Wind turbine pricing pressures are being passed along the American supply chain to turbine tower makers, Broadwind Energy Inc CEO Stephanie Kushner said during the clean tech manufacturer's Feb. 27 earnings call.
After the U.S. wind market added 7 GW of new capacity in 2017, the country's biggest wind turbine suppliers General Electric Co., Siemens Gamesa Renewable Energy and Vestas Wind Systems A/S said they expect to face pricing headwinds in 2018. That drop in turbine prices is affecting wind tower makers like Broadwind, which supply the towers to turbine companies for wind projects, Kushner said.
"We are seeing increased pricing pressures as wind turbine competition has intensified and U.S. turbine prices have declined about 10% during the past 18 months," she said during the call on the company's fourth-quarter results. "Those price reductions are being passed through to the supply chain to the extent possible, and we are working to improve manufacturing efficiencies and manage down costs to absorb some of this pricing pressure."
The possibility of steel tariffs is also adding uncertainty to turbine prices, Kushner added. On Feb. 16, President Donald Trump received recommendations from the U.S. Department of Commerce on adding duties to steel imports. Of the three options, the most severe recommendation is a duty of at least 24% on all steel imports from anywhere in the world. If wind products are not included as a protected product, American tower makers would see increased pricing and margin pressure.
"We are watching this closely as a widening steel price differential could increase pricing and margin pressure for U.S. tower manufacturers, particularly for wind projects in close proximity to U.S. ports.," Kushner said.
By the numbers
Broadwind's pricing pressure concerns did not help the company's disappointing 2017 financial performance. The company had a $6.9 million operating loss in the fourth quarter — nearly 50% more than the Illinois-based firm had anticipated it would lose back in October.
The company's tower and heavy fabrication segment also saw its revenues for 2017 fall, by $56.8 million year over year, after its two biggest wind tower customers merged together to form Siemens Gamesa and cut their orders. The company sold 272 towers in 2017, compared to 458 units in 2016, CFO Jason Bonfigt said.
"Frankly, Siemens was pretty much taking all our production capacity," Kushner said during a Jan. 10 interview, adding that Broadwind is in the process of broadening its customer base. That said, Kushner noted during the earnings call that, as the world's leading wind turbine supplier, Siemens Gamesa remains an important customer to Broadwind.