Siemens says wind industry must cut costs rapidly

April 16, 2012 by  
Filed under Green Energy News

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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