Germany’s government and banks stepped in to assist Siemens Energy and its Spanish wind turbine subsidiary Siemens Gamesa after a devastating registration year, reporting a loss of 4.588 billion euros in 2023. The Spanish government also signaled its participation in aiding the Zamudio-based company. The gap in performance is tied to a combination of design flaws in some wind turbines and strategic restructuring efforts by the Germans. The bailout underscores the challenges facing the European wind industry, pressed by rising costs and intense competition, particularly from China.
The Spanish government announced its intent to participate in the relief effort for Siemens Gamesa, a move that reflects the broader European push to stabilize a key renewable energy sector amid pressure from fiscal strains and global market shifts. The episode highlights how a once-celebrated European wind success story now contends with elevated material costs, pricing volatility, and the need for strategic recalibration to maintain competitive wind turbine output across the continent.
Germany’s intervention to stabilize Siemens Energy following the Gamesa crisis
European leaders have called wind power a symbol of regional innovation and economic resilience. In a state of the union address, a prominent European official framed the current phase as an opportunity to secure long-term stability for the sector while acknowledging the pressures faced today. The energy transition aims to triple renewable capacity by 2030, which means expanding wind turbine installations across Europe. Yet the continent confronts a mix of uncertain demand, permit delays, shortages of key components, and elevated inflation that complicate project timelines and financing.
Rising production costs
The International Energy Agency (IEA) projects that the cost of producing renewable energy will remain 10% to 15% above 2020 levels in 2024. Costs surged in 2022 after a period of decline, driven by spikes in steel, copper, and aluminum prices, all of which feed into wind turbine manufacturing. While some prices have levelled from their peaks, they remain high. Steel and copper costs, along with freight, have all shown substantial increases. The wind industry has not escaped these pressures, and higher financing costs add another hurdle for new projects, especially offshore wind, where large investors seek government support or careful risk management before committing to new builds.
In 2024, Danish giant Ørsted reported a substantial profit decline for the first nine months of the year as it faced project reductions and strategic exits abroad. The company scrapped offshore projects in the United States and withdrew from a Norwegian consortium, while leadership changes signaled a shifting environment for the sector. The market conditions are described as challenging and fluid by industry observers and executives alike.
Chinese competition
Against this backdrop of internal pressures, the global wind market contends with intensifying competition, notably from China. China rose from a 35% share of new turbine installations in 2018 to exceeding 50% by 2021. Bloomberg NEF data indicate that a Chinese manufacturer, Goldwind, rose to the top ranking in global wind turbine supply, though most of its production serves the domestic market. Other major players, including General Electric of the United States, remained strong but faced stiff competition. In this landscape, Siemens Gamesa and Mingyang were among the top five, illustrating the tightening race for leadership in turbine technology and scale.
A looming warning from industry analysts suggests the European energy ecosystem could become as dependent on Chinese supply by 2030 as it once was on Russia, though with a different pattern of dependence. The Spanish presidency of the EU has stressed the need to safeguard strategic autonomy, outlining a roadmap to reduce future vulnerability while strengthening domestic manufacturing and regional resilience.
European chemical and energy executives have weighed in on the competitive dynamic. A senior executive suggested that Europe is facing a faster, more profitable Chinese industry that outpaces European capabilities in many dimensions. The head of Siemens Energy responded by emphasizing the aim not to shield markets from foreign competition but to create a level playing field that supports a sustainable regional wind industry. He pointed to auctions as a central mechanism, urging that sustainability metrics and CO2 footprints be integrated into bid evaluations to ensure a robust, long-term market structure. This stance highlights the push for more nuanced procurement criteria that balance price with environmental and strategic factors.
If appropriate policies are in place, the industry believes it can reach or exceed international benchmarks while addressing underlying problems first. Questions remain about whether certain markets and regions enjoy a truly level playing field. The European Commission’s wind energy package seeks to address these gaps by improving access to financing through programs like the Innovation Fund and risk mitigation from the European Investment Bank, along with faster project clearances and auctions that consider pre-qualification criteria for cybersecurity, environmental protection, and robust project commitments.
Structural changes
Structural changes in Europe have been a recurring theme. Vestas, the earlier Danish wind turbine manufacturer, announced factory closures in Germany, Spain, and Denmark before the pandemic. Siemens Gamesa later announced plant closures in Spain and elsewhere as part of its broader restructuring to emphasize turbines that meet market demand for more efficient, smaller machines. The ongoing shift includes strategic decisions about which markets to prioritize and how production lines will adapt to evolving technology and customer needs.
Looking ahead, Siemens Energy plans to unveil a new strategic plan in the near term. The company has stated that there will be no major layoffs, but the exact scale and focus of its markets remain an important unknown. The plan is expected to outline how the wind division will allocate resources across Europe and beyond, with Spain, Germany, and Denmark playing central roles as the business navigates a challenging yet potentially transformative period for the sector.