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Ørsted CEO Change, Shell Leaves Atlantic Shores
This week on Uptime, we discuss Ørsted CEO Mads Nipper stepping down, Shell withdrawing from the Atlantic Shores offshore wind project, and a study showing only 15% of employees feel their managers are transparent about challenges in the workplace.
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You’re listening to the Uptime Wind Energy Podcast, brought to you by BuildTurbines. com. Learn, train, and be a part of the clean energy revolution. Visit BuildTurbines. com today. Now here’s your hosts, Allen Hall, Joel Saxom, Phil Totaro, and Rosemary Barnes.
Allen Hall: Danish Renewable Energy Company, Ørsted, announced a leadership change, with CEO Mad Snipper stepping down after four years at the helm.
Rasmus Erbo. Uh, the company’s deputy CEO and chief commercial officer will take over as group president and CEO, uh, in February. Uh, the transition comes as Orsted adapts to evolving market conditions in the offshore wind sector. Now this, uh, I guess around the industry was expected news. Uh, if you had talked to somebody, uh, about offshore in the US, uh, they felt like what had happened over the last year or so was really rough on the leadership at Oersted, part of this too, guys, is that some of it is just happenstance, interest rates rising, the supply chain nightmares that were happening and Mads Knipper would just happen to be there at that specific time.
Is, is that the feeling like it was just bad timing, uh, for Mads?
Phil Totaro: Yeah, it’s, it’s part of it, but the, the reality I think is you, you’ve got a scenario where he, he was there and the buck stops here and all that sort of stuff, um, if you’re the boss, but he also was one kind of overseeing a lot of the deals that got him put in place that led to all those impairments that they ended up having.
It’s like, yeah, okay. Interest rates are high, but. It’s like he, he, you know, was there signing off on these, these deals with, uh, PSEG in New Jersey and, uh, Eversource in, in Connecticut, uh, and Rhode Island that were just frankly terrible deals. I mean, it just, they, they ended up, Orsted ended up having to pay.
for whatever the utility companies had invested time and money and effort and et cetera, uh, into, you know, the development work on these deals, um, in case they decided to pull out plus, you know, uh, a little extra. And it’s like, that’s, that’s the way it is. You know, you might think that that’s typical, but when you get into a deal like this for an offshore wind farm, uh, I mean, we’re starting to talk in the hundreds of millions of dollars, and it led to this, this multi billion dollar impairment that they had, you know, last year.
So, you know, I think I said on the show six months ago that he was likely to be gone, and guess what? He is.
Allen Hall: My feeling about it is there’s just a little bit of happenstance, but that’s the problem at being in leadership You don’t get to choose the economic times in which you’re running the company and you have to play what the cards are dealt right, I Wouldn’t say any offshore wind developer in the United States.
This has great numbers at the minute So it isn’t like Orsted has is in a different bucket at the minute it but I I I think the, my contention at the time was New Jersey really screwed Orsted. Not the, the government in New Jersey was just negotiating in bad faith. And they wanted to take all the federal tax credits, which Orsted agreed to, and then they needed them back.
And then it just went back and forth there. And it just felt like it was unnatural for a Scandinavian country. Like an organization in Scandinavia like Orsted is, which is, you know, the national, uh, energy source for Denmark to deal with such kind of shady characters. It’s, it wouldn’t happen if they were dealing with Norway or Finland or Germany, those things wouldn’t have happened like that, but it just felt like, uh, they were a little bit out of the elements in terms of how they could get screwed.
And they, and they did. I
Joel Saxum: think if you look at the, like what the background with Mad Snippers was, is he was there for four years and they grew their portfolio big time, right? They went from 11, about 11 gigawatts. That’s seven gigawatts of growth in four years of installed capacity is huge. So he has a skillset of scaling up, moving, making things go fast.
Uh, and if you read his like a little letter that he wrote on LinkedIn, thanks for all the time with the colleagues, the standard stuff you read, right? Um, but he did in that letter, he said, you know, look at the, the, you know, leadership’s looking for someone with a little bit of a different skill set. And if you look at Rasmus, Airbo’s skill set, he was a, he was lead, leading the IPO.
He was a part of divesting in the oil and gas business. So he has, it looks like he has a bit more of a financial or commercial mind than say Mads was just like, blow and go, let’s, let’s develop as much as we can is what it looks like from the numbers. Right?
Allen Hall: Yeah. But Orsted financially is doing just fine.
It didn’t look great, but Orsted is doing quite well. But the stock, the, the stock price is the, is the one, right? That’s the one you can’t really walk away from, but you don’t have any control over the stock price. In a sense, he delivered EBITDA numbers that were true, and it wasn’t like he was trying to deceive the market, but no one ever accused Mads of that.
He, he was really straightforward When bad stuff happened, he’d get out in front of it and tell you bad stuff’s about to happen, which is great. However, the market just moved away from Orsted and from renewables from that sense, uh, does that sound something he can really control, right?
Phil Totaro: No, uh, from, from that perspective, but, and, and look again, to, to, you know, not beat up on him too much, like what Joel said, you know, he oversaw the expansion of the company.
Orsted acquires, uh, Lincoln Electric under his, um, you know, watchful eye. Uh, and, and they moved into a lot of new, new markets, including, you know, developing offshore in Taiwan, um, you know, growing their portfolio in Europe and pioneering a lot of what got, you know, built and, and, you know, is still being built here with, With revolution wind, uh, in, in the US, you know, I mean, he, he caused the company a certain amount of frustration and embarrassment.
