GE Vernova Closes Brazil Factory, Decommissioning Bonds for Wind Farms

GE Vernova closes a Brazilian blade factory as installations drop
30%, while Australia faces issues with trailing edge serrations
falling from turbines. Also, cultural differences between European
and American work environments, blade recycling challenges, and the
need for decommissioning bonds as the industry matures. Fill out
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today. Now here's your hosts, Allen Hall, Joel Saxum, Phil Totaro,
and Rosemary Barnes. Allen Hall: Manufacturing capacity in the wind
energy sector continues to contract as GE Vernova's LM wind power
continues to grow. Plant down in Brazil is being closed and that
affects about a thousand workers, Joel. And it's coming because the
demand in Latin America for GE, Vernova wind turbines and all them
products is diminishing quite a bit. Now it's also part of a
broader trend down in Brazil where installations have fallen by
about 30 percent in 2024 compared to previous years. So there's a
big slowdown in Brazil. And. GE, Vernova, slash LM are ceasing
operations there. I don't see how this is going to last very long.
There's a number of operators that are coming into Brazil,
especially Chinese manufacturers. You think this factory will get
gobbled up like some of the other ones that LM has closed recently?
Joel Saxum: Yeah, I think this one, we heard about this whisperings
of this. We before it happened, we've got some pretty good
connections down in Brazil. With some people that are in the
factories and it is, it's just following that trend. I think one of
the interesting things about the Brazilian market as well is that,
A lot of big turbines down there. People may not know that, but the
majority of turbines, I think, are over like three megawatt
machines. They're big down there. They don't have a whole lot of
legacy old stuff like we do here. So there was this big ramp up to
create all these bigger blades down there. Of course, making those
big blades locally saves a lot of logistical costs. But you're
going to see this changeover, right? Like in the States, we don't
really, we don't allow the Chinese manufacturers to come in. And in
Europe, they're not really allowing the Chinese manufacturers to
come in, but in Brazil, they've been all over the place. And to be
honest with you, some of the big asset owners down there have to,
They're not just Chinese OEMs. It's Chinese owned asset owners like
CGN and things like that. So there's a, there is a big tie to China
and I believe, like you said, Alan, I think this a blade factory is
a kind of a pain to build. And one that's just sitting there and
all you really have to do is, Build some new molds and repurpose a
couple of things and you're ready to roll. I think this will get
scooped up pretty dang quick. Allen Hall: Yeah, which should be
good news for the employees down there because there is still a
need for people who know how to build blades that are hard to find
right now. Now, Phil, is this a broader move by LM that they're
going to be closing some of the factories because of GE's demand
more recently? Phil Totaro: Yes, and let's keep in mind too that,
GE stopped selling their turbines down there and that LM factory
was largely just producing blades for Vestas V150s. It looks like
it might be rough sledding for for some of the folks at LM. The
good news is, so going, pivoting back to Brazil for a second,
they're suffering a little bit from some of the in 2024, they
terminated the guarantees that the independent power producers got
for curtailments. And that's also what kind of led a lot more
investment in, other forms of power generation solar displaced,
some of the wind, hydro displaced, some of the wind And, we just
couldn't get enough wind contracts to make that a worthwhile
market. So you've seen a massive slowdown across the board. It is
likely that a factory like that will be gobbled up by somebody like
Goldwind or, Sonoma has been poking around the market. They've
already got one factory. But why not Look at a second one in a
market that just like China takes advantage of cheap labor and has
reasonably good access to raw materials down there. They can also
start using that as an export hub. Should they need to. Joel Saxum:
Phil, what do you do? Okay. So let's just take the broader context
of Brazil. Now I know we're talking about building blades here and
the export markets and all these different kinds of things, but in
Brazil. What has to happen for, basically, 30 new wind farm
installations down 30 percent in 2024. What has to happen to get
that back up on pace? Is it what we're sitting here like ERCOT,
right? I was just talking about this a little bit ago off air, but
batteries, do they have to get batteries in to avoid this
curtailment issues? And does that make sense for you? economically
down there? Phil Totaro: Potentially, yes. And the, I guess the
reality of it is that either they need to go back to the old law,
which basically gave, a certain amount of payment to the or
certainty, at least to the independent power producers that they
were going to receive some type of compensation when they were
being curtailed. They're still, potentially exposed to if they're
not largely on a merchant power market down there, it's mostly
fixed price offtake at least as part of the auctions that they've
previously had but they just had an auction down in Brazil and
there was no wind that was even bid into the auction. Because
nobody wants to build wind farms down there right now. So it's
something has to change. Storage would help. But it's not a cure
all necessarily for a larger fundamental issue down there. I was
going to ask Allen Hall: about that swap over to TPI, because TPI
is going to open or is opening their facility in Iowa. And is that
part of the move with Brazil closing? They don't really even need
it if Iowa is opening and TPI is going to be the main source of
blaze over the next couple of years. What happened, Joel Saxum: but
it but a blade factory TPI I think if you're GE you're looking at
it like we it's a little bit closer to home Of course, we can
control QA QC a little bit better. We can it's we can take some
trips from Schenectady or trips from North Carolina up there, South
Carolina. Sorry Greenville a lot easier And then you're serving
your biggest market right your biggest market of course for GE is
the US and Canada And so everything's close to home here. You're
going to be able to knock some things out, buy a factory in Iowa.
It may not be you know, that perfect optimization economically, but
the things that you're going to make up in QAQC and cost support
quality and these other kind of logistical issues, I think that's a
winning move in my mind to give more to TPI. Phil Totaro: Yeah, you
also face the logistical cost and time, frankly, of, even though
you're getting cheaper capex on blades that are manufactured in a
low cost market like Brazil, You still got to get them up here and
if somebody needs a blade fast, they're going to get it faster from
Iowa than they are from anywhere south of the equator. Joel Saxum:
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Don't miss out. Visit PESWIND. com today. Allen Hall: There's more
safety concerns down in Australia as Australia's largest wind
project lost a set of trailing edge serrations from a Vestas wind
turbines at the Golden Plains Wind Farm, which is down in Victoria.
It's the second time that trailing edge serrations have fallen off
at this facility. And the site is a little under a year old, right?
It's about six months old, roughly which is creating all kinds of
problems. Now, I've seen trailing edge serrations come off if
you're driven around the Midwest, where they do occasionally use
serrations. You do see them missing from time to time. I guess my
top concern wouldn't be safety on those Joel. They just don't seem,
they're not that heavy. I wouldn't like to get hit in the head with
them, that's for sure. But the panels themselves are not
particularly large or heavy. They're going to Mostly flutter down
to the ground, but it does raise concerns like it's stuff falling
off of turbines. What's going on? And what are the probable fixes
for it? Joel Saxum: I think to be honest with you a young wind farm
like this losing Serrated trailing edge pieces right to me. That is
something that happened in construction, right? They put like when
these when these things are moved they put those Kind of yeah,
transport like socks over some of them to keep them in place. And
then you got to pull that whole thing off. And I think that they
probably got the glue, got cracked, messed up, something got peeled
up or whatever in that process. So to me, this is a, it's a
construction issue. It's a quality issue at that level, right? That
should be found. Or it's a lifting problem at that same point in
time, a strap or something like that, or,