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Vestas Wind Systems: The Wind Giant's Reinvention
I. Introduction & Episode Roadmap
The windswept west coast of Denmark is not a place you would expect to birth a global industrial giant. Cold North Sea winds batter small farming communities with relentless efficiency, and for centuries, the people of this region simply endured what nature threw at them. But in 1898, a 22-year-old blacksmith named Hans Søren Hansen stepped off a train in the sleepy town of Lem, bought a local workshop, and unknowingly planted the seed for what would become the world's most consequential wind energy company.
Today, Vestas Wind Systems A/S is a Danish manufacturer, seller, installer, and servicer of wind turbines that was founded in 1945. The company operates manufacturing plants in Denmark, Germany, the Netherlands, Taiwan, India, Italy, Romania, the United Kingdom, Spain, Sweden, Norway, Australia, China, Brazil, Poland and the United States, and employs 29,000 people globally.
The central question driving this deep dive is both simple and profound: How did a blacksmith shop in rural Denmark become the world's largest wind turbine company—and survive near-bankruptcy twice?
For the year 2024, Vestas achieved revenue of EUR 17,295m, with an EBIT margin before special items of 4.3 percent, and total investments of EUR 1,142m. The value of the combined order backlog across Power Solutions and Service increased to EUR 68.4bn. That EUR 68 billion backlog is not simply a number—it represents years of future revenue visibility, a testament to the company's dominant market position, and a claim on the world's energy future.
But to understand Vestas is to understand the wind industry itself: a sector perpetually at the mercy of government policy, brutally cyclical, and prone to both spectacular booms and devastating busts. Vestas has experienced both extremes, emerging from each crisis transformed, leaner, and ultimately stronger.
The themes that run through this story are universal for any company operating at the intersection of technology and policy: Government dependency and its perils, where tax credits and subsidies can make or break an entire industry overnight. Technology scaling, where the company's three-blade turbine design became the global standard. Cyclical bust-and-boom, where Vestas has weathered not one but two near-death experiences. And finally, the service transformation, where recurring revenue from maintaining turbines has become as strategically important as selling new ones.
What follows is the story of reinvention—a company that pivoted from farm equipment to intercoolers to hydraulic cranes to wind turbines, and then had to reinvent itself again when the market collapsed. It is a story of technology leadership, strategic missteps, brilliant pivots, and the ongoing challenge of competing against Chinese manufacturers who now dominate global market share.
II. Origins: From Blacksmith to Steel Works (1898–1978)
On the windswept west coast of Denmark the 22-year-old Hans Søren Hansen stepped off a train at the sleepy farming town of Lem. He buys the local blacksmith workshop and quickly establishes himself as a blacksmith full of ideas and enthusiasm.
What Hansen found in Lem was not a thriving industrial center but a hardscrabble farming community where equipment needed to be tough, practical, and repairable by farmers themselves. This environment would shape the company's DNA for over a century—a focus on rugged, reliable machinery that could withstand harsh conditions.
Vestas traces its roots to 1898 when Hans Smith Hansen bought a blacksmith shop in Lem, West Jutland, that operated as a family business. After the second world war Vestas was founded in 1945 by his son Peder Hansen as "Vestjysk StĂĄlteknik A/S" (West-Jutlandish steel technology).
The name itself tells the origin story: VEstjysk STaalteknik—shortened to Vestas. The story of the Vestas company begins in Lem, Denmark, on March 21, 1945. Founded by Peder Hansen, the company initially operated under the name Vestjysk Stålteknik A/S, which translates to 'West Jutland Steel Technology'. Its early operations centered on manufacturing agricultural equipment.
Peder Hansen was ambitious in ways his father's generation had not been. Peder wants the company to become international so he buys the worldwide patent for a milk urn cooler. Vestas' employees, all from Lem's farming community, know that agricultural equipment must be robust and practical. They apply their know-how and expertise to produce equipment they know customers will want. Vestas exports its first goods - primarily to Finland, Germany and Belgium.
Founded in 1945, that company was called Vestjysk Stalteknik, and then became known as Vestas. Before long, however, Vestas added the production of farm trailers, which became the company's chief product by 1950. Almost from the start, Vestas produced for the export market.
The pivotal transformation came through serendipity. At a family party, Søren Hansen, Peder's brother, explains that the Burmeister & Wain shipyard is looking for a partner to develop a new type of cooler for turbo chargers. It's a small but creative leap from milk coolers - and the intercooler soon becomes a bestseller in the Vestas portfolio. Peder Hansen buys out his partners in 1959 to take sole control of the company but celebrations are short-lived: in 1960, the Vestas offices and warehouse burn to the ground.
