First came the good news – a massive investment in offshore wind in the UK. Although the UK leads the world in offshore wind generation, that is mainly because so little of it has been built anywhere. But a vote of confidence in the UK’s prospects came from three wind turbine manufacturers who announced on Monday they would set up shop on the UK’s north-east and eastern coasts.
General Electric, Siemens and Gamesa are arriving, with more than £300m in investment promised and the creation of an estimated 3,000 jobs. (That is direct jobs – more will follow along the supply chain.)
David Cameron, the UK prime minister, announced the investment as a triumph – which it was, though much of the work on attracting the investors was done under the previous Labour government.
Then the bad news – and a touch of schadenfreude. Vestas, the world’s biggest wind turbine maker, announced poor results on Wednesday, with the loss of 3,000 jobs – most of them in its home market of Denmark, some in Sweden.
(The schadenfreude, for windy people in the UK, came in because Vestas last year closed its only UK factory – and indeed the only factory in the UK making wind turbine blades – with the loss of 600 jobs. The grim irony that while Vestas’ main rivals were celebrating their entry into the UK market, Vestas was swallowing bad news in its home market, was not lost on the UK’s wind industry.)
Vestas blamed the high cost of making turbines in Europe, and said that orders in the region were severely down on predictions. Other wind companies have also been suffering – Gamesa had to lower expectations, and General Electric has been having a tough old time.
Enel had to reduce the price of its IPO on Thursday, as the market digested the poor news from the renewable energy sector.
What should we make of all this?
Wind is a difficult business, in part because orders tend to be lumpy at the best of times. The drop in revenues now is partly a hangover from the financial crisis, because wind projects take a long time to plan. Some projects that had been financed, but were still in the pipeline when the crisis hit, continued to come through for manufacturers in the year or two that followed. That pipeline has now dried up, however, and the financing of new projects has become much harder.
Some of the issues are regional. In the US, climate legislation that the industry had hoped for has not been forthcoming, and orders plunged. It has been a dreadful year for the US wind industry, and next year might be as bad.
In Europe, the generous subsidies that have buoyed the wind industry have come under threat, as countries such as Spain and Italy count the cost. Governments casting about for ways to save money have renewable energy subsidies in their sights, despite the howls of protest from the industry.
Silver lining for UK
It all adds up to a gloomy picture.
But amid the clouds, there is a small silver lining – if you are based in the UK. British renewable energy enthusiasts have long despaired of the position of the UK in the European renewable energy league tables – it comes third from bottom. They could only look with envy at continental European rivals. Now, for a change, the wind is blowing in their direction.