Updates from ACP 2024, Thoughts on Vestas Q1 Financial Loss

Allen, Joel, and Phil record their thoughts on the show floor of
American Clean Power 2024 in Minneapolis, Minnesota. Which
companies are in attendance? What seems to be the industry
direction? And they also discuss Vestas' Q1 financial results which
show a loss. Sign up now for Uptime Tech News, our weekly email
update on all things wind technology. This episode is sponsored
by Weather Guard Lightning Tech. Learn more about Weather
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www.weatherguardwind.comIntelstor - https://www.intelstor.com Allen
Hall: Welcome to the special edition of the Uptime Wind Energy
Podcast. I'm your host, Allen Hall, and I'm here with Phil Totaro,
the CEO of IntelStor and Joel Saxum, the chief commercial officer
of Weather Guard. And we are in Minneapolis today for the opening
of American Clean Power 2024. And we wanted to get everybody's
thoughts on what we have seen today, what the feeling is, what the
number of people we've seen bouncing around, what the business
atmosphere has been like, and, give everybody an update who
couldn't be here. Obviously there's a number of people out in the
field fixing wind turbines right now. the people actually keeping
wind turbines operating. give us a sense of what's happening with
some of the new technology we've seen today and what to expect on
the remainder of the week. And Joel, I know early on this morning,
it seemed like it was going to be pretty busy. Joel Saxum: Yeah,
absolutely. So I walked in here, the agenda said 10 30, they
opened. I walked in at 10 31 and it was already. Packed in here. I
tried to get a cup of coffee. There's 200 people in line. so I know
Phil, you were saying that you, were the only one of us able to
actually take a lap so far today around the show floor and saw a
ton of people. Alan and I have been basically in conversations back
to back since we got here with whether it's talking about podcast
stuff or strike tape or fixing any other kinds of problems with
everybody from the insurance industry, asset owners, ISPs all the
above. So it has been swamped here at our booth. Philip Totaro:
Unfortunately, I got here late. I arrived because of some weather
in Denver, at about 2. o'clock this afternoon. And so I've been
here about, two hours now, three hours now as we record this, and I
think I've already closed about three deals. So this is probably
the, most productive I've seen an ACP event in, a long time. which
I guess is, good news. but just based on my walking around, I'd
conservatively say there's at least about 10, 000, if not maybe 12,
000 here, at this event. So it's got a much better tenor to it,
much better mood. people are, really quite engaged. so it's,
overall, I, think, better, better than everybody might have
expected. Joel Saxum: Yeah, Minneapolis, the Minneapolis Convention
Center, that's where we're at. The weather's great right now. but
the Minneapolis Convention Center is huge. I've been in this, when
I was a kid, we were, we'd come down here for sports shows and
they'd have this whole thing full of boats and all kinds of stuff.
I remember it as a kid, I don't remember it being this big. but it
is, from end to end, we talked with Armando from Earthwind, our
friend, and he's Dude, we walked up and down every aisle basically
just to check everything out. And it took them almost four hours.
Yeah. There's Allen Hall: a lot of vendors here. It's a lot. And I
think some of the feeling I got just talking to people who walked
up to the booth and running into people we've had on the podcast is
there's more activity. the operators are focused. On getting their
assets up and running and to, get to the solutions and the ones
that I had talked to specifically have been trying different
solutions, evaluating them over the last couple of years and are
ready to start moving. It's no longer trial phases. We want to get
going and deploy useful ideas, useful solutions fleet wide. Joel
Saxum: Yeah, absolutely. Absolutely. And, Not only is it the asset
owners that are looking at these things, the ISPs are asking,
right? So what that means to me is that their clients, the asset
owners, have been telling them, Find us a solution, or we're
looking for this solution. I had an ISP come up and just say We've
been tasked by our clients to find things to solve problems. When
we came to this show, I said, you're talking to the right people,
lightning wise. that, I think is a, It's real and it's moving,
right? People want to get their assets up and running and they want
them to be running smoothly. and they're willing to spend money
right now that people are allocating budgets to, to get things done
and you can feel it. Allen Hall: Yeah. Excited. I think the feeling
on the OEM side and GE Vernova is here, but I haven't seen Vestas.
not to me, they haven't been here, but I haven't seen them and I
haven't seen, Siemens Gamesa. Joel Saxum: No, I heard, of some
people having meetings with people from Siemens Gamesa, but they
don't have a booth. Okay. Yeah. So I know there's definitely
representation here, but, not necessarily in a booth. I haven't
seen any Vestas. what do you call these things? Badges? I haven't
seen any Vestas badges walking around though. Allen Hall: So that,
that's an interesting point because Vestas announced their first
quarter results and they came to a loss of about 75 million, right?
