Another sustainable energy company is failing to sustain itself
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CNBC’s “Sustainable Future” page reports today that “Siemens Energy shares plunge more than 37% as wind turbine worries deepen.” A “sustainable energy” company failing to sustain itself (despite government support)—whodda thunk it!
The article begins with two key points. The company’s review of their wind turbine subsidiary Siemens Gamesa found a “substantial increase in failure rates of wind turbine components.” An “extended technical review” finds that Siemens will incur “significantly higher costs” than previously projected, upwards of 1 billion euros ($1.09 billion). Ouch!
The article goes on to report that “Siemens Energy shares plunged over 37% on Friday after the company scrapped its profit forecast and warned that costly problems at its wind turbine unit could last for years.”
What’s the problem here? Not being a company analyst, I’ll hazard an “educated” guess.
When demand for a product grows from a free market of willing buyers and sellers, producers have time to discover and correct technical failures before scaling up production. Conversely, when governments mandate and subsidize markets for particular technologies, OEMs produce to meet political quota, which relieve normal competitive pressures for quality control and excellence.
Whether or not that’s actually the case here, the company’s travails are “broadly consistent with our model,” as climate scientists would say.