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A turbine blade fell off in Norway. Does the wind industry have a quality problem?

Kim Jonny Karlsen was at home last month when a 20-tonne turbine blade the length of a Boeing 747 broke off its tower at the nearby Odal wind farm and crashed into the fir trees below. 

“I jumped up from the sofa and called a friend who works there,” said the former mechanic. “I wanted to check if anyone was hurt.”

No one was harmed. But the 163-megawatt development in remote eastern Norway, whose turbines are made by German group Siemens Gamesa, has remained offline since the incident, its second major technical fault this year.

Component failures have occurred at wind farms all over the world as the sector grapples with quality challenges following rapid growth of both the global fleet and turbine sizes amid a drive to cut use of fossil fuels to meet net zero emissions targets.

While many of the problems affect the inner workings of the turbines, the Odal accident is not unique, with blade losses reported this year at another wind farm in Norway as well as sites in the US and Scotland.

The industry does not publish precise failure rates, making it hard to ascertain how widespread defects are. However, high provisions for payouts on warranties — guarantees a manufacturer offers to repair or replace faulty products — have helped push turbine makers to steep losses in recent years. 

Big wind turbine manufacturers’ warranty provisions accounted for an average 5.4 per cent of revenues in 2023, according to analysis by Wood Mackenzie. That compares to 2.8 per cent in 2018, although it is slightly down on a high of 5.7 per cent in 2022. The figure covers Chinese companies Goldwind and Mingyang and European companies Vestas and Nordex. 

Line chart of  showing Turbine sizes and warranty costs have risen in parallel

It does not include Siemens Gamesa, whose parent company Siemens Energy set aside nearly €2bn last year in provisions for warranties and onerous contracts mostly connected to problems with two of Gamesa’s onshore turbine platforms. The figure amounts to 22 per cent of Siemens Gamesa’s annual revenue or 6.3 per cent of Siemens Energy’s revenues.

“There is no option here; they need to sort it out,” said Endri Lico, supply chain expert at Wood Mackenzie, who warned that warranty provisions risked dragging on manufacturers’ recovery. “It’s not sustainable.”

Some manufacturers are trying to slow down the rapid introduction of new models, and focus on quality and standardisation. Yet insurance experts say supply chain strains are adding to the disruption of individual failures. Meanwhile, rising competition from Chinese manufacturers risks putting pressure on turbine makers to rush out new models again. 

It comes as the surge in interest rates over the past few years has created difficulties in the capital-intensive wind sector, particularly among developers of offshore projects in the US and the UK, several of which were stalled or abandoned last year.  

Odal Wind Park © Knut Egil Wang/FT

The wind industry added a record 117-gigawatt of new capacity last year despite the challenges, according to industry group the Global Wind Energy Council, taking the total installed globally to more than 1 terawatt from less than 200GW in 2010. Almost 500,000 turbines are now in place worldwide. 

The expansion has been matched by sharp increases in size, with average turbine capacity rising from 2.5MW to 4.8MW for onshore models and from 5MW to 9.6MW offshore, according to GWEC figures. 

Yet the growth has come at a cost, with industry executives and analysts saying rapid development and undeveloped supply chains have created strains. 

“There’s no time to optimise the new turbines,” said Feng Zhao, head of strategy and market intelligence at GWEC. “The launch of larger models to win the market has generated concern about reliability.”

Line chart of  showing Global onshore wind installations have skyrocketed

“We seem to have had a bit of an immature way of constantly launching new products in this industry,” said Morten Dyrholm, senior vice-president at Vestas. “There has really been an extreme race.”

Turbines coming on to the market are not “as mature” as previously, according to Espen Hagstrom, head of wind technology and quality at Norwegian renewables developer Statkraft, Europe’s biggest renewable energy producer, noting they were now commonly installed while still going through certification. “Things should have been identified earlier than what we have seen.”

Kim Jonny Karlsen at Odal © Knut Egil Wang/FT

Vestas, one of the world’s largest manufacturers, booked warranty provisions in 2022 of €930mn, or 6.4 per cent of its revenue, while US company General Electric’s renewable energy business also cited high provisions as its slumped to an annual loss of $2.2bn the same year. 

In an attempt to boost quality, the latter — now GE Vernova — said last year it would streamline new products, while Vestas and others have also called for an end to the race to build ever bigger turbines. 

Christian Bruch, chief executive of Siemens Gamesa’s parent company Siemens Energy said on May 8 it would “sharpen the focus” of the business, including by cutting product variants and concentrating on profitable markets.

“There is a real sense of rational behaviour about an end to the ‘arms race’,” said William Mackie, head of capital goods research at Kepler Cheuvreux.  

But there is some way to go. Vestas’s warranty provisions accounted for 4.5 per cent of revenues during the first quarter of this year, above its target of 3 per cent, while those of Germany’s Nordex were 5.5 per cent in 2023, up from 4 per cent in 2022. Nordex declined to comment.

Meanwhile, Vestas said its “lost production factor”, a measure of reliability across the more than 40,000 turbines it has under full-scope service, was still “unsatisfactory” during the first quarter, although it has fallen since 2022.

Vestas finance chief Hans Martin Smith told investors the company was “not seeing any big new [warranty] cases”. The company is still dealing with cases from 2020, while inflation has also pushed up repair costs.

Henrik Andersen, chief executive, told the Financial Times that both figures were heading in the right direction and that the company was doing “upgrades and repairs along the lines of what is expected.”

He added that he had been a bit concerned to see some component failures late in turbines’ life cycles, but the company was “addressing that with the partners we have in the supply chain”.

Lars Tallhaug, CEO of Odal Wind Park © Knut Egil Wang/FT

Josh Shimali, head of onshore underwriting at insurer GCube, warned that onshore turbines were now seen as riskier to insure, in part because of “historical performance concerns” around larger turbines. 

Supply chain strains mean it can also take more than a year to get new turbines, blades and tower sections, he added, adding to the cost of disruption.

“Discussions increasingly centre around lead times ranging from 12 to 18 months for replacements,” he added. 

More than half of respondents in an October survey of more than 40 industry leaders said they were expecting more reliability issues because of new turbine technology, according to data provider Onyx.

Meanwhile, the European wind industry fears that Chinese manufacturers could make inroads. China’s turbine-makers are growing quickly, with 400 turbine models launched by almost a dozen producers over the past four years, according to Wood Mackenzie.

The German government last year stepped in to support Siemens Energy with guarantees worth €7.5bn as the wind business works to fix the problems with its two most recent models. 

Christoph Zipf of industry advocacy group WindEurope said the fact that turbines operate in harsh conditions, withstanding powerful wind speeds, changing temperatures and extreme humidity at sea, “underscores the high quality and reliability of these complex machines”.

Back in Odal, a village home to more elk than people, the wind farm’s chief executive Lars Tallhaug does not know when the site will reopen.

“We have no routines for how long the wind park will be closed after an incident like this,” he said.

Despite the incident, Karlsen, who was wary of the turbines before they arrived, said he had grown accustomed to their presence. “It’s just a shame that when they are here, they don’t work.”

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