GE Vernova, the energy spinoff of General Electric (GE), has announced plans to scale back its offshore wind business in response to ongoing financial challenges and recent technical failures.
The move is expected to result in around 900 job cuts, creating a major setback for the offshore wind industry.
GE Vernova, which separated from GE to focus on energy solutions, including wind power, revealed its plans to reduce its workforce as part of a broader restructuring effort.
The company has faced mounting financial losses, particularly in its offshore wind division, which has struggled to turn a profit.
The proposed job cuts were presented to the European Works Council, a body representing employees in Europe, marking the first step toward downsizing.
In a statement, GE Vernova said its restructuring aims to create “a smaller, leaner, and more profitable business,” citing industry-wide challenges that have hit the offshore wind sector hard. The company did not provide specific details on which locations would be most affected, but its turbine manufacturing facility in Saint-Nazaire, France, is likely to be impacted.
The decision to cut jobs comes after GE Vernova’s wind division reported huge financial losses. Earlier this month, the company projected a $300 million loss for the third quarter in its wind business, with the offshore sector being a primary driver of those losses.
One of the key factors contributing to these financial difficulties has been a surge in inflation, which has increased the cost of raw materials and construction for offshore wind projects. This has left GE Vernova locked into contracts that are now less profitable, eroding its margins.
In addition to financial issues, the company has also been grappling with high-profile technical failures. The most notable incident occurred in July when a blade from one of GE Vernova’s Haliade-X turbines broke off at the Vineyard Wind 1 project, a $4 billion offshore wind farm off the coast of Massachusetts. The blade failure resulted in debris washing ashore in Nantucket and temporarily halted construction. The company attributed the failure to a “manufacturing deviation” at its plant in Gaspé, Quebec.
Further complicating matters, two more turbine blade failures occurred at the Dogger Bank offshore wind project in the North Sea earlier this year.
GE Vernova has maintained that these incidents were not caused by design flaws but rather errors during the installation and startup process. Nonetheless, these technical setbacks have led to costly delays, particularly during the summer when weather conditions are most favorable for construction.
GE Vernova’s troubles come at a time when the offshore wind sector is seen as a critical component of the global transition to renewable energy. Offshore wind farms are a significant source of clean energy in northern Europe and are also expected to play a key role in the U.S. renewable energy market, particularly along the East Coast.
However, the challenges faced by GE Vernova raise concerns about the industry’s ability to scale up in the face of rising costs and technical difficulties.
With GE Vernova scaling back its offshore wind ambitions, the industry landscape may see reduced competition. Currently, the market is dominated by a few key players, including Siemens Gamesa of Germany and Vestas Wind Systems of Denmark. A downsizing of GE Vernova could lead to supply constraints, driving up equipment prices and potentially increasing costs for consumers.
Despite the setbacks, GE Vernova remains committed to the offshore wind sector, though some analysts believe the company may shift its focus toward the North American market, where opportunities for offshore wind development are expanding.
The company has invested heavily in its Haliade-X turbine, which features blades over 300 feet long and was once considered the most powerful turbine in the market. However, profitability has remained elusive, prompting the need for a strategic rethink.
Scott Strazik, CEO of GE Vernova, acknowledged the challenges during a recent investor call, stating, “We have had a tough couple of months.” The company is now focused on addressing the financial and operational issues within its offshore wind unit while continuing to explore opportunities for growth in the renewable energy space.
