Show notes
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.
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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.