And, you know, typically in Europe, like they, they don’t just like, unless it’s like egregious, like you won’t see an executive get, you know, heave hoed, right. Immediately after, you know, something happens, they’ll usually give it six months and then they’ll, they’ll just shift in a new direction, which is basically what they’re saying.
So again, unsurprising that this happened, there were plenty of good things to talk about, but also some, some concerns that I’m sure the company had as to how things were being handled and bringing in somebody else. That’s probably going to handle them in a, in a bit of a different way is what we’re going to talk about.
Um, you know, something that, uh, frankly needs to happen sometimes at a company to, to, you know, stabilize, especially for a publicly traded company, like you need to, to provide investors with confidence and, and stabilize the situation.
Allen Hall: Is Oristed going to structurally change from what it is now?
Phil Totaro: That’s a interesting question because they don’t actually have a whole lot.
That they could, you know, like lump off and. Right. I think they can lean a little bit, but not much. Yeah. I mean, but it’s also, you know, if you made it a point to acquire an onshore renewable portfolio, I mean, maybe they sell that off, but that could also just be like, What a lot of other companies do with an asset rotation, just like, Hey, let’s get some cash by divesting some, some older assets, um, and reinvest the proceeds in new greenfield projects.
That could, and it is probably, if anything were to happen, that’s the likeliest thing to happen, but it’s not like you can take and split the company up. Or anything any more than it already was, they already got rid of the oil and gas stuff and they already got rid of the utility, um, retail business over in Denmark as well, a year or two or three ago.
So, you know, that this is it, like, you know, Orsted’s, uh, uh, pretty much an offshore wind and a little bit of onshore renewable development company.
Joel Saxum: Well, you have other, other people investing in Orsted too. So, so you have, you know, Econor’s, they, they’re 10%. Now from, from the Norwegian side, getting into this thing to kind of drive their goals, of course, towards, um, you know, investing in renewable energies, but what does it look like there, right?
Is what’s the, what does the fly on the wall say at Econor’s office looking at this thing there? I mean, in my mind, probably happy about this change because there’s a, it looks like there could be a way forward.
Allen Hall: Well, did they drive it, Joel? I think the question is how much influence did Equinor have in the boardroom to make this swap and to, to put more focus on the sort of day to day finances?
I think with
Joel Saxum: their, with their 10 percent investment, they actually didn’t get a board seat. That doesn’t mean they don’t have influence over what happens at the board level, right? But from a, from a legal standpoint, I think they, they didn’t have that. Yeah, but there’s, there’s, there’s a lot of coffee being drank on the streets in
Allen Hall: Copenhagen.
There’s always a voice if that kind of percentage of a company. And I think that’s probably the, the, you know, if you look at the straw that broke the camel’s back here, it was probably that it just feels like it. Maybe it wasn’t, but it does feel like it when you talk to people. It’s Denmark itself is very proud of.
Ørsted. They should be. It’s an amazing company. It’s done wonderful things, uh, but to have the Norwegians come in and acquire 10 percent of it to write the company at the time just didn’t feel good.
Joel Saxum: Merit with a Danish offshore wind auction, and the Danish government owns part of Ørsted, and they couldn’t even, they didn’t even solicit a bid for any of the projects there.
So there’s like some weird Yeah, there’s some weird stuff going on in Offshore Wind over there, so it demands a little change.
Phil Totaro: You know, developers are changing their tune pretty quick here, saying, oh, well, we wanted subsidies, and it’s like, well, no, now we don’t want subsidies. Uh, we want, you know, whatever we want, and it just, like, let the government Just let us go do our thing.
But it’s, it’s kind of strange because I, you know, the, the Orsted is still, you know, in terms of, well, with the exception of China, the, the number one global, um, you know, offshore wind project developer and asset owner. They are are still in a position where they can, you know, take advantage of a lot of emerging markets if they choose to do so.
So it’ll be interesting to see if some of those plans, you know, given again, we’ve still got a high interest rate environment right now. But is that going to be the case in 9 months or 10 months? Um, you know, now that we’re already in in February here, Uh, you know, by the end of 2025, what’s the market really going to look like?
And I, I think it’s going to change up quite a bit. Um, and, and it could be an environment where a lot more investment is poised to flow. And, you know, Orsted still knows how to develop a project or two. So it’s not like they’re not going to be well positioned.
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Allen Hall: Shell has announced its withdrawal from Atlantic Shores offshore wind project off the coast of New Jersey, much like everything that happened in Orsted. This decision comes amid regulatory changes and follows a recent executive order that placed new restrictions on offshore wind development.
Now, the project, which had secured most of its permits, was designed to power approximately one million homes across two phases of development. In the press, In the United States, it’s being seen as a Trump win. But a billion dollars is still a billion dollars. A shell, which would obviously indicate a shell loss.
So it’s like this, somebody wins, somebody loses scenario. I’m not sure that’s actually true. Obviously there was going to be some slowdown because of the Current administration. Wiping this away and just saying it’s a complete write off, Phil, seems a little unusual right now. And maybe they just wanted to get out of the project altogether, and it has really nothing to do with, with the administration.
Phil Totaro: Yeah, but, uh, look, at the end of the day, that was just the nail in the coffin, because it, it, they were certainly looking at, you don’t just make a decision like this to divest, and take an impairment of, you know, 996 million, although, again, most of it wasn’t necessarily, uh, fully attributed to the Atlantic Shores Project, but a large chunk of it was, um, because of, A, everything they had already invested in the project development, and B, what they were, you know, future revenues, etc.,
etc., that they were expecting. You know, you’re, you’re still in an environment where they’ve spent You know, tens, if not hundreds of millions of dollars on leases, they’ve spent hundreds of millions of dollars on project development expenses up until now, trying to cultivate the project as well as the supply chain around the project that they’re going to need to, to build.
