GE Vernova Now Must Explain Broken Wind Turbine to Investors
(Bloomberg) -- GE Vernova Inc. is set to face hard questions from investors Wednesday after an accident shut down construction at the biggest US offshore wind farm.
Debris continues to wash ashore after part of a massive blade from a GE Vernova turbine broke off July 13 at the Vineyard Wind project south of Martha’s Vineyard in Massachusetts.
The incident temporarily closed beaches on Nantucket island, one of America’s premiere vacation destinations for well-heeled travelers. It has also raised questions about the long-term prospects of both the US offshore wind industry and the newly independent company, which spun off from General Electric Co. in April.
Shares of GE Vernova are down more than 5% since pieces of the blade started falling into the sea. The company is set to report earnings early Wednesday and will host a conference call with analysts seeking answers.
Investors will be looking for indications that the accident was not the result of a systemic issue or design flaw. In May, a blade was damaged on a GE Vernova turbine at the UK’s Dogger Bank offshore wind project.
“The markets have responded as if this goes well beyond a single, one-off incident,” said Chris Dendrinos, an analyst with RBC Capital Markets. “The worst-case scenario could definitely be worse than having to replace a handful of blades.”
The company and US officials are still investigating the Vineyard Wind accident, and it’s unlikely they’ll be able to identify a cause this soon, said Dendrinos. However, GE Vernova is expected to deliver an initial environmental assessment to local officials Tuesday, and executives will address a public meeting in Nantucket Wednesday evening. In an emailed statement Tuesday, the company said its top priority was minimizing the accident’s impact on neighboring communities.
The Vineyard Wind incident is raising political and financial risks for the emerging US offshore wind industry, whose future development is based on its status as a pollution-free energy source.
Companies are reeling after a year of cost overruns and canceled contracts. Former President Donald Trump, a longstanding critic of wind turbines, has vowed to target the industry if he reclaims the White House this fall. And Nantucket officials were meeting Tuesday to consider potential legal action.
“The timing on this is about as bad as we can imagine,” said Eric Hines, a Tufts University engineering professor. “Offshore wind has plenty of detractors.”
Vineyard Wind has been viewed as one of the industry’s marquee projects. It became the largest operating offshore wind farm in the US in June when its 10th turbine began sending power to the grid. Once completed, its planned 62 turbines will have about 800 megawatts of capacity, enough to power about 400,000 East Coast homes.
But this accident comes even as litigation continues to dog the project. A Boston-based federal circuit court is set to hear oral arguments Thursday in consolidated cases brought by a fishing group and a seafood processor that assert environmental violations. The fishing group argues that the US agency that permitted the project failed to adequately consider impacts or examine “safety or engineering issues with respect to the new Haliade-X wind turbines.”
©2024 Bloomberg L.P.
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