Intercoolers became the group's core product line in 1959 when Hansen bought out his partners, and then sold off its noncore operations to another of the original founders. Vestas showed its willingness to transform itself yet again in the late 1960s, when it launched production of truck-mounted hydraulic cranes in 1969.
The company expanded into agricultural equipment, steel window frames via Dansk Staalvindue Industri in 1928, and by 1968 was exporting hydraulic cranes to 65 countries, with 96% of production directed abroad.
This is the key insight about Vestas's early DNA: it was never content to remain in one business. The company repeatedly demonstrated a willingness to abandon what it knew in favor of what might work better. Milk coolers gave way to intercoolers, which gave way to hydraulic cranes. Each pivot was driven by market circumstances, not corporate ego.
That product line was a success, especially on the import market. Yet the oil crisis of the early 1970s and the resulting slump in the international transport industry placed sales of the company's hydraulic cranes under pressure. Vestas once again began looking for a new product line.
For investors studying this history, the lesson is profound. A company's willingness to reinvent itself—to abandon sacred cows and cannibalize existing businesses—is often the difference between survival and extinction. Vestas had already done it three times before it ever built a wind turbine.
III. The Wind Pivot: Birth of a Turbine Business (1979–1986)
By the end of the decade, Vestas had hit on the product that would bring it into the next century. As a new oil crisis plunged Denmark and much of Europe into a new recession, Vestas became convinced that a future lay in the development of renewable energy sources, especially in harnessing the power of wind.
The year 1979 marks one of the most consequential pivots in Danish industrial history. Vestas starts to experiment with alternatives to traditional energy production, developing wind turbine technology in secret. Despite technological success, the company stands on the brink of closure.
What makes this pivot remarkable is the unconventional path to success. Keen to avoid ridicule from customers and suppliers, Vestas carries out initial wind turbine experiments in secret. The first prototype looks like a giant egg whisk - and fails to produce sustainable, economical electricity. Meanwhile, in another Danish town, two black smiths, Karl Erik Jørgensen and Henrik Stiesdal, are developing a wind turbine but don't have the money to go into production.
The connection between Vestas and these outside innovators proved transformative. In the same year, the first successful wind turbine was being developed outside of the company by two blacksmiths, Karl Erik Jorgensen and Henrik Stiesdal. The two blacksmiths developed a 3-blade wind turbine, however did not have the money to go into production. They contacted Vestas for help in testing the design. Vestas discovered the success of the 3-blade model and asked the Karl and Henrik to join the Vestas team.
This three-blade design would become the global standard—a design that remains dominant in the wind industry forty-five years later. It was an early example of what would become a Vestas hallmark: the ability to recognize superior external technology and integrate it into commercial products.
The California Gold Rush
Early investing in new wind technology turns out to be a stroke of genius. New legislation in the United States gives tax breaks to wind energy investors and Zond places an order for 155 turbines. The following year, Zond orders 550. Vestas swells from 200 employees to 870.
The story of Zond's discovery of Vestas reads like corporate folklore. An American company, Zond, sends a team to Europe to source wind turbines. As Vestas gears up to welcome the Americans, they receive a call: Zond won't visit Denmark after all, as they are happy with what they've seen in the Netherlands. Determined to show their turbines, a Vestas team jumps into the company's twin-engine plane and arrives in the Netherlands three hours later. The Americans agree to make the trip to Denmark - and buy two turbines there and then.
Dehlsen collaborated with the Danish company Vestas, from which Zond purchased wind turbines. During the 1980s, Zond purchased nearly all the turbines Vestas produced. As a result, "California became the birthplace of the modern wind industry."
Dehlsen's decision paid off, and Zond became a prolific wind farm developer. Zond ordered 1100 Vestas machines in 1985 alone, many installed in Palm Springs.
The innovation pipeline was accelerating. The first pitch-regulated turbine rolls out. The OptiTip® innovation constantly fine-tunes the angle of the blades - and no competitors can match the increased efficiency.
The First Near-Death Experience
Then disaster struck—not from a technological failure, but from the byzantine world of international trade and government policy.
Zond orders a further 1,200 turbines to be delivered by 1 December. But on the second shipment, disaster strikes: the shipping company goes bankrupt. Anchored outside Los Angeles, Vestas misses the deadline. When the turbines finally arrive, Zond refuses to accept them – and can't even pay for the turbines already delivered.
