Get out of wind now

Warning: This is not investment advice. This is a reality check.

“Wind industry and supply chains are challenged. While renewable energy remains a competitive, rapid-to-deploy, and secure solution to Europe’s energy needs, the complex interplay of rising inflation, increasing costs of capital and input, and supply chain and labour challenges have impacted the renewable energy industry just as all other industries.”

This is a paragraph from the executive summary of a paper by Ørsed, the Danish wind turbine major, in which the company outlines “a path to progress” in the energy transition that envisages a massive buildout in — amazingly— wind energy.

It is an interesting paper in that its message basically comes down to urging policymakers to offer greater support for that buildout. Much, much greater support than already provided. Because with the current levels of support — political and financial — wind power is not working as advertised. Shocking, I know.

And it was going to be so easy. Technology advancements made wind turbines more efficient and raw material costs were comfortably low. Government support was booming.

Everyone in forecasting forecast smooth sailing for the wind power industry thanks to its essential role in the transition to total electrification. What everyone in forecasting apparently missed were a few minor details, such as inflation, raw material production trends, and central bank policies.

A famous movie quote states that assumption is the mother of all fuck-ups. It is a paraphrase of an observation made by American political scientist Eugene Lewis Fordsworthe, who, interestingly, later revised it to allow for the possibility that some assumptions lead to positive outcomes.

Not if there are too many of them, it seems, if the latest developments in wind power are any indication.