They’ve also invested heavily into developing the concept for the interconnection and, and, you know, the, the Atlantic shores interconnection wasn’t just going to be fed in. You know, from one project, there were other projects and, you know, adjacent to that, that we’re also going to be fed into New Jersey.
And now New Jersey’s saying, you know, the governor is basically saying, well, that’s it for offshore wind for a while. Uh, so, you know, I, I consider this to be a failure on. Uh, the part of, of the current administration to not foster an environment where people feel comfortable investing.
Allen Hall: So that’s a good point, Phil.
I want to flip that on its head a little bit. Isn’t a large part of this, the New Jersey governor, the reason that Orsted is not there is because of the New Jersey governor, the reason that Shell’s pulling out is because of the New Jersey governor. You can’t have it both ways. When the election was kind of around and renewables weren’t as in favor.
It’s like, Oh, I think we ought to just take our time, slow it down. We’ll develop it over time. Like when you have billions of dollars on the line, that’s the last thing you want to hear from the government. Like make your freaking mind up and let’s go. Trump had nothing to do with that. That was, that was New Jersey.
Phil Totaro: I mean, let’s, let’s be fair though. It’s, it’s both of them because at the end of the day, again, you can’t, you know, if I’m, if I’m looking at trying to do, and again, to be clear, Trump’s order. really applies to leases for new leases that weren’t already allocated. The problem, however, is that for leases that already have been allocated, they’re also talking about slowing down or stopping any additional permitting for, for those existing leases.
So if I’ve come into the market, particularly from abroad, and I’ve spent 400 million combined on a lease, development costs, and supply chain costs, expecting to see some kind of a return, and I get both the governor of the state that I’m trying to do the project in and now the new president trying to preclude me from doing it, I’m Yeah, I’m frankly going to be pissed and I’m going to be, you know, I’m going to want to either pull out.
I’m going to want my money back. I’m going to be, I mean, he’s making people’s wallets lighter and it’s affecting people here. You know, if you are the leader of anything, if you’re the governor of a state, if you’re the president of the United States, if you’re, you know, the leader of a company, your responsibility is to foster an environment where whatever it is you’re responsible for, And I don’t see the people in positions of power doing that.
That’s what my problem is.
Joel Saxum: I think three words here that may not be very common to our wind brethren and sisters. Veto. Whale. Ardo. Those are the three platforms that Shell has been developing and is developing in the offshore oil and gas plays in the Gulf of Mexico right now. They’re the, they’re one of the top producers out there, right?
So as soon as Trump goes, drill, baby, drill, drill, baby, drill, we don’t know what we’re going to do to win. And you’re looking at it going, I don’t know what we’re going to do, maybe this, maybe that. And you look at the margins that can be had in offshore oil and gas versus offshore wind. You say, you know what?
We’re I’ve had enough of this problem. I’m done with it. I’m going back to where I know I can make money for my stakeholders and my company. And, and they’re one of the top producers in the Gulf of Gulf of Mexico, Gulf of America, whatever you want to call it. And they’re going to, they’re going to continue to push that way.
But they just got, but, but they’ve, they’ve optimized what they’re doing out there with these three plat, these three new platforms are the first platforms of their kind that are built. They almost exactly the same. They’re replicas of each other. That has, that doesn’t happen in offshore oil and gas.
Usually everything is bespoke and custom. These are replicas of each other and they plan to be. Operations and maintenance, smart platforms, a lot of tech out there, a lot of AI on these platforms. And they’re going to make, that’s going to make margins increase and increase and increase in offshore oil and gas.
And that’s where they’re going to make money. That’s where they’re going to put their money to make money.
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Allen Hall: Well, I wish Rosie was here because she provides some good feedback because this is an interesting news item that’s popped up.
A recent leadership IQ poll has revealed concerning trends in workplace communication with only 15 percent of employees feeling their organizations are transparent about challenges in the workplace. Uh, the phenomenon known as glossing occurs when managers downplay workplace issues in an attempt to maintain positivity, potentially creating disconnects between leadership and staff.
Now, uh, that study found that only 24 percent of respondents reported their leaders consistently encourage and acknowledge suggestions for improvement, while 16 percent said their leaders never do this. So this has a lot to do with, I think, the economic times. In order to keep an office running and headed towards some direction, you have to downplay the horrible scenarios you watch as there may be layoffs next door and the company down the street.
You may see closing of businesses as you drive home. That starts to worry everybody. And so what happens is Managers tend to downplay and say, no, no, no, we’re fine. We’re fine. We’re fine. We’re going to work 80 hour weeks, but we’re fine. And that doesn’t feel right to a lot of people. And I think, you know, people, a lot of employees know, they, they see the writing on the wall, they read the newspaper, they read the, uh, The internet, they see it.
It’s there. Uh, and I see this a lot in renewables, actually. Uh, some of the names we talked about earlier in this episode, I think we’re in that moat, like we’re going to be fine. It’s going to be fine. It’s going to be fine. And then it’s not, it’s one of those, uh, it’s, it’s, it’s slowly changes, slowly changes, and then there’s an abrupt stop and everybody’s waiting for that abrupt stop.
It’s that’s hard thing to manage for the low level managers though. And Phil, you’ve been there. I mean, you’ve been in some real tough situations in your career. How do you handle that? Do you just ignore what the management’s saying? You just say, I’m going to pay more attention to what’s happening on the outside, no matter what management’s saying?