The wind energy industry struggled following the collapse of the California wind market. Many manufacturers, including Vestas, declared bankruptcy (Vestas after a customer failed to pay for 1200 wind turbines that had been delivered). However, as the US market was declining, the European market was rising, also largely due to government incentive programs.
Yet the wind turbine industry remained at the mercy of government policy. In 1986, the company slipped into financial crisis when the United States failed to renew the legislation that had provided special tax benefits for the wind turbine market. The company's heavy exposure to the U.S. market plunged the company into financial disarray. By the end of that year, Vestas was forced to declare bankruptcy.
Suddenly, Vestas finds itself with a huge stockpile of turbines to shift. At home, the Danish government changes the tax laws on turbines, halving the rebate. Vestas' financial situation looks bleak. On 3 October it goes into suspension of payments.
For investors, the 1986 crisis provides a template for understanding Vestas's enduring vulnerability: the company's fortunes are inextricably linked to government policy in ways that no amount of technological excellence can fully mitigate. This would prove true again in the 2010s—and arguably remains true today.
IV. Rebirth and Pure-Play Focus (1987–1998)
The bankruptcy could have been the end. Instead, it marked the true beginning of Vestas as a wind energy company.
In response to crisis of 1986, Vestas decided to focus exclusively on creating wind turbines. Much of the original Vestas group was sold, and a new company, Vestas Wind Systems A/S was born. The company was reduced to a workforce of 60, and Johannes Poulsen became Managing Director.
Nonetheless, Vestas's problems were recognized as legislative; the company's turbine technology remained an industry leader. In particular, Vestas had begun experimenting with the concept of developing large-scale wind "farms." The new concept was immediately promising, pointing to the company's technological viability. The promise held by Vestas's wind turbine business led to the company's reorganization in 1987. A new management led by Johannes Poulson now took over operations of the company, and refocused Vestas as a wind turbine specialist.
The decision to become a pure-play wind company was not obvious at the time. Other conglomerates maintained diversified portfolios of industrial products. But by shedding everything except turbines, Vestas concentrated its engineering talent, capital, and management attention on winning what its leaders believed would be a defining technology race.
Vestas immediately turned toward the international market. In 1987, Vestas set up a subsidiary in India; by 1988, the company had won a bid to build six wind farm projects for Danida in India.
Back at home, Vestas, encouraged by the Danish government, began to grow externally. As H.S. Hansen had inspired the creation of a blacksmith market in Lem at the beginning of the century, Vestas had helped stimulate a buoyant market for wind turbine production in Denmark in the 1980s. By the end of the decade, however, the Danish government had begun to promote a consolidation of the industry's many small players in order to create a smaller number of internationally competitive wind turbine leaders. As part of that process, Vestas took over rival Danish Wind Technology in 1989, boosting its production capacity, as well as its sales and marketing reach. Vestas also sought to expand its international network.
Offshore Pioneering
In 1995, Vestas created the offshore wind turbine farm Tunoe Knob located in Denmark, one of the first offshore wind farms ever built. The offshore wind turbine farms have the potential to increase energy production by 15 percent. Vestas' construction of the offshore wind turbine proved to be very efficient, as Vestas installed ten 500 kW turbines with 20-meter long blades in just five days.
The IPO
Vestas went public in 1998, listing its stock on the Copenhagen Stock Exchange. The highly successful initial public offering signaled the beginning of a new era for Vestas as its growth went into overdrive into the new century. By the end of that year, Vestas had opened a new production facility in Italy in a joint venture partnership with that country's Wind Energy System Taranto S.p.A.
In 1997, Vestas technology development led to the growth of the wind turbine's size. The V66 turbine was developed, the largest commercial wind turbine in the world up to this point. The 1.65 MW of power produced by the V66 is 55 times more power than the first wind turbine produced by Vestas in 1979. It produces enough electricity to power roughly 1,000 households. While Vestas has grown to a global leader in wind energy technology, supplying 15 different countries, the company still sought turbine efficiency that could compete with traditional energy sources.
From 60 employees in 1987 to an IPO in 1998—the turnaround demonstrated that pure-play focus, combined with secular tailwinds in renewable energy, could generate extraordinary growth. But the IPO also marked the transition from scrappy survival mode to the expectations and pressures of public markets.
V. Global Dominance & Strategic Partnerships (1999–2005)
The post-IPO years brought explosive growth—and the complexities of managing partnerships with would-be competitors.
