Ireland’s environment minister called for a pan-European “defence procurement-style emergency process” to help the continent’s struggling wind power supply chain, as the new CEO of turbine giant Siemens Gamesa warned “many of us are suffering”.
Irish minister Eamon Ryan told the WindEurope 2022 industry event in Bilbao this morning that he was concerned about the ability of the European sector to meet massive projected growth, especially offshore, given the “very difficult environment” in which suppliers are working.
“Our supply industry, our turbine manufacturers, our cable manufacturers [are] working on very tight margins," he explained.
“We need to create the environment where they can expand production in an organised, ordered way.”
Ryan told the event’s opening session: “We need to really plan, on a European basis, with scale-up of the production systems, for ships, for cabling, for electrolysers.
“I think it needs a European co-ordinated, almost a defence procurement-style emergency process.”
Ryan’s comments came after delegates in Bilbao heard newly installed Siemens Gamesa CEO Jochen Eickholt lay out the scale of the problems facing the sector.
He said meeting European ambitions for a wind-led clean, independent energy system requires a “robust and healthy” industry with “financial muscle”.
“Can anyone look at today’s industry and say it is healthy? Many of us are suffering, from OEMs to suppliers and sub-suppliers.”
CEOs of Europe’s biggest turbine manufacturers have in recent months been vocal on the multiple pressures facing the sector, from rampant commodity price inflation and logistics problems to slow consenting of new wind projects, low volumes in auctions, and unsustainably low rock-bottom bids by developers to grab what capacity is available.
One of the most memorable interventions recently came from Eickholt’s predecessor Andreas Nauen, who said Europe’s turbine makers were “squashed in the middle” and paying the price for ultra-cheap wind power.
Eickholt set out five points he’d like to see tackled to help the industry: an immediate increase in market volumes; faster permitting of new wind projects; accelerated grid upgrades; auction outcomes to be determined by more than price alone, to reflect the added value European suppliers bring; an end to negative bidding in auctions, where developers pay for the right to build projects, creating a price that “needs to be paid by someone... [typically] consumers or the supply chain”.
The Siemens Gamesa chief also called for “flexibility” in the structure of power-purchase agreements in a way that would allow the entire value chain to better adapt to the dramatic variations currently being experienced, rather than leaving those in the supply chain tied into fixed-price contracts struggling to cope with sudden huge cost increases.
Samuel Leupold, chairman of Macquarie’s newly-formed offshore wind group Corio, said: "It would be wrong to say developers are making huge loads and they don’t let others in the supply chain live. Everyone is in a squeeze now, because auction designs have a led to a race to the bottom.”