From NOT A LOT OF PEOPLE KNOW THAT
APRIL 14, 2022
By Paul Homewood
h/t Joe Public
More evidence that low wind prices at auctions are unsustainable:
Raw material and logistics inflation coupled with downward price pressures from auctions have led to an unsustainable situation where wind OEMs are selling at a loss, with the sector unable to deliver Europe’s planned tripling of wind capacity by 2030, industry leaders have warned.
“The state of the supply chain is ultimately unhealthy right now,” GE Renewable Energy chief executive for onshore wind, Sheri Hickok, told a panel at the WindEurope 2022 conference in Bilbao on Tuesday.
“It is unhealthy because we have an inflationary market that is beyond what anybody anticipated even last year. Steel is going up three times.”
Steel for offshore wind towers is currently being purchased at over $2,000 per tonne, Hickok gave as example, adding that the prices of copper, carbon and logistics had also soared.
“It is really ridiculous to think how we can sustain a supply chain in a growing industry with these kind of pressures.”
After hefty price hikes last year in the wake of the Covid-19 pandemic “things were higher but stabilising,” Hickok said, but added that with Russia’s war in Ukraine, the entire system had “unhinched” again in the past eight weeks, making it unsustainable at an unprecedented level of uncertainty.
The GE executive said she is very fearful for the entire wind industry ecosystem.
“Right now, different suppliers within the industry are reducing their footprint, they are reducing jobs in Europe,” she explained.
“If the government thinks that on a dime, this supply chain is going to be able to turn around and meet two to three times the demand, it is not reasonable.”
The European Commission’s recent REPowerEU plan, formulated in response to Russia’s invasion of Ukraine, wants wind power capacity to soar from 190GW today to 480GW by 2030.
Destructive loop
Nordex chief executive José Luis Blanco stressed that even before the Ukraine war, the economics in the wind industry had been destroyed due to price pressures from competitive tenders coupled with a low visibility of wind capacity pipelines due to failed government policies.
“We are investing in volumes in trust in market dynamics, then the volume doesn’t come, then a factory is empty, [and then] it is better [to have] some cash flow than no cash flow — and [consequently] the sector enters into a self-destructive loop.”
Blanco also said if Europe wants to triple its wind power capacity, it needs to better support the independence of the supply chain.
Currently, some 85% of the industry’s components are, however, coming from China, he said.
“The energy independence is supported by a supply-chain dependency policy. This a huge risk.”
Blanco was not only referring to rare earths, but said “normal things” such as metallic shafts in turbines, 95% of which are sourced in China.
All onshore OEMs in trouble
Enercon’s new chief executive Jürgen Zeschky went even further, saying “all European onshore OEMs are in trouble.”
Over the past eight years, cost was the only driver for developments, with low levelised costs of energy and low turbine prices driving the whole business, he told WindEurope 2022.
“We have reached a low cost base, but at the price of outsourcing to low-cost countries,” Zeschky admitted.
“If you look at Europe and Germany, we are constantly losing jobs in industry by relocating to other places.”
But the situation has changed fundamentally, he pointed out.
Due to Russia’s war in Ukraine, “we are faced with a situation, where it is not only about cost, but about an independent, resilient and reliable energy situation in Europe”.
To have sustainable energy generation, Europe needs a sustainable industry, and thus has to overcome being constricted to the lowest cost, he explained.
“That needs to change.”
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Futures market for unicorn rainbow farts looking pretty good.
Good. Let stupid wind power die its death. Get fracking Mr Johnson.
If it isnt viable without govt support it deserves to die. Thats what a free market economy means.
“‘We’re all in trouble’ – Wind turbine makers selling at a loss”
I believe I can hear the bids outside chirping in celebration…..
Deep pocket competitors buying out weak companies to shut them down. They’re not worried about recovering their investment. They simply need to be sure to make the right campaign investments in the right amount to keep the mandates in-place. Cost isn’t an issue as long as there is enough political “support’ for sale. No matter how expensive wind gets the same “cheaper than fossil fuels” will be pronounced and regurgitated by the liberal MSM. And so it goes.
When you look at regs, rules, legislation, and the money they are willing to print do this, rewire the country, insulate everything, install charging stations everywhere, or the universal installation of heat pumps, keep repeating, “It just doesn’t matter. It just doesn’t matter. It just doesn’t matter.”
We don’t have the trained labor forces required for massive projects that require completion in a short time frame, and I don’t see any proposals for appropriate training crash courses. Not enough designers, engineers, electrical workers, construction crews, fabrication experts, even project managers. All the money in the world won’t help if there is no one with the necessary skillset to hire.
Other government programs given big budgets have failed despite having most of the budget left to spend. The labor force simply did not have enough properly trained people to do the work. All these governmental green plans will suffer the same fate.
So all of it just doesn’t matter.
Here in the UK the plan is to train people for a week and unleash them on the unsuspecting public to install 600,000 heat pumps a year from 2028. What could possibly go wrong!?!!!
I’ve read pros saying 90% of existing heat pumps were installed incorrectly, and 70% were sized wrong.
Buy lots of popcorn, and invest in companies that sell portable electric heaters. Their sales will heat up when this program is underway.
I’ve been highlighting the vicious cycle that occurs as people attempt to do away with energy: the cost of producing energy goes up, so the cost of raw materials produced using energy goes up, so the cost of devices that produce no more energy than is needed to make them, goes up.
The closer we get to “net zero” … the more prices rise, the higher energy costs rise, the poorer everyone gets and the less energy that is actually produced as people rely more and more on energy “production” that takes more energy to produce than it produces.
My comment explaining how the vicious cycle of price increases was inherent in net zero was just deleted. Seems like this website was taken over by the dark side?
Oops
The bulk of the wind industry is dependent on China and what’s that going to look like in 2,3 … 5, … 10 years. We should not be aligning ourselves politically or supply chain strategically (is there a difference) with hostile regimes … recall Khrushchev saying “We will bury you!” (in Russian, “my vas pokhoronim”) in his address to Western ambassadors at a reception at the Polish embassy in Moscow on November 18, 1956. Europe, in particular Germany made a serious “political blunder” by aligning with Russia / Putin on oil and gas pipeline imports. But, the U.S. has done similarly … by making the U.S. dependent on China on critical minerals used in alternative energy (batteries, wind, …). Perhaps it would be wiser for the U.S. to support strategically critical supply chain materials… if you believe it, make your voices heard with federal and local government .. ‘cept they are too busy promoting woke agendas, especially likb Demmies.
You have to wonder if anyone could bid at the maximum allowed CFD prices for Allocation Round 4 with a straight face.