Siemens says wind industry must cut costs rapidly

Mon Apr 16, 2012 6:44am EDT

* Subsidies still needed, governments reluctant to pay

* Wind needs to be competitive with other fuel sources

By John Acher and Barbara Lewis

COPENHAGEN, April 16 (Reuters) - The wind industry must cut costs rapidly to stay competitive and boost its unacceptably low margins, the head of German conglomerate Siemens AG's wind turbines business said on Monday.

Rising costs and falling investment in energy infrastructure are threatening growth in the sector, while European manufacturers also face increasing competition from Chinese rivals which are so far focused on their domestic market but are seen as international rivals in the future.

"The wind industry currently faces a very difficult market environment," said Felix Ferlemann, chief executive of Siemens Wind Power, which was the world's ninth biggest wind turbine maker last year according to BTM Consult.

"Price pressure is growing, and, at the same time, governments are under pressure to reduce public spending on the subsidies we still depend on," he told the annual conference of the European Wind Energy Association (EWEA).

Ferlemann said those and other factors had affected the results of many European wind energy companies.

"Currently, profitability is not always given." he said. "The wind industry struggles with low margins ... This is not a sustainable situation. We are under pressure to reduce costs quickly. And we have made this our highest priority."

His comments came after a report from the EWEA argued wind power had bucked Europe's economic downturn to swell gross domestic product and create jobs but needed more ambitious EU green energy policy and investment in research and development to keep growing.

Ferlemann said the wind sector had to become more competitive with other types of energy.

"We must make it (wind) competitive with traditional energy sources and we must do this soon. Only then can we become independent from subsidies."

To secure its future, the wind industry needs to invest massively in innovation and industrialisation, but shareholders would only endorse that if the industry could operate in a stable, predictable and profitable environment.

In the past, it reduced costs by 40 percent every 10 years. "In the future, we need to be even quicker," Ferlemann said.

EWEA argues the advantage of wind energy is that although upfront costs are high, fuel costs are zero and new nuclear energy, for instance, requires greater investment. (Editing by David Holmes)

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Comments (2)
SolWill wrote:
Tough part about emerging energy sources is that there are low margins both in Solar & Wind and far less history on ‘best practices’. For more info on solar check out beta.divyaenergy.com.

Apr 16, 2012 8:02am EDT  --  Report as abuse
SolWill wrote:
Tough part about emerging energy sources is that there are low margins both in Solar & Wind and far less history on ‘best practices’. For more info on solar check out beta.divyaenergy.com.

Apr 16, 2012 8:02am EDT  --  Report as abuse
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