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Siemens Energy down 31% on windmill problems - does this affect the entire green project?

The windmills all have maintenance problems - is this just Siemens or all of them? 

Update : 23 Jun 2023, 05:19 PM

Siemens Energy (ETR: ENR) (OTCPK: SMEGF) shares are down 31% today as it becomes obvious that there's been a big boo boo at the windmill (OK, wind turbine) unit. Essentially they've been making the things with dodgy parts, have just realised this and are going to have to replace some to a lot of them.

As CNBC says: “The company, born from the spinoff of the former gas and power division of German conglomerate Siemens , announced late on Thursday that a review of issues at subsidiary Siemens Gamesa had found a “substantial increase in failure rates of wind turbine components.” The Siemens Gamesa board has initiated an “extended technical review” aimed at improving product quality that the parent company said will incur “significantly higher costs” than previously assumed, now estimated to be in excess of 1 billion euros ($1.09 billion).” As we say, they've been using dodgy components and are going to have to replace them.

As the FT says: ““The potential magnitude of the impact leads us to withdraw the profit assumptions for Siemens Gamesa and consequently the profit guidance for Siemens Energy Group for fiscal year 2023,” it said in a statement late on Thursday.”

Well, OK, but there are two ways to view this.

Siemens Energy share price from Google

It's possible that this is just a mistake on the part of Siemens. It's not wholly unknown for one of the large German engineering companies to simply get it wrong in this manner. Sure, it shouldn't happen, sometimes it does, but it's a function of internal controls at the manufacturing plant and no more. 

However, there's also long been a worry about the maintenance costs of those turbine towers. A muttering perhaps that the costs were being undervalued and that this impacts, definitively and grossly, on the overall calculations of whether wind turbines are even a good source of power in the first place. If it's that second then we should brace ourselves for similar revelations from other manufacturers like Oersted as well. For it's always the first admission which is difficult to prise out of people, isn't it?  

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