European wind turbine leaders Vestas and Siemens Gamesa face the risk of massive order cancellations amid plans by major international energy firms to pull out of wind farm contracts.

This order crisis stems from TotalEnergies and BP’s attempts to back out of German offshore wind development agreements. The dispute covers ten projects with a combined installed capacity of 16 GW.

If all these planned schemes are fully suspended, the two turbine manufacturers will collectively lose potential orders worth €23 billion between 2028 and 2032, including more than 1,000 large 15 MW offshore wind turbines and associated auxiliary equipment.

Industry analysts state that these offshore wind projects have generally become unviable for investment.

For one thing, equipment, construction and financing costs have surged far above the levels projected when developers submitted their bids. For another, developers struggle to secure favourable power prices via long-term power purchase agreements, severely squeezing project profit margins.

The nominal post-tax internal rate of return for these projects stands below 5%, well beneath standard industry investment thresholds, making it difficult for developers to reach final investment decisions. Exorbitant sea lease fees for some sites further worsen developers’ financial strains.

Nevertheless, analysts note that the suspension of these projects carries mixed implications for the sector.

While the mass delay of developments will trigger heavy short-term order losses, it will ease looming supply bottlenecks for offshore wind turbines starting in 2029.

The downside remains significant, however. The period around 2029 was originally a critical window for Vestas and Siemens Gamesa to strengthen their pricing power, and delayed projects will somewhat erode the two manufacturers’ market bargaining leverage.