Reuters recently published an analysis of the technical issues facing Siemens and the broader industry. The company’s wind turbines have quality control issues that they predict will cost around $1 billion to fix. The sector as a whole has problems with rushed production, growing materials costs and inefficient planning and design.
Siemens Mistake With A $1bn Price Tag
Last month Siemens warned of faulty components in their production and major design issues. They predict it’ll cost $1 billion to solve the issue, yet some internal company courses told Reuters they think it’ll be more.
Siemens and Competitors Face Huge Profit Losses
For years, wind energy producers have been facing huge profit losses as they haven’t been able to pass on the cost of materials. For Siemens in particular it comes down to not outsourcing enough; sacrificing quality and losing them money. It’s no wonder that the wind turbine industry isn’t run efficiently. They are under pressure to build new projects at a superhuman rate to tackle the climate crisis and fill the gap in energy demand left by Russian gas.
Climate Targets and Rising Costs
Governments around the world are setting targets to increase wind energy production to record levels in the next decade. The EU wants 43% of Europe’s consumption to come from wind turbines by 2030 for example. These challenges are compounded by the increase in the cost of materials. High prices sparked by COVID and maintained by high inflation, interest rates and the war in Ukraine.
Cutting Corners Sacrifices Quality
Turbine producers have been working at light-speed to develop bigger and better equipment. While this is much needed, it’s feared that in the flurry of excitement, quality checks have been overlooked. This means that not only do we have products with faults but producers are wasting extra time and money going back to fix these issues.
Fixing The Problem Makes New Problems
General Electric (GE) reported that in 2022 they lost $2.24 billion largely due to these corrective measures. To make up for these losses GE will reduce the variety of turbine models they produce. This will mean new turbines will be more standard rather than perfectly suited to their environment. This could cause further problems in the long run.
Conclusion
Of course, the speed of production is necessary in the face of the climate crisis. In this sort of rush, mistakes are inevitable. Hopefully as the sector gains momentum and the companies within it reach their stride, some of the issues with efficiency and quality will be ironed out. Do you think these mistakes could’ve been avoided in the first place?