Phil Totaro: It depends on what level of influence, I guess, you feel like you have within the company and, you know, cause ultimately you are. If you’re in a position where you’re interacting with customers, especially, they need a certain perception, um, of your company and, and your company’s health and success and everything in order to feel comfortable working with you and, and frankly, allocating, you know, tens of thousands, if not, you know, hundreds of thousands or millions of dollars, uh, on, on projects and, and whatnot that they, they work with you on.
So that’s, that’s, that’s That’s a part of it. The other part is, you know, how does that reflect back internally? Um, you know, at the end of the day, I mean, look, I’ve been in a company where, you know, it was Clipper Windpower. I’ll, I’ll, um, name names because it’s been, you know, 15 years since any of us have been there.
Um, but we couldn’t. We suffered from a dearth of talent, but a leadership that couldn’t pull the trigger on me, you know, and, and just make a decision and say, this is what we’re doing and we’re going forward. I left Clipper in 2010 because I felt like I was in an environment where we weren’t going to change.
We, we were not going to, it was a sinking ship and I could see it. And I didn’t want to be on the Titanic as it went down. You know, people can look at me however they want to look at me for making that decision, but, I mean, I’ve now been running a consultancy that’s lasted longer than Clipper did. I mean, my company’s been around for 15 years, not for nothing, but hey, you know, we, we made it, we made it longer than Clipper did, so I guess I must be doing something right, uh, over here.
So, you know, I guess that’s my, my two cents on, on the whole matter.
Joel Saxum: I think there’s a little bit of something else in play here. That’s a, like a cultural change, right? So with the newer generations of workers coming into place, I think it’s, everybody’s a little bit more, Oh, you gotta be a little nice, got to dance around a little bit and kind of, um, make sure their feelings aren’t hurting at the, where the older generations of workers were just kind of like, you could lay it to people bluntly and they would just kind of carry on.
Um, so I think that there’s a little bit of a difference with the younger workforce coming into play where they’re intermixing with everybody and working great and bringing new ideas. Cool. But you know, some, some people you got to handle more with like kid gloves versus being able to, um, you know, really say what you want to say, I think is the difference.
I guess I like it to like, my brother was, my brother was HR in the military and he retired after 20 years. Uh, and I was like, oh man, you’re a shoo in for any kind of position you want. He’s like, no, I’m not because he can’t do HR in the real world like you do it in the military. Um, so he’s like, yeah, you kind of get, you know, it’s not going to work.
And I think it’s kind of the same thing. You have, uh, you’ve got these different dynamics in play in the workplace that, uh, a little bit more care of people’s feelings, uh, these days than there used to be.
Allen Hall: Yeah, I think as an employee in those situations, I’m much more on Phil’s side on this than, than I typically see out in the rest of the world.
Protect your backside all the time. Always be looking behind you to make sure, uh, it’s going like you think it’s going and always generally have an out plan. Maybe because I worked in aerospace so long that airplane programs were notoriously, um, going to run out of money much sooner than they thought.
And you could feel it, because the amount of work hours would increase. So it was generally 40, and then it became 44, then it was 50, then it becomes 60, and you’re like, all right, now I’m approaching 70. Okay, this is, we’re not, nothing is progressing any faster for us working all these extra hours. What’s about to happen?
Well, what’s about to happen is they’re not going to pay you, and then all those hours will just go poof. Uh, that was always the downside of that. In today’s world, I do think. Mostly because of the pandemic, that there’s, uh, it’s a, it’s a hard place to be. Everybody was sort of laid off for a little while because of the pandemic, and they don’t want to be laid off again, so they’re pretty sensitive about it.
And they’re trying to figure out a way to navigate that. I always, for engineers, I always recommend, like Phil said, have a plan B. Whether you re enact it or not. Always have a plan B. Always be making a plan B. If your plan B is so so, then have a plan C and a D. Always, because things change. And as Phil pointed out, Clipper was a great company.
I remember working with Clipper back in the day. And early on, it was like, wow, this is cool. This is good stuff. And then all of a sudden, it just didn’t. You don’t want to be there. And Phil’s not, right? So that’s a good example of pay attention to what’s going on. This week’s Wind
Joel Saxum: Farm of the Week is Red Barn Wind.
It’s an elite clean energy site down in southern Wisconsin and it has 28 GE 3. 4 140 kilowatts. Turbines. So it’s 92 megawatts. There’s enough to power about 32, 000 homes. And one of the things to touch on here is during construction of this site, they used slag cement and slag cement is an interesting product because it’s actually.
Partially recycled. So when they’d use slag cement, it’s uh, it actually increases some of the performance of the product. But it, uh, they take it from industrial usage and they pulverize the powder and they supplement it for cement. So this one actually had about 50 percent, 50 percent slag cement, 50 percent regular cement.
But it is a recycled product that went into the bases of these turbines. So that’s pretty cool. Uh, they employ 250 people during construction and about 10 people during full on operation and the power goes, stays right in there in Wisconsin. So Madison Gas and Electric is getting some of it. Wisconsin Public Service is getting some of it.
WEC Energy Group gets the rest. So, uh, it’s a pretty cool project that they use some recycled materials for there in Wisconsin. So, um, and Red Barn Wind
Allen Hall: from Elite Clean Energy, you are the wind farm of the week. That’s going to do it for this week’s Uptime Wind Energy Podcast. Thanks for listening. And please give us a five star rating on your podcast platform and subscribe in the show notes below to Uptime Tech News, our substack newsletter.
And we’ll see you here next week on the Uptime Wind Energy Podcast.
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Allen Hall: Welcome to the Uptime Wind Energy podcast. I’m your host, Allen Hall, and I’m here with Rosemary Barnes, Matthew Stead, and Yolanda Padron. And three out of the four of us will be in Melbourne Australia talking to a number of operators and interested parties about WOMA 2027. Matthew, where will we be the couple of days we’re in Melbourne?
