6.33MW offshore turbine, and is also developing a 12MW-plus offshore machine.
While shrinking its product portfolio could mean losing out in some markets, Senvion also faces stiff competition from its larger peers such as Vestas, Siemens Gamesa, GE, Nordex, and Enercon, which have all recently launched onshore machines in the 5MW-class. Those may become the bread-and-butter products in only a few years in the European market.
The strict cost-cutting required to get its financial house in order contrasts with the need to spend substantial amounts of money on R&D for a 5MW platform. Senvion faces the same dilemma in offshore wind, where it is unknown how far the manufacturer has come in the development of its 12MW-plus machine.
Mukherjee stresses that restructuring does not necessarily mean Senvion is actively on the lookout for a new buyer – although the company has said various potential investors have expressed their interest, and China could be one source of interest.
But without substantial fresh money or a new owner, new product development may prove impossible in the mid- to long term.
