Siemens Energy’s shares took a nosedive on Friday after the company announced that its subsidiary, Siemens Gamesa, had discovered that up to 30% of its wind turbine fleet might be faulty due to failing components.
The international energy giant employs over 92,000 workers and aims to “decarbonize global energy systems.”
Late Thursday, Siemens Energy announced that after conducting a review, it found a “substantial increase in failure rates of wind turbine components.”
The company reported that the faulty components could take years to fix and noted “significantly higher costs” than previously estimated. New estimates project $1.09 billion in repairs, but the company noted that the final financial impact is still undetermined.
As a result of the findings, the company decided to pull its profit guidance for the year.
“It is too early to have an exact estimate of the potential financial impact of the quality topics and to gauge the impact of the review of our assumptions on our business plans,” Siemens Energy stated.
“However, based on our initial assessment as of today, the potential magnitude of the impact leads us to withdraw the profit assumptions for Siemens Gamesa and consequently the profit guidance for Siemens Energy Group for fiscal year 2023,” it added.
During a Friday analyst call, CEO of Siemens Gamesa Jochen Eickholt stated that the company estimates that between 15-30% of its onshore wind turbine fleet is impacted by various component failures.
The Wall Street Journal reported that the faulty parts include bearings and blades. It also noted that turbines could operate for up to 20 years but that Siemens Energy discovered wear on new and older installations.
President and CEO of Siemens Energy Christian Bruch explained during the call, “The fact that we have identified more quality problems marks a significant setback for us. These quality problems go beyond what we were previously aware of, and they are directly linked to selective components at a few but important suppliers.”
“At this point in time, we believe that the costs are likely to be in excess of 1 billion euros,” Bruch added. He claimed that “too much had been swept under the carpet” at the company.
Following the announcement, Siemens Energy shares dropped over 37% on Friday amid a questionable profit forecast and uncertain repair costs.
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This is why solar and wind are not reliable sources for electricity, maybe by the end of this century