Which in the bigger scheme of things is, a small drop in the
bucket. I think the bigger story there is the number of sales that
they had is down. And I attribute that, Phil, to the increase in
prices. everybody's talking about the OEMs increasing prices and
looking to recover the money they lost over the last couple of
years. that necessarily, I would assume, is going to drop the
quantity of megawatts purchased, right? Philip Totaro: to an
extent, yes. there's a couple of things at play here. Number one,
Vestas normally has a down first quarter anyway. but that's
something that a lot of equity analysts already price in and that
sort of thing. so that's been a part of it. Obviously, there's year
to year fluctuations. The other thing is, yes, to an extent,
raising prices theoretically means less, demand. But it's, there's
been a consolidation in the U. S. market to an extent because
Siemens Gamesa is not really offering turbans for sale, which is
why any of the folks from Siemens Gamesa that are here are probably
service, and the Nordex, while they're, they've obviously got a
presence in the U. S. market with the N149, and now they're trying
to get the N163 product in here, and we have these, hints about,
The fact that they're going to be launching, probably a lower power
rated version of the N163 to compete with the, Vestas V163, later
this summer. that's, reason to, be interested for them. But I, I
think it, it really has to do with interconnection cues. if I go,
if I point the, indicator anywhere, it's interconnection cues.
Piling up are causing a slowdown in deal closures. That is then
having a result of an impact on Vestas, not being able to, close
deals and recognize as much revenue in, quarter by quarter as they,
they otherwise would. Allen Hall: So why is solar going so heavy
right now? They're in the same interconnection queues, right?
Philip Totaro: Yeah. And, that's a great point because they're
actually taking up more space in the queue with a lot of projects
that are never going to get built. than wind. However, the projects
that are getting built, it's still more capacity than what wind is
doing. and so for an IPP, for every dollar that they can spend on
solar or storage, it's one less dollar they have to spend on wind.
grand scheme, I think this is not emblematic of a, industry wide
issue. Or anything Vestas specific to be concerned about. Again, I
think it's one bad quarter that it's not really that concerning. If
it starts showing, another quarter and by the third quarter, if
it's also down, then we worry that raising prices has resulted in
lower sales. But for one quarter, I'm not that concerned about it.
Allen Hall: But Vestas, as seen by a lot of operators at the
moment, is the number one choice. So if, Vestas is having a
decrease in sales in Q1, I would assume GE and then Siemens Gamesa,
who knows, but it's going to be a pinch on GE, right? Philip
Totaro: to be honest with our order tracking that we're doing at
Intel store, it's, that's not necessarily the case there. So keep
in mind that Vestas only receives revenue when projects go COD. And
it's commissioned and it's, they're online and operating, or at
least the bulk of what they get paid. there's usually an upfront
and et cetera, et cetera. Based on orders right now, Vestas didn't
have such a great quarter, but GE actually did in the U. S. Nordex
also got a few orders, that they've closed in, the U. S. as well in
the first quarter. But, it's, everybody's having to accept a higher
price because even the Project CapEx cost is going up, which means
the cost of finance is up, interest rates are still high, so
everybody's paying more. And, especially when an OEM's gotta pass
on the cost of raw materials and increased, labor and overhead
rates and all these other things that they have to incur, that's
necessarily gonna push the prices up for everybody. Allen Hall: So
is that a marker now that we need to focus on in terms of what to
expect the remainder of this year? If GE is starting to see a
little bit of a, if GE is starting to see a little bit of a
turnaround, which they have to, they have to be profitable this
year. And Investus is obviously going to be profitable.