Wind power giants struggle to remain profitable

Five Second Summary:

Wind power companies are struggling financially amid surging costs, operational difficulties and rising interest rates.

The companies

• Orsted A/S

• Siemens Energy AG

• Xinjiang Goldwind Science & Technology Co.

• Equinor ASA

• Vattenfall AB

What's happening

• Wind power giants around the world are struggling to remain profitable as interest rates hurt the economics of their projects

• German government may need to prop up Siemens Energy AG

• Some projects are being shelved

Numbers + facts

• Orsted A/S is expected to report an adjusted net income loss of 12 billion kroner for the third quarter.

• The worst quarterly loss since 2015 when the company was primarily focused on fossil fuels and conventional electricity.

• Xinjiang Goldwind Science & Technology Co. reported a 98% drop in third-quarter profit.

• Equinor ASA took a $300 million impairment on US offshore wind projects.

• Orsted, despite winning contracts for its UK project, is grappling with rising costs

Looking ahead

We’ve seen high interest rates hurt the ability of both large and small clean energy projects to secure funding. One factor to consider is also the reliance of wind turbines on a steady supply of rare earths such as the NdPr found in permanent magnets. We’re of the view that companies providing rare earths will help with the energy transition and that while interest rates remain high, projects that require less start-up money (CAPEX) to enter production will be more likely to attract funding.

Read more: As Wind Industry Struggles, Investors Brace for Orsted Losses (via Bloomberg)