Matthew Stead: So, um, first of all, we’ve got the Pullman, uh, East Melbourne, which is, uh, where the venue will be for, for 2027. Um, so that’ll be our home base. Um, we’ve got around about eight meetings planned already. So what we’re doing is we’re talking to the operators and a few other industry, um, players about [00:01:00] what we need to talk about, how we’re gonna move the industry forward in Australia.
Uh, so it’s gonna be jam-packed, but there’s a little bit of time left on the Friday afternoon if there’s any late-minute, um, people that wanna get in contact and catch up with us, um, for next Thursday, Friday, or actually Friday. Uh, so yeah, it’s gonna be a, a jam-packed time. I think we’re gonna be tired, too many coffees, and talking to all the key, all the key operators, uh, about what they wanna hear about and how we can move the, the industry forward.
Allen Hall: And if someone wants to put an input into the WOMA panel about what will be discussed at WOMA 2027, Matthew, how would they do that? How do they get ahold of you?
Matthew Stead: Well, we have a wonderful website, and that’s got all the details you could ever want. Um, you can also register on the website, so please register.
Otherwise, um, I’m sure we’re gonna be a sellout this year for sure. So woma2027.com.
Rosemary Barnes: I just wanna add that when people talk to [00:02:00] me about the event, they always say how they love that the topics are so relevant, and the reason why that they’re so relevant is because we make sure to go around to operators and find out what are the issues that they’re really dealing with.
So anybody that’s thinking of attending, even if you can’t, you know, meet us up, meet up with us in Melbourne, get in touch and tell us what are the, yeah, what are the topics that you’re struggling with that you’re not, um, you’re having trouble finding enough information, having trouble finding the people that can help you.
And y- yeah, like we take all of that information, and that’s how we come up with our agenda each year. And yeah, I mean, for us, that’s the, the main thing is that this has to be really relevant, up-to-date information for the industry, and we need your help to make sure it stays that way. I
Matthew Stead: mean, that’s what we’ve done the last two years, so this is– we’re just repeating the formula, um, listening to the operators and getting the good topics and the good speakers.
Allen Hall: Well, Vestas has had a good quarter. Uh, the, for the last couple of years, honestly, s- [00:03:00] Vestas has been really thin on margins. There was questions about it continuing on. Rising costs mostly, uh, supply chains, especially during COVID, were bad. Uh, and, uh, but for the most part, the shareholders stayed attached.
Well, that story is changing rapidly. The world’s largest turbine maker posted second quarter operating profits of $400- €46 million, more than double what the analysts had expected, and it’s raised its full-year margin guidance alongside half-year results for the first time in a decade. The shares climbed about 20% in Copenhagen, adding roughly €4.7 billion of market value in a single session.
Now, the chief executive, uh, Henrik Andersen, ha- put it plainly to, uh, uh, in a couple of news sources that something much bigger is happening and Vestas is gonna be the, the leader in wind. That’s how I read it, that everybody [00:04:00]at Vestas was super happy with the, the change in direction and things were moving up steadily.
But a 20% jump in a day is remarkable. You don’t see that in large industrial businesses like wind energy. Matthew, this has real implications on what happens next for Vestas because success like this usually means more orders.
Matthew Stead: Yeah, I wonder what’s going on under the hood there. Um, I mean, Vestas is a quality company, although, although can I just do a quick segue?
How many turbines were installed in Denmark in the last, uh, two years? Like last year and the year before?
Allen Hall: I don’t know. How many?
Matthew Stead: I believe it was eight turbines installed onshore in Denmark last year, and the year before it was 12. So, you know, maybe, maybe Vestas needs to focus on their own backyard a little bit as well.
Allen Hall: I’m not sure there’s a lot of opportunity there. Yeah, onshore.
Matthew Stead: How can you ever be full? I mean, there’s always, um, [00:05:00] uh, you know, um, you know, resiting or, um, you know, upgrades and-
Rosemary Barnes: You know what? Allen and I are probably gonna get some time in Jutland, uh, later this year, um, and that area and the old wind turbines there was actually the inspiration for my whole YouTube channel.
It just, ’cause there’s, you know, there’s turbines there from, the earliest one is, um, from the ’70s and still going. I think it’s one and a half megawatts, actually huge for, for that time. Um, and it was like community made, um, at Tvind. But anyway, I’m interested to revisit the site and have a look and see are these, you know, all these old turbines still there.
It’s only, like six years since I went through and did the experience but for the most part, they don’t seem to be yet pulling down the, the small old ones and putting up big ones. There’s a lot of, a lot of them are community owned. Um, and yeah, I mean, Danish people love wind turbines, but there’s only so many that you can have onshore.
Like, people are happy to live near them by, you know, the standards of people in other countries, but you don’t want [00:06:00] one in your literal backyard. I think that there is, there, there is a, a limit to how many more onshore wind turbines that you can get in that area and offshore expansion is the more likely way to go.
Um, and also I think it’s, it’s, it’s good to recognize that if you have a domestic only or a domestic first strategy, that will only get you so far and then you have to expand, and I think Denmark did that really well. I think Germany a little bit less. I think that Enercon were a bit surprised, um, by their strategy.
It, uh, they had a real hard time anyway when they had to transition away from mostly Germany to getting overseas. And obviously, like if you look at China, they have most of their installations are in China. They are trying so hard to get outside of China because it’s not, like even a market as big as China, it’s got decades to go before it will be full.
Um, you can still recognize that that’s not your, like long-term strategy for growth has to involve expansion, I think.