The following year, Vestas boosted its international presence with a distribution partnership agreement with Japan's Vestech, owned by Toyota, Kawasaki, and other major Japanese companies. During this time, Vestas had begun developing new turbine technologies for a new and highly promising market—that of offshore wind farms. In 2001, the company was chosen to supply the turbines for the world's first major offshore wind farm being constructed on Horns Reef in the North Sea off the Danish coast. The company delivered the completed platform in 2003.
The Gamesa Partnership and Split
The company added to its production capacity through the acquisition of Volund Stalteknik, based in Varde, Denmark, in 1994. In that year, as well, Vestas entered Spain, forming a joint venture with that country's Gamesa, with Vestas's stake at just 40 percent. The partnership started strongly, and by the end of the decade, Spain had become one of Vestas's fastest-growing markets.
But partnerships in fast-growing markets often contain the seeds of their own destruction. The first and most powerful of these came with the news that Gamesa and Denmark's Vestas are ending their seven-year-old partnership. The split sees Vestas relinquish its 40% in Gamesa EĂłlica to the Gamesa group for EUR 287 million and phase out the technology transfer agreement between the two companies. Just two days later, Gamesa announced a new strategic plan for 2002-2004 aimed at increasing the group's net profits by 24%.
Bjerre-Madsen has even said that Vestas' failure to secure a foothold in Spain after its split from former Spanish partner Gamesa two years ago is because it was not prepared to be a wind farm developer.
The Gamesa situation illustrates a recurring tension in industrial partnerships: the technology provider (Vestas) often trains its own future competitor. Gamesa would go on to merge with Siemens Wind Power in 2017 to form Siemens Gamesa—one of Vestas's primary global competitors today.
The NEG Micon Merger
In 2003, the company merged with the Danish wind turbine manufacturer NEG Micon to create the largest wind turbine manufacturer in the world, under the banner of Vestas Wind Systems.
The merger protects Vestas and NEG Micon against being taken over by an overseas company -- a real threat as their share prices have fallen and both companies have become cheaper and cheaper. Vestas is also defending itself against the purchase of NEG Micon by a competitor to create a mega rival on its doorstep. Spain's Gamesa, a former partner of Vestas, recently set up an office in Denmark.
If the merger goes ahead, former NEG Micon shareholders will own 20% of the new company, with the remaining 80% in the hands of Vestas' shareholders. The share offer closes on January 21.
A major milestone in Vestas's growth came at the end of 2003, when the company announced its acquisition of rival Danish wind power producer NEG Micon. The merger, completed at the end of 2004, established Vestas as the clear global leader, with a market share of some 40 percent. The completion of the merger process also signaled the departure of Svend Sigaard, who turned over the CEO position to former Hempel A/S executive Ditlev Engel.
The NEG Micon merger is a classic example of defensive consolidation. Rather than let a competitor acquire the number-two player and create a "mega rival," Vestas absorbed NEG Micon itself. The logic was sound: combined market share of ~35-40%, cost synergies from eliminating duplicate functions, and protection against hostile takeover.
VI. The 2010–2013 Crisis: Vestas's Darkest Hour
If the 1986 bankruptcy was a near-death experience caused by external policy changes, the 2010-2013 crisis was more insidious—a slow-motion collapse driven by overcapacity, financial crisis, and management missteps.
In May 2013, Marika Fredriksson became the company's new Executive Vice President and Chief Financial Officer after her predecessor Dag Andresen resigned for personal reasons. Her strategy is to lead Vestas back to higher earnings after the important losses faced by the company: from €166 million losses in 2011 and increasing to €963 million in 2012.
The numbers tell a devastating story: from profitability to a nearly €1 billion loss in two years. What happened?
The company said it was "expanding heavily in China and the US because these markets were growing the fastest, in contrast to the sluggish pace of wind farm development in the UK". As part of this gradual shift in production away from Europe and towards China and the US, in October 2010, the company announced it was closing five factories in Denmark and Sweden, with the loss of 3,000 jobs.
In 2012, Vestas scaled back and closed some of its R&D offices in Houston, Marlborough, Louisville, China, Singapore and Denmark.
In January 2012, the company suggested firing 1,600 out of its 3,000 U.S. workers if the U.S. did not renew the 2.2 cents-per-kilowatt-hour Production Tax Credit, which was extended in 2013.
The Production Tax Credit (PTC) drama illustrates the policy dependency that has plagued the wind industry. When Congress delayed PTC renewal, the entire U.S. wind market ground to a halt, with developers unwilling to commit capital without knowing the tax treatment of their projects.
