Siemens Gamesa CEO warns that capacity cuts will be made if Europe’s offshore expansion fails

Siemens Energy warned on Thursday of potential wind turbine capacity cuts in Europe, if governments fall behind in efforts to expand off-shore power. The company said a lack a determination could be an "existential danger" to the industry.

Comments by one of Europe's largest industrial firms show growing concern about the future of Europe's manufacturing capability, which has been under pressure due to high energy costs and Asian competitors.

Europe's offshore expansion is being hampered due to regulatory challenges. This has caused some developers, such as those in Germany, to reconsider their involvement.

The problems can range from long project approvals to delayed grid connections that could create significant financial risks for operators.

Vinod Phillip, the head of Siemens Gamesa's Siemens Energy wind division, says that while Europe's current wind power plants are operating at maximum capacity, a lack in follow-up orders could cause plants to be scrambling by 2028 for contracts.

He said that although it was not an existential danger yet, the EU is currently about 40 GW shy of its 120-GW target by 2030.

Philip stated that while this is unlikely to lead to the closure of factories, "we will probably need to reduce their resources".

Philip stated that Siemens Gamesa is in discussions with governments to unlock projects at risk of?delay. He added the offshore wind supply chain in Europe had invested EUR14.15 billion ($16.15billion) in 2030 targets.

Siemens Gamesa is the largest manufacturer of offshore wind turbines in the world. It has six wind turbine factories across Europe, and around 20,000 people are employed on the continent.

It weighed down on the parent's performance for many years, due to a number of quality issues which have been resolved.

Investors have been closely watching the division which is "planning to break-even this year". Some are pushing for a divestment or sale, but Siemens Energy CEO Christian Bruch has said that it's not in the cards.

(source: Reuters)