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The Brewing Battle for Offshore Wind Turbines

Investors have been pouring more money than ever into renewable energies such as solar and wind. WSJ looks at how the pandemic, lower energy costs and global politics have driven the rally–and whether it can last.

Offshore wind turbines have a nice tailwind as politicians around the world clamp down on carbon emissions. But global leader Siemens Gamesa Renewable Energy also needs to watch its back: The likes of General Electric and Vestas Wind Systems are raising their game.

The Spanish-German company’s latest quarterly results, published in full Friday, show a work in progress. Margins rose to 5.3%, having been negative in the comparable period, while orders and revenues disappointed, albeit primarily due to pandemic impacts and currency effects.

The company’s shares are down about 8% since headline figures were released last Sunday, but that fall comes after they more than doubled in the past year. Investors are buying into the massive rollout of renewables as countries, now including the U.S., have promised to decarbonize.

Offshore wind farms are a small part of installed renewable capacity globally, but huge growth is expected as costs continue to fall. Building on water is more complex and expensive than on land, but sea winds are stronger and more consistent and bigger turbines produce more power. BloombergNEF forecasts the installation of 19 gigawatts of offshore wind capacity in 2025, up from just five in 2020.

Siemens Gamesa makes and services wind turbines for land and sea. Andreas Nauen, who took over as chief executive in June 2020 having previously run its offshore division, has launched a plan to turn around the troubled onshore business. It is early days but there has been some progress, with the closure of two sites in Spain and job cuts in Denmark and India.

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