Wind Industry Between Extremes in Times of Pandemic

The Global Wind Energy Council (GWEC), together with signatories representing all major wind industry companies and associations worldwide, has published a statement highlighting the role of wind energy in the global economic recovery from the COVID-19 crisis. The statement sets out the key policy measures that need to be put in place to achieve a sustainable economic recovery.

GWEC CEO Ben Backwell said: "The COVID-19 pandemic has had unprecedented social and economic impact around the world, and how we recover from the crisis depends on the actions that we all take over the coming months. We have the opportunity here to ‘better re-build’, help kick-start sustainable economic recovery, and build the energy infrastructure of the future. Young people in particular will bear the financial, social, health and environmental costs of the stimulus plans now being designed, and carry the debt associated, so we must make sure they are able to benefit from today’s decisions."

Wind industry as one of the fastest growing industries in the world so far is expected to play a major role in this reconstruction. If wind capacity exceeds 2 terawatts, it could create nearly 4 million direct and indirect jobs and approximately $207 billion in additional annual investment, GWEC said. The long-term outlook is therefore bright. Eventuelly.

In order to realize the full potential, appropriate political action is needed. So far, governments have found it difficult to actively assign a greater role to climate protection. Lip service is paid in many ways - e.g. by German Chancellor Angela Merkel at the Petersberg Climate Dialogue - but concrete implementation is still lacking.

Nordex is currently acting cautiously (Image: Nordex Group)

This in turn leads to uncertainty within the economy. Though the pipelines are full, wind turbine manufacturers are currently hesitant. Thus, the Management Board of German manufacturer Nordex announced that they were retracting the forecast for the current fiscal year. Although Nordex's business performance in the first quarter of 2020 improved substantially over the previous year as expected thanks to the good order backlog of EUR 8.4 billion, it is still not possible to estimate the full extent of this improvement. However, the effects of the COVID-19 pandemic will be exerting pressure on earnings from the second quarter of 2020 onwards, although this effect cannot be quantified at present. According to Nordex, the pandemic with its global government restrictions and measures has led to considerable disruption and adjustments in key areas of business, such as procurement and production.

German-Spanish manufacturer Siemens Gamesa is also cautious and has revised its forecast. Nonetheless, the long-term prospects for the industry and Siemens Gamesa remain solid. The company had a record order backlog of EUR 28.6 billion (+21% year-on-year) and, thanks to its geographic diversification and technology leadership, is well positioned to benefit from future growth prospects in the wind industry.

Uncertainty about the duration of the pandemic is affecting the prospects at Schaeffler (Image: Schaeffler)

Even automotive and industrial supplier Schaeffler doesn't dare to make a forecast for the current year. “The coronavirus pandemic confronts us with unprecedented challenges. Our results for the first quarter of 2020 are robust. The positive development of our free cash flow is particularly encouraging. We are reaping the benefits of having started to proactively manage our capital expenditures and working capital last year. Combined with our comfortable liquidity position and the high quality of our balance sheet, we are confident that we will successfully overcome the current crisis. The second quarter will be difficult. We will continue to consistently carry out the countermeasures we have put in place,” stated Schaeffler AG CEO Klaus Rosenfeld.

However, politics will remain a key factor, as Siemens Gamesa CEO Markus Tacke made clear: “We are experiencing a situation without precedent that has changed our lives in just weeks. Siemens Gamesa considers that the renewables industry must play a key role in the economic recovery to move towards a sustainable energy model that generates quality jobs. It is in our hands to avoid another crisis: the climate crisis," he said in his appeal to politicians.