A Case Study of Wind Power


At the moment, Siemens Gamesa and Vestas Wind Systems are considered as the world giants in producing wind turbines. These are the companies that are responsible for building turbines that power millions of homes around the world. However, it has emerged that these companies are finding it difficult to adapt in a sector that is changing rapidly. This has been revealed by the disappointing results that have been posted by the two companies. In the past few years, wind has become an important player in the electricity industry. This is because it’s considered as a clean source of energy. It has emerged that the prices for the wind technology are decreasing at a fast rate. However, the decrease in revenue according to an article by the New York Times has been caused by phasing out of tax incentives and subsidies by governments in North America and Europe.

This is what has caused companies like Siemens Gamesa and Vestas to suffer. A report on Thursday revealed that Vestas was feeling these effects. At the moment, this is the largest producer of wind turbines in the world. While releasing figures for its third quarter on Thursday, the company said that its revenue had dropped by 6 percent. This is in comparison with the figures that had been collected last year. The figures fell to 3.1 billion euros or roughly $2.7 billion. At the same time, the company announced that its profit had dropped by 18 percent. This means that the company made a profit of just 250 million euros. This caused the shares of the company to fall by 20 percent.

This report came some few days after Siemens Gamesa Renewable announced that it had made a loss of 147 million Euros during the third quarter of 2017. The company that is currently based in Madrid announced that it would lay off nearly 6,000 workers as an effort to try and turn its fortunes around. The poor performance by these companies has been blamed on a number of issues by experts and analysts. Other than tax credits been scraped by some governments, experts say that the competition offered by solar power has posed a great threat to wind power. This has been the case in countries like Germany, Chile, and Britain. For instance, these competition has caused a reduction of wind power by nearly 15 percent. MAKE senior analyst Brian Gaylord says that the situation is likely to worsen in the next five years.