Allen Hall: I think Vestas, regardless of what happens in Denmark, is making a play for the United States. That seems to be [00:07:00] where a significant effort is happening at the moment and on offshore. Their– Vestas seems very excited about the offshore opportunities.
Of course, there’s a ton of wind turbines gonna be installed in the UK and, and all around Northern Europe. Offshore, the opportunities to buy turbines, there’s only a couple that you could get today. Uh, uh, the GE Vernova offerings I, I don’t think are gonna fit the mold, and I don’t know if GE’s even actively selling.
So their competitor realistically is Siemens Gamesa, which does seem like the smaller player at the minute versus Vestas, which is heavily pushing the V236 and will fill order books like crazy, I think, uh, just based upon the, the history they’ve had and everybody knowing who they are. So Also on the move in Australia, right?
Vestas is huge in Australia right now.
Rosemary Barnes: I think it’s really good that their, um, yeah, finances, uh, are [00:08:00] looking a bit better ’cause it’s been funny. Like, I tried early on in my wind career to invest in, you know, wind turbine manufacturers knowing that there would be immense growth, and I was right. There, there was immense growth.
Not that that was so hard to figure out that there would be, but it did not lead to any kind of, um, return on, on anything, you know. Like, that did not keep pace with the just general market. Um, so I, I stopped trying to, stopped trying to invest to that. But it has been really, really hard for the companies to, you know, raise money or y- you know, do any of the things that they need to do because they’ve always, like, they’re growing, growing, growing, but finances has been so tight that it has been a real constraint on the amount of engineering that they could do, and I really hope that Vestas are gonna take this opportunity that they’ve got compared to, you know, a lot of the other manufacturers.
Vestas do have really strong, um, innovation and, yeah, engineering capabilities for doing– you know, developing new technologies and improving them, and I really hope that they’re taking this opportunity to build that up. There are a lot [00:09:00] of very good engineers with a lot of experience in the industry in that area that are working in other fields at the moment because, you know, there’s been a lot of contraction in Denmark.
So I don’t know, it seems like a really good time to hire back some of that really in-depth knowledge and, yeah, get a- get ahead of, you know, some of the future quality problems. We’re going through such a hard time at the moment from the fast development that happened in the 20-teens when there wasn’t a whole lot of money around.
We’re dealing with quality problems now, so, you know, maybe we can get ahead and not have the next round of them if we can invest in just a lot more, uh, engineering capacity.
Allen Hall: When you have success like Vestas has, usually the upper level management and some of the executive team starts getting pilfered, that they’ll get offers to repeat that success at another company, and it sounds like that process has started already.
There’s a couple of executives that have recently departing or are in the midst of departing from Vestas. [00:10:00] I would see that continuing f- at least for the next six months, uh, because everybody wants to repeat that, right? If you can get a 20% increase in your valuation overnight, uh, I can, I can list a number of companies, regardless of industry, that would love to participate.
Even in a 5% increase, that would be remarkable. So, um, Vestas is gonna have a hard time holding onto this. That’s just the nature of the business where things are successful, people will wander. And Rosemary, I, I think they’re– And Yolanda In, in my book, Vestas should sort of s-stand down and just make quality products.
I’m not sure you sh-should tinker too much at the time being and just make the good stuff better. That seems like a way to really increase profits.
Yolanda Padron: Yeah, I mean, solving a lot of the issues that– And, and that’s not just a Vestas exclusive thing, right? All of these OEMs have some sort of issue that maybe– I know Rosie’s touched a lot on, on it, where [00:11:00] you build this version A and then version B solves one of the small little issues, but now it creates another little problem, and then you have version C, and then everything just kinda has its own niche little issue, um, that really expands over time.
So if they could solidify what they already have in, in a, in a model that, that would help them just even keep a lot of their customers, I think that’d be great, and it would help, certainly help them, um, not continuously, like, rotate around the customers, ’cause it almost feels like, at least in the States, right, you, you get GE to be really, really strong and have a huge market share, and then GE starts focusing more on gas turbines, so then they all go onto Vestas, and then they all go onto Ontara now.
Um, and then just, you know, just kind of everybody starts cycling through them because they just kind of want something that’s better quality than what they’re getting in the long haul.
Matthew Stead: Allen, you, you talked about you think there’s something big under the hood. I think you, you [00:12:00] thought that maybe Vestas was angling towards something or being quite bullish.
Do you think that they might take over GE Vernova?
Allen Hall: I don’t think they’re gonna grab Vernova, and I don’t think Vernova is for sale at the minute, but I wonder if Siemens Gamesa is, or Nordex. I mean, Nordex has done terrific the last couple of quarters and is making inroads in places that I didn’t think possible three, four years ago.
Uh, the European marketplace is be- becoming really unique in that sense that there’s a lot of money being put out. But is there a sole perfect solution for Europe? Not at the minute, ’cause you got two competitors there, and then China trying to, to work its way in. Will the Europeans come together and form something more united, even if it’s just a partnership, a loose partnership, versus letting China on the shores?
We’ll see. 64 of the largest machines that Vestas has builds are standing off the German coast, but one blade is missing a [00:13:00] piece. We’ll talk about that when we come back.
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Allen Hall: Well, Germany’s largest offshore wind farm is now fully installed, and EnBW confirmed this, uh, past week that all 64 of the Vestas V236 15-megawatt turbines are s- standing at the He Dreiht wind farm about 85 kilometers northwest of Borkum. Uh, 960 megawatts, [00:14:00] 2.4 billion euros invested. Man, these offshore projects are expensive to get installed.
