Tariffs on steel and other components have been one of the real big conversation topics after Vestas' presented its second quarter interim report. Vestas' senior vice president of marketing and communication tells that the Danish wind turbine manufacturer has a number of options it can utilize in order to counteract the negative effects of trade barriers.
Steel tariffs and a prospect of import duties being posed on electronic components have caused uncertainty in the wind turbine industry, and it will most certainly be affected. Vestas' CEO Anders Runevad said in a conference call following the presentation of the second quarter report that Vestas' total production costs are at risk of increasing by up to 1.5 percent points in 2019, after the company's own countermeasures are incorporated in the estimate. At the same time, he underlines that it entails a high level of uncertainty.
Vestas' Senior Vice President of Marketing and Communication Morten Dyrholm tells EnergyWatch that the situation is unbelievably dynamic and that it applies to each player.
"It is something we view in a very broad sense. We have a global production machine and a global supply chain, which we do everything we can to optimize and mitigate certain trade-related issues. We keep the dialogue with our sub-suppliers and customers as well looking at our whole setup to find the best possible solutions," says Dyrholm who also tells that many variables are in play.
So it is about having the best global setup to compensate for this?
Is it possible that Vestas could actually win something from this trade war?
"In the sense we are the player with the largest global reach and thereby also the broadest supply chain. After looking through everything, we expect to find some levers on which we can pull to mitigate certain negative effects. Whether or not we have an advantage compared to our competitors, we'll have to wait and see when the figures arrive," says Dyrholm.
Does Vestas have an intuition that this could turn out to be positive?
"We would rather be able to trade in a free market like every other business. But we of course have more options [than our competitors, -ed.] on account of our size," says Dyrholm.
Lower prices provide more orders
The other big conversation topic after Vestas' Q2 report is the announcement that prices have finally stabilized.
The average price in the second quarter was EUR 0.71 million per MW, whereas the price was between EUR 0.73 - 0.74 million over the preceding quarters.
"We have been able to see over the last few quarters that our prices have actually stayed more or less at that level. Thus, we have a little more confidence that prices have reached a stable level," says Dyrholm.
Another positive announcement from Vestas was an order intake for 3,807 MW in the second quarter.
"We can see that the declining prices we have witnessed for some time are now beginnings cause concrete results in the form of higher political targets, that we can get more turbines at the same price than was previously possible. So the transition to green energy has because cheaper, and that makes it possible to increase the volume of wind energy," says Dyrholm.
He exemplifies this by indicating that the EU has raised its renewable energy target from 27 percent to 32 percent by 2030.
"We are seeing more and more of that kind of thing, where governments go out and raise targets. That is positive, and it means that the future looks a little brighter," Dyrholm says.
English Edit: Daniel Frank Christensen