Siemens Gamesa loses EUR 70 million off faulty gear boxes

Following a prototype malfunction, the wind turbine manufacturer has started to replace equipment on its 4-MW platform.

Photo: Gamesa Gearbox

(Correction note on first paragraph: Geared transmissions are less expensive than direct drive technology. The English version of this article mistakenly inverted that relationship. We apologize for the misinformation)

In 2018, Siemens Gamesa switched over to exclusively building onshore wind turbines with geared transmissions. While this technology usually makes for cheaper machines than direct-drive technology, there are also costs tied to carrying out replacements, the OEM acknowledges after having uncovered a fault in the gearboxes of its 4-MW platform.

This issue has led Siemens Gamesa to book an impairment worth EUR 69 million for its fiscal fourth quarter.

The problem was discovered when the 4-MW prototype started leaking oil. At closer examination, technicians found cracks in a section of the gearbox, prompting Siemens Gamesa to initiate a campaign of repairing existing turbines as well as taking measures to prevent sending further units to market that suffer from the same problem.

"When we uncovered the problem, it was extremely important for me that we quickly located both the underlying cause as well as finding a solution. Because this wind turbine fleet is of a limited volume, we very rapidly identified the full extent of the issue – including finding both a solution so the machines can operate temporarily as well as the final fix," says Siemens Gamesa Chief Executive Andreas Nauen about the fault.

"Now it depends on our execution of the replacements and the preventative effort. However, from my perspective we took an extremely fitting approach and quickly identified the cause."

This positive spin aside, the affair will be a costly one for the German-Spanish OEM, not least because the gearboxes are predominately produced at the company's own transmission factories, which makes it relatively redundant to demand a recall.

On the other hand, the group doesn't expect the bill to exceed the 70 million euros already on the books.

"We expect to have the final spare parts in place before the end of September, and then we can at that point make our final evaluation of the impairments. However, we have the solution, are currently positive and expect that our present assessment holds water," says Chief Financial Officer Thomas Spannring.

Siemens Gamesa is not the only OEM to have had problems with its wind turbines. Last year, a handful of GE's units collapsed both in the US and Brazil, while Vestas reserved EUR 175 million to rectifying faults tied to lightning protection on several of its blades. Most recently, Midamerican shut down 42 Vestas turbines after a fourth blade cracked within a shorter period of time.

Similarly, it's not exactly that absence of gearboxes galvanizes against malfunction. In 2013, the company then called Siemens Wind Power was directly mauled by defective bearings on its direct-drive D3 units, which at the time cost the OEM a large sum.

English Edit: Daniel Frank Christensen

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