COVID-19 impacts offshore wind players’ balance sheets, but not build-out and expansion plans

With financial results for the second quarter and the first half of the year now being presented, the status of the offshore wind sector in relation to the impact of the global COVID-19 crisis is becoming more prominent and, once again, it shows that the companies are both shaken and unshaken by it, at the same time. While the impact is obvious in their financial records – project development, new investments and expansion plans are mostly intact.

Almost all of the big offshore wind players have an optimistic long-term view, and one of the reasons for this is also the global push to use more renewable energy, and that push is now perhaps stronger than ever.  

“The greatest cause for long term optimism for our industry came not in the wind farms of the North Sea or Aragon, but on the streets of our Cities where the call to address climate change was made loud and clear by the youth of society, and in the corridors of power where that call was heard and where we are seeing the resolution to act”, said Miguel Ángel López, Chairman of Siemens Gamesa’s Board of Directors, at the company’s 2020 General Shareholders’ Meeting on 22 July.

Spanish renewable energy giant Iberdrola has reported a COVID-19 impact of € 228 million for the first half of the year, which the company plans to recover through its commercial activity and regulatory mechanisms.

Even so, Iberdrola had more investments in the second quarter, after the COVID-19 outbreak and subsequent restrictions, than in the first quarter of the year – and it plans to accelerate them further during rest of the year.

The company, which ramped up its offshore wind activities over the past few years, now has a pipeline of 12,000 MW and further 9,000 MW for which it inked an agreement in Sweden last month, and has also joined a couple of floating wind consortia.

While presenting the latest results on 23 July, Iberdrola’s stated it aims to become a leader in offshore wind.

In April, the company said it would speed up its investments and projects in 2020 to surpass last year’s renewable energy investment record and reach € 10 billion, which would also contribute to mitigating the effect of the current COVID-19 situation on economic activity and prevent loss of jobs.

Meanwhile, Siemens Gamesa has also felt the impact of COVID-19 on its project costs and financial records, with direct losses from the crisis in the second quarter amounting to € 56 million. However, these losses are mainly clustered in its Onshore business unit.

The wind turbine supplier its third quarter results set to report a negative EBIT, before PPA and integration and restructuring costs. expects a positive EBIT in the fourth quarter, however, most likely this will not entirely offset the negative impact for the full fiscal year 2020.

“It is still early to reliably estimate the impact of the pandemic in future quarters, but the business continuity teams are working to minimize the disruption to operations caused by the lockdowns and supply chain problems”, Andreas Nauen, Siemens Gamesa’s new CEO, said at the company’s General Shareholders’ Meeting.

Nauen also added that Siemens Gamesa is “optimistic about the long-term outlook”.

The company’s offshore wind order backlog is now at 10.7 GW. Overall, the wind turbine order book stood at € 25.5 billion at the end of 2019 and at € 28.6 billion in the second quarter of 2020.

The offshore wind part comprises multiple orders and preferred supplier agreements signed in the U.S., Europe and Asia. Andreas Nauen said Siemens Gamesa’s geographical expansion will help the company “continue as leader in the offshore industry”.

“The emergence of projects in US, such as preferred supplier agreement with Dominion for the 2.6GW offshore projects, as well as about 2GW of orders in Taiwan and the first onshore wind project in Djibouti, point to a healthy market that is diversifying geographically”, said Miguel Ángel López.

The company, which acquired Senvion assets this year, said it planned to keep growing its Service business. After taking over Senvion assets, Siemens Gamesa now has around 72 GW and it aims to have 100 GW by 2022.