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Renewable power’s big mistake was a promise to always get cheaper  

Credit:  Will Mathis | November 7, 2022 | bloomberg.com ~~

Renewable-energy producers have long touted the promise of cheap electricity, an assurance that’s helped them eat into the dominance of fossil fuels. But the pledge has gone too far, according to the world’s biggest wind-turbine maker.

Manufacturers such as Vestas Wind Systems A/S are seeing losses pile up as orders collapse at a time when they should be capitalizing on the turmoil in natural-gas markets. To blame – at least in part – is the industry’s insistence that clean electricity can only get cheaper, according to Henrik Andersen, chief executive officer of the Danish wind giant.

“It made some people make the wrong assumption that energy and electricity should become free,” Andersen said in an interview in London. “We created the perception to some extent. So we are to blame for it. That was a mistake.”

While wind-power costs have steadily declined, to the point where many people concluded prices would eventually hit zero, technological advances can only go so far. Now the industry needs to charge more so that it can deliver the massive scale-up needed for countries to achieve ambitious climate goals.

Soaring commodity costs and supply-chain bottlenecks have wiped out profits for much of the wind industry this year. Vestas expects its profit margin to be around −5% in 2022.

“The output from the turbine has never been more valuable,” Andersen said. “But we are losing money in manufacturing a turbine.” Vestas has raised prices more than 30% in the past year to help stem losses.

To be sure, wind power remains competitive with other energy after Russia’s invasion of Ukraine [sic] drove up prices for fossil fuels. But government auctions for new wind farms put pressure on companies to keep prices low, while costly and lengthy processes to gain planning permission continue to inhibit growth.

“You have actually right now delegated your defense and energy policy furthest away from where it needs to be,” the CEO said. “You cannot run energy and defense policy in the municipalities.”

Source:  Will Mathis | November 7, 2022 | bloomberg.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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