Uh, so it’s power for roughly 1.1 million households, and there’s no state subsidy behind any of it. And so this is a little bit of a u- unique situation. Uh, th- well, the one footnote about the wind farm is they had a V236 blade break and fall into the North Sea, and they had fished it out and I think I passed along s- pictures that I saw online of, uh, one of the police boats pulling the shear web out of the water I don’t know what to think anymore about some of these offshore blade issues.
Obviously, Vestas is very conscientious about it and will be doing RCAs and engineering reviews and all the above to go identify what the problem is. But it does just lead to a little bit of a pause of do– what is going on for some of these offshore [00:15:00] wind blade installations or, or whatever’s causing these blades to break?
Do we have a good handle on it? Yolanda, is– are we following up on all the design details so that we can prevent these things in the future?
Yolanda Padron: I mean, I’d, I’d hope you’d be following up on the design, right? Like, and, um, but I think there is still a little bit of a disconnect from, from what we’ve seen, and again, not just Vestas exclusive, um, between the people who are designing and the people who are manufacturing, the people who are in operations, right?
So, uh- The, from what we’ve heard, uh, this could have potentially been a, um, partially because of a transportation issue, which is what happens a lot in onshore. It’s a lot more common than we would like it to be. Um, and so that even goes beyond what would go on in the design studio and what would go on in the manufacturing and what would [00:16:00] go on even just for the people that are running the site, right?
So, so some sort of, um, in between, uh, EPC error. Um, but yeah, I just think that, like in a lot of industries, there should be a lot more communication between all of these teams on the lower level, so that way a lot of these problems can, can be avoided.
Allen Hall: I’m wondering if it’s actually an issue on the, the testing side.
And, uh, the one question that just popped up, and we saw from the ORE Catapult, uh, survey that’s being conducted at the moment, and if you haven’t participated in that, you just visit ORE Catapult and answer some of the survey questions. But torsion on a blade, which is very difficult to test for, and it really isn’t tested for today, but does happen during the move and the transportation of these big offshore blades.
Is it one area that we need to do a little more work in or maybe spend some more time focusing on it to see what is happening as blades are [00:17:00]moved?
Rosemary Barnes: The thing about te- torsion is that it is much more significant as blades get longer. I can’t, I can’t remember the equation off the top of my head, which is, um, bothering me.
But I think it scales with, like, the fourth power or something of, of length. And so whilst it was always a bit of a problem, it’s much more of a problem as it gets, as blades get bigger. I mean, they’ve never, like, fully tested a blade, and there was always a lot of reliance on, hey, y- you know, like we’ve tested certain things that is possible to test in a test facility on the ground.
But they also rely on their decades of experience of how blades actually behave in the field. But, you know, remember, that’s a real lagging, lagging indicator because y- you know, their decades of experience is mostly with lots smaller blades. Now, blades are really different because they’re longer and different effects are, are taking over.
It’s not just, uh, torsion, but it’s also the laminates get much thicker, and then y- you know, you, you have issues with the way that they’re curing, [00:18:00] and there’s a lot more just space for, um, defects to be present in a really thick laminate All of those things add up. Oh, yeah, then add in addition, like new materials, carbon fiber is new, and then new ways of producing it, you know, pultrusions, um, all kinds of different materials like balsa’s being replaced with foams and, um, like, you know, 10 times that number of what sounds like a small innovation, but all of these things have the potential for damage and don’t have a really long track record in the field to be able to kind of calibrate.
We do need to remember that, like, when you do something new, things are gonna break, uh, sometimes, they’re gonna fail sometimes. If they don’t, then you’re definitely being too conservative, and your product is costing more than it should, and nobody wants more expensive wind energy, right?
Matthew Stead: Rosie, Rosie, I, I know you’re doing some, some excellent work on, um, industry studies around erosion and temperature and so forth.
Um, I just wanted to let a little secret out of the bag that, um, in the future there will also be some [00:19:00] other studies on torsion and blade twist and blade dynamics. So, um, just a few things are in, in train at the moment, which I can’t share, share, but, uh, watch this space around better understanding blade twist.
Allen Hall: The Hydride wind farm runs on European turbines, but the next one might not. Two governments with two very different answers on who gets to build Europe’s wind fleet.
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Well, two countries and two decisions, one question. In Scotland, the UK government blocked plans for the Chinese manufacturer Mingyang to build a turbine factory, uh, near Inverness on national security grounds. 1.5 billion pounds of investment, up to about 1,500 jobs. And First Minister John Swinney has asked the new prime minister to reconsider.
And the UK energy secretary minister called that request irresponsible. Meanwhile, up in Denmark, Vattenfall has just won two offshore wind farms and will not say whether it will buy European turbines. Danish suppliers are not taking that quietly. So [00:21:00] the Scotland question about the Mingyang factory is at least being discussed again with the new prime minister in the UK.
It does seem like there’s a lot to do and get the government formed and make all this stuff happen. But I don’t see a Burnham administration changing the outcome for Mingyang, but I could be wrong. At the, the same time, Vestas is pushing for a more Eurocentric focus and to really keep out the Chinese.
Uh, something has to give here pretty soon.
Matthew Stead: I actually think Mingyang should, um, set up a factory in Scotland. I, I mean, what’s wrong with that? I mean, uh, why is that a security issue?
Rosemary Barnes: Set up the factory and put the, like, whatever you’re worried about, put protections in place for it, require it to be a local joint venture or whatever.
You know, we’ve seen the blueprint in many of what used to be, you know, less rich countries. That’s how they, you know, got a head start on some of these technologies. It’s not like, I don’t think that China [00:22:00] has a head start on wind, wind turbine technology, but they certainly have different ways of doing things that, um, yeah, we could, we could learn from.
