Siemens Energy's Turbulent Winds: Challenges and Pathways to Recovery in the Wind Turbine Sector

Siemens Energy's Turbulent Winds: Challenges and Pathways to Recovery in the Wind Turbine Sector

The global energy transition is accelerating, with renewable sources like wind power playing a pivotal role in combating climate change and ensuring energy security. However, not all players in this space are sailing smoothly. Siemens Energy, a major force in the energy technology landscape, has been grappling with significant headwinds in its wind division, Siemens Gamesa. In November 2025, CEO Christian Bruch highlighted limited synergies between the company's struggling onshore and more resilient offshore wind units, underscoring ongoing uncertainty about the division's future. This comes amid a staggering 1.36 billion euro ($1.59 billion) operating loss for the fiscal year ending September 2025, making Siemens Gamesa the only loss-making segment in the group. As we enter 2026, this article delves into the roots of these challenges, the broader market context, recent developments, and potential remedies to steer the business back toward profitability.

## The Spin-Off and Early Ambitions

Siemens Energy's journey as an independent entity began in 2020 when it was spun off from Siemens AG, with high expectations for its wind business to capitalize on the booming renewable energy market. Siemens Gamesa, formed from the 2017 merger of Siemens Wind Power and Gamesa, was positioned as a leader in both onshore and offshore wind turbines. The division was seen as a cornerstone of the green energy shift, leveraging Siemens' engineering prowess to deliver innovative, high-efficiency turbines.

At the time of the spin-off, management expressed optimism about achieving double-digit margins in wind, driven by global demand for clean energy. Offshore wind, in particular, was touted for its potential, with Siemens Gamesa holding a market-leading position in projects like those in the North Sea and beyond. However, the reality has been far more turbulent. The division has been plagued by operational issues, supply chain disruptions, and escalating costs, culminating in the quality crisis that erupted in 2023.

## The 2023 Quality Crisis: A Turning Point

The seeds of Siemens Gamesa's current struggles were sown in 2023, when severe quality issues emerged in its onshore turbine platforms, specifically the 4.X and 5.X models. These problems primarily affected rotor blades and main bearings, leading to abnormal vibrations and potential long-term failures. Siemens Energy quantified the remediation costs at over a billion euros, with provisions set aside for future expenses. The issues were not universal across the fleet but necessitated halting sales of newer generation onshore turbines and establishing a task force with external consultants to address them.

This crisis forced Siemens Energy to scrap its profit outlook and delay break-even projections for Siemens Gamesa to 2026. The fallout was swift: shares plummeted, and investors called for a strategic review or even divestment of the wind unit. CEO Bruch acknowledged the setback, noting that while offshore products were excellent, onshore faced design and productivity flaws. By mid-2023, the company booked billions in costs, emphasizing the need to slow product rollouts to ensure reliability.

The crisis wasn't isolated; it reflected broader industry challenges. Wind turbine manufacturers operate in a competitive, low-margin environment where guarantees for decades-long performance are standard. Rushing untested turbines to market exacerbated the problems. This led to significant full-year losses in fiscal 2023, with ongoing impacts into 2024 and 2025.

## Current Challenges: Losses, Synergies, and Market Pressures

Fast-forward to late 2025, and the echoes of 2023 persist. Siemens Gamesa's fiscal year loss of 1.36 billion euros underscores its status as the group's sole underperformer, while gas turbines and power networks drive profits and share price growth. Bruch's comments at the annual press conference revealed skepticism about wind achieving double-digit margins, stating it was "too early to say." He also downplayed synergies between onshore and offshore, suggesting a potential breakup to isolate the weaker onshore segment.

Onshore wind, hit hardest by the quality issues, faces additional threats from Chinese manufacturers potentially flooding the market with low-cost alternatives. Bruch highlighted this as a key uncertainty. In contrast, offshore wind positions Siemens Gamesa as a market leader with strong products and growth potential, provided market demand thrives.

