Siemens Gamesa Suspends Plans for Offshore Wind Blade Plant in Virginia

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15-Nov-2023

Siemens Gamesa, the European supplier that leads the global market for offshore wind turbines, has suspended plans to build a $200 million turbine blade factory at Virginia’s Portsmouth Marine Terminal. 

Siemens Gamesa confirmed Friday that it would not be moving ahead with its plans for the 80-acre manufacturing site, citing problems meeting “development milestones.” 

The cancellation is the latest in a series of setbacks for U.S. offshore wind, as well as for political ambitions to localize the industry’s suppliers in the United States. When it was first announced in 2021, the Portsmouth site was the first investment by a major turbine manufacturer in the U.S. supply chain, and it was heralded as a landmark development. “Make no mistake: Virginia is building a new industry in renewable energy, with more new jobs to follow, and that’s good news for our country,” said then-governor Ralph Northam at the time. 

But times have changed: Like other suppliers, Siemens Gamesa faces a challenging business environment in the U.S. market. Orsted has just canceled its Ocean Wind project off New Jersey (a GE-equipped project), and a slew of others are working to renegotiate their power-purchase agreements with utility customers. Costs have soared alongside interest rates and supply chain challenges, and offshore wind developers warn that the sales contracts they signed three years ago no longer make business sense. 

Siemens Gamesa’s Portsmouth plant would have produced turbine blades for the massive Coastal Virginia Offshore Wind project (CVOW), a 2.6 gigawatt wind farm planned for a site about 25 nm off Virginia Beach. The blades for CVOW and other Siemens Gamesa-supplied wind projects in North America will now come from the supplier’s factories in Europe, and the switch is not expected to have a material effect on the developer, Dominion Energy.

Siemens Gamesa was also in line to supply at least three other American projects, Revolution Wind, South Fork Wind and Sunrise Wind. Revolution Wind is under construction and on track for completion, according to developer Orsted. Likewise, South Fork has installed its first turbine and is moving ahead. Sunrise Wind’s future is less certain: it recently applied for a subsidy increase with New York regulators, but was denied.

The upheaval in the U.S. market creates uncertainty for all suppliers in the near term, but Siemens Gamesa also faces its own internal challenges. A spate of quality issues with its legacy onshore wind turbines is expected to cost it $2.4 billion to fix, and unrelated manufacturing delays have affected its offshore wind portfolio. 

The Portsmouth plant was not its largest planned investment in the U.S. market. In February 2023, Siemens Gamesa announced plans to build a $500 million nacelle plant at Port of Coeymans in Upstate New York. It has not announced any changes to this initiative. “This proposed facility in New York is a major step forward in our desire to lead the massive U.S. offshore wind market. We’re excited by the opportunity presented by the State of New York to further develop our manufacturing footprint,” said Marc Becker, Siemens Gamesa’s head of offshore, in a statement in February. 

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