But I think across the board, wind turbines, batteries, solar panels, whatever, let them set up factories, put the rules in place that mean that your country benefits from it and you’re getting the, you know, the information transfer.
Yolanda Padron: Do you think that’ll, like, impulse a lot of these more established European companies to maybe start fixing some of the issues that they’ve known about for, for a while, um, particularly regarding the blades and everything that we’ve talked about earlier?
Like, there’s enough competition there, so maybe they need to start looking a little bit more deeply into their problems.
Allen Hall: Do we think that Chinese operations have been out front, forward, honest, I’ll even use, about their blade issues?
Rosemary Barnes: No, but this is a good way to find out, isn’t it?
Allen Hall: Governments decide who is allowed to build a turbine after a discussion on Scotland.
Uh, but, but [00:23:00] occasionally, a court decides what a turbine legally is. India has just settled that question, and the reasoning should be of interest to anybody who ships machines across a border right after this. As wind energy professionals, staying informed is crucial and let’s face it, difficult. That’s why the Uptime Podcast recommends PES Wind Magazine.
PES Wind offers a diverse range of in-depth articles and expert insights that dive into the most pressing issues facing our energy future. Whether you’re an industry veteran or new to wind, PES Wind has the high-quality content you need. Don’t miss out. Visit peswind.com today. A tax fight in India has produced a definition every turbine supplier should read.
Is a wind turbine bolted to a concrete foundation movable goods, or is it immovable property? State tax authorities argued immovable, which would have [00:24:00] taxed erection and commissioning contracts at 18% instead of 5%. The Andhra Pradesh, uh, High Court disagreed, and on the 12th of August, the Supreme Court declined to interfere.
The reasoning rests on something this whole industry takes for granted. A turbine can be taken down, moved, and put back up. So a turbine is a movable object, and it has less taxation. Bonus. So this is a really interesting discussion that’s happening in India because it’s probably symptomatic of things we’re seeing elsewhere across the world about taxation for wind turbines, right?
That, um, if there’s a way to tax a wind turbine, we’re gonna try to do it. This is a unique way, uh, that happens in India where depending on if it’s permanent or movable, the tax rates are different. I, I guess that would apply to a lot of components inside a wind turbine too, Matthew, don’t you? Like the, the generator, the, the big heavy things, [00:25:00] gearbox, generator, blades, rotors, tower sections, would be taxed at a, a lesser rate.
Matthew Stead: I agree with the court case that it’s all movable and, uh, you can actually buy turbines on the secondhand market, can’t you? I mean, if I wanted to buy, yeah, whatever, whatever, I could buy one and, and put it up in my backyard if I had a bigger backyard. Um, so yeah, I vote for movable. I vote for lower taxes.
Yolanda Padron: The way that it would work a lot of times in the US is, I mean, it’s, you pay, the company itself pays a lot less than they would’ve over time, right? Just by pure, the, the regular kind of tax laws. Um, but the community, there’d be just direct donations to the community, so then they’d get, uh, like money would actually come into the community where the turbines were being built instead of just distributed around the state, which I mean, in a state as big as Texas, it gets, um, but easier for that c- um, that county to get a lot more, uh, funding than they would typically get if it was [00:26:00] through a big enough area.
Um, but yeah, no, I agr- I completely agree with you guys that, that this should be a movable good. I mean, how many times have we seen, uh, even just a blade, um, that it looks like it’s, uh, just a, a failed blade that they have to go in and replace, and then they take it out, fix it, and then just bring it back to the same site or take it to another site across the country.
And, and to that point, like if you were to h- judge it as something that’s immovable, would then any blade replacement just not be taxed? Because then it’s, you’re moving that one component and two, but it’s essentially the same turbine. Like, I don’t know how that all would make sense.
Allen Hall: I think the Uptime Supreme Court agrees with the Indian Supreme Court that wind turbines are movable, and that’s good.
Well, that wraps up another episode of the Uptime Wind Energy podcast. If today’s discussion sparked any questions or ideas, we’d love to hear from you. [00:27:00] Reach out to us on LinkedIn. And if you found value in today’s conversation, please leave us a review. It really helps other wind energy professionals discover the show.
And don’t forget to subscribe so you never miss an episode. For Rosa, Yolanda, and Matthew, I’m Allen Hall. We’ll see you here next week on the Uptime Wind Energy podcast.
Can’t swear that the story here is authentic, but it sure rings true.
Vermont is a somewhat quirky state, but it protects its citizens very well. FWIW, this is where I want MY tax dollars going too.
Florida is a deeply red state that, true to form, wants as much ignorance as it can possibly produce. Educated people aren’t voting for people like Ron Desantis.
The GOP is asking American voters to believe that “radical left Democrat extremists” are leading the country into socialism/communism. They’re hoping that this fear will outweigh the electorate’s understanding of the damage that Trump, with help of congressional Republicans, is inflicting on this nation in the form of the war in Iran, destroyed relations with allies, inflation, shoddy education, environmental collapse, and threats to Social Security and Medicare.
As we all know, the rate at which a lie becomes accepted as true is a function of the frequency that it is repeated. And God knows, we see this crap about communism every time we turn around.
But this looks like an unwinnable battle. Virtually no one wants to abandon free enterprise. Moreover, Trump’s abysmal polling numbers reflect the fact that is largely despised as a criminal–the most corrupt figure in U.S. history.
How would you like to be campaigning to retired baby boomers on the platform that we cannot afford Social Security any longer, because we’ve siphoned off huge amounts of money, like our president’s “vanity war,” with only further downside in sight, that is costing $1 billion a day?
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