Financially, the division narrowed its Q4 2025 loss thanks to operational improvements. Yet, it remains cash-flow negative on warranty fixes, subsidized by profitable gas services. This dependency highlights a paradox: without fossil fuel-derived revenues, the renewables arm might struggle further.

Broader portfolio reviews are ongoing, with Finance Chief Maria Ferraro insisting all businesses must deliver double-digit margins. Despite the losses, Siemens Energy raised mid-term targets and proposed its first dividend in four years, buoyed by demand for non-wind segments.

## Wind Energy Market Trends in 2025-2026

The wind sector's struggles aren't unique to Siemens Gamesa. 2025 was a challenging year, marked by policy reversals, corporate upheavals, and sub-par generation. Global wind-powered electricity grew, but policy shifts in regions like the U.S. froze offshore projects and spurred industry consolidation. Layoffs at major firms and project pull-outs compounded issues.

Looking to 2026, an uplift is anticipated. Changes in auction incentives, supply chain adjustments, and rising power demand from AI data centers could spur growth. Industry outlooks project surges in deployments, particularly in solar, wind, and storage, though tempered by policy uncertainties.

Globally, solar and wind growth outpaced electricity demand in early 2025, with China leading additions. However, shifts to competitive bidding may impact overall renewables. Floating offshore wind, a niche Siemens Gamesa excels in, is poised for explosive growth in the coming decade.

Hybrid wind-solar systems and innovations in turbine design are trends to watch, optimizing land use and stabilizing output. Clean energy investments continue to rise, with wind benefiting from this shift.

## Recent Developments as of January 2026

Entering 2026, Siemens Energy forecasts strong revenue growth and improved profit margins. The Siemens Gamesa CEO noted executing an "unprecedented offshore pipeline" as the main challenge, aiming for break-even.

A notable move: Siemens Gamesa divested its onshore wind business in India and Sri Lanka to a new entity, signaling a strategic retreat from underperforming onshore markets.

Projects continue: Siemens Gamesa supplies turbines for major offshore farms in Europe and beyond. Globally, it's involved in advanced floating offshore technologies.

Siemens is pivoting to AI, with acquisitions and partnerships for industrial applications, potentially aiding turbine maintenance. Sustainability efforts include blade recycling initiatives, addressing environmental concerns.

## Crafting a Remedy: Strategies for Turnaround

To remedy Siemens Gamesa's woes, a multifaceted approach is essential, drawing from industry best practices and the company's strengths. Here’s a proposed framework:

1. **Focus on Core Strengths and Divest Weaknesses**: Prioritize offshore wind, where Siemens Gamesa leads with high-capacity products. Further divest onshore assets to reduce exposure to Chinese competition and quality risks. This aligns with views on limited synergies between onshore and offshore.

2. **Implement Proactive Maintenance and AI-Driven Innovations**: Shift from reactive to preventive strategies. Use AI for inspections, autonomous drones for surveys, and data analytics to predict failures. This could cut downtime by addressing issues early, saving millions in repairs.

3. **Optimize Supply Chain and Product Portfolio**: Reduce variants and markets to stabilize operations. Exclude unreliable suppliers and integrate hybrid technologies for efficiency. Leverage AI for predictive modeling.

4. **Enhance Sales and Risk Management**: Adopt flexible Power Purchase Agreements with protections amid volatility. Be selective with projects, increasing prices and de-risking contracts.

5. **Invest in Sustainability and R&D**: Advance recycling for blades to meet environmental standards. R&D in floating offshore could tap emerging markets.

6. **Cultural and Operational Overhaul**: Foster a turnaround culture with cross-functional teams. Benchmark against peers for maintenance excellence.

Implementing these could achieve break-even in 2026 and profits in 2027, positioning Siemens Gamesa as a resilient leader. The wind sector's anticipated 2026 uplift offers a window—seizing it requires bold, decisive action.

Source: Reuters