What are the Issues with Siemens Gamesa's Wind Turbines?

Credit: Alex/AdobeStock
Credit: Alex/AdobeStock

Shares in Siemens Energy fell on Monday after the company quantified deeper than expected problems at its struggling wind turbine division that were first unveiled in June, saying the issues triggered a 2.2 billion euro ($2.42 billion) charge.

The group's shares slid 7.4% to the bottom of Germany's blue-chip index, as the group disclosed more details about the far-reaching issues, which affect both its onshore and offshore wind turbine businesses.

Here are details on the most pressing issues:


Most of the issues revolve around quality problems at Siemens Gamesa's two most recent onshore wind turbine platforms, the 4.X and 5.X, specifically certain rotor blades and main bearings.

The company said that while around 2,100 4.X and 800 5.X models were in the field, not all of those turbines were affected by the problems, which include wrinkles in rotor blades and unspecified particles in the bearings section.

Fixing these issues will cost 1.6 billion euros, with most of these costs expected to occur in the fiscal years 2024 and 2025, the company said.

Management said part of the challenge was to develop a statistical model that could translate fault rates into firm indications of how turbines are expected to perform over their life span of around 25 years.



Siemens Energy has said that there is a separate set of challenges in the offshore turbine part of Siemens Gamesa's business, centered around a delay in the 30% ramp-up of production as well as potentially loss-making legacy contracts.

This includes slower-than-expected headcount addition, the delay of production site construction, including manufacturing halls, as well as supply-chain issues.

It also includes the lack of ramp-up quality of components, the group said, as well as higher than expected material costs.

In addition, a small number of contracts that were concluded at much lower pricing assumption could incur losses if Siemens Gamesa's customers decide to go ahead with the projects, simply because inflation has eaten up any potential profit margin.

Taken together, these problems led to a 600 million euro charge in the third quarter, with the cash outflow to be spread over several years.


Siemens Energy declined to comment on its supplier structure for bearings and turbines, but said suppliers were part of the review and that it was in talks over potential compensation payments.

The world's top wind turbine bearings makers include China's Dalian Metallurgical Bearing Group, NTN Corp 6472.T and NSK Ltd 6471.T in Japan, Switzerland's Liebherr-International AG, and Germany's Thyssenkrupp TKAG.DE, IMO and Schaeffler SHA_p.DE.

Siemens Energy said that suppliers were only accountable for the value of delivered goods and that the group would be unable to pass on possible additional servicing costs for turbines as a result of the faulty components.

Siemens Energy said certain third-party suppliers had been excluded from further deliveries, without disclosing their identity.


Siemens Gamesa is a global company based in Spain which manufactures onshore and offshore turbines for the wind industry and offers services to wind power developers globally, with key markets including Europe and the Americas.

The company has provided more than 132 GW of wind turbines as of the end of April this year to all global regions: 108 GW of onshore wind and 22 GW of offshore wind.

It generates revenue of 9.8 billion euros a year and had an order backlog worth 39.9 billion euros as of the end of June.


Siemens Gamesa has provided wind turbines to some of the biggest power companies and oil and gas majors worldwide.

In March, it announced an order from Scottish Power Renewables in Britain to supply 95 turbines to the East Anglia 3 wind power project in the North Sea, with a total capacity of 1.4 GW.

This would be enough to power 1.3 million UK homes.

In May, it signed contracts with Spain's Repsol REP.MC for the supply of 40 onshore wind turbines which would provide power to around 160,000 homes in Spain.

It has also agreed to tie up with Poland's PGE Group PGE.WA and Denmark's Orsted ORSTED.CO to supply 107 wind turbines for the Baltica 2 offshore wind project in the Baltic Sea.


Siemens Energy's supervisory board has set up a special committee to look into the quality and productivity problems, the company said.

"Independent external experts have critically reviewed and positively assessed the methodology used to calculate theoretical future failure rates as well as expected follow-up costs," the company said.

         In addition, a task force consisting of experts from Siemens Gamesa, Siemens Energy and Alix Partners, has been put in chare of fixing the quality issues for the affected 4.X and 5.X turbines as well as implementing a quality management system.

Siemens Energy said the aim was to fix the problems within the regular service intervals.

($1 = 0.9096 euros)

(Reuters - Reporting by Nina Chestney and Christoph Steitz; Editing by Susan Fenton)

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