CEO Change
DENMARK: Long-serving CEO Ditlev Engel has been fired by Vestas to be replaced by Anders Runevad, who joins the firm from Swedish Telecoms company Ericsson. Engel has been with Vestas since 2005, but has proved a controversial figure in recent years as the company moved to make deep cuts and close a number of factories. He has also been embroiled in a number of legal cases and was voted last in a survey of top business leaders in Denmark earlier this year.
Ditlev Engel has been with the company since 2005 and has during the past 1½ years focused his efforts on leading Vestas' extensive restructuring programme. "Following the recent measures taken, it is now the appropriate time to make this change. The company is now entering a new phase, where we want to realise our growth potential, and I am confident that Mr Runevad has the right experience to lead the company going forward. The restructuring programme has resulted in a more competitive company and we thank Mr Engel for his leadership over the past eight years," says Chairman of the Board of Directors of Vestas Wind Systems A/S, Bert Nordberg.
Henrik Andersen is no stranger to crisis. A decade ago turbine maker Vestas Wind Systems A/S was in trouble when governments pulled back subsidies for renewable power. Andersen was brought in as a board member in 2013, following a record loss in the year prior. He helped restructure the company and returned it to profitability.
The hiring of Anders Runevad from Ericsson—a telecommunications company—was unconventional but reflected the board's belief that wind turbines had become a complex infrastructure business requiring telecom-style project management, not just engineering excellence.
VII. The Turnaround & Service Transformation (2013–2019)
The Runevad era marked a fundamental strategic shift: from growth-at-all-costs to operational discipline, margin focus, and building recurring revenue.
Runevad has been at the helm at Vestas since 2013 when he joined the wind group from Swedish telecoms company Ericsson, succeeding Ditlev Engel. The Swede steered the Danish group from a financially rocky position to the global number-one spot in onshore wind – during a time of ferocious industry consolidation that has seen rivals merge or disappear.
The MHI Joint Venture
In September 2013, Vestas made a joint venture for offshore wind turbines with Mitsubishi Heavy Industries creating MHI-Vestas, including the 7-9 MW Vestas V164, the most powerful turbine on Earth.
The JV will combine Vestas' and MHI's current capabilities within offshore wind turbines. Vestas will transfer the development of the V164-8.0 MW, the V112 offshore order book, existing offshore service contracts and approx 300 employees to the JV. MHI will inject EUR 100m in cash into the JV and will inject another EUR 200m based on certain milestone achievements reflecting the natural early product life cycle of the V164 turbine.
The MHI joint venture was brilliant risk management. Rather than bear the full development cost and market risk of offshore turbines alone—a market where Siemens Gamesa had significant advantages—Vestas shared the burden with a deep-pocketed Japanese partner. It allowed Vestas to remain a credible offshore player while focusing its own resources on the larger onshore market.
The Service Business Transformation
We maintain our ambitions in the long term for Service revenue to grow faster than the market, and to achieve an EBIT margin in Service at a level of 25 percent. In the mid term, however, revenue growth and margin will likely be lower, as we execute the recovery plan. The service market (excluding China) is expected to grow by 8-10 percent per year until 2030 and Vestas aims to remain a global leader in wind power service.
The service business represents Vestas's answer to the commoditization threat in turbine manufacturing. Each turbine sold creates decades of maintenance requirements, and Vestas has positioned itself as the dominant service provider with an unmatched installed base. The company's Service business continues to grow, with the order backlog increasing to almost EUR 37 billion from EUR 34 billion a year ago. Vestas now has 157 GW under service compared to 149 GW a year ago, solidifying its position as the largest Service business in the industry. The average contract duration stands at 11 years, providing long-term revenue visibility.
VIII. The Pandemic and Inflation Crisis (2020–2023)
He's at it again. Soon after Andersen was made chief executive in 2019, the global wind industry was plunged into chaos following the pandemic. Soaring costs and supply chain disruptions caused Vestas to lose more than $1 billion in 2022. Andersen was forced to raise prices of Vestas' wind turbines, reversing a years-long trend of decline, which helped the company get back to profitability last year.
Henrik Andersen's tenure began with crisis. His replacement Henrik Andersen joined Vestas' board in 2013 and has served in management roles in global companies over the last 20 years, including most recently as CEO of Hempel. Nordberg added Andersen's leadership would "ensure continuation in the short-term and build momentum for our long-term vision".
Henrik Andersen, Born: 31 December 1967, Nationality: Danish. Position: Group President & CEO of Vestas Wind Systems A/S. Education: 1993-1997 Master in Law, University of Aarhus (DK), 1988-1992 Graduate Diploma in International Business, Aarhus School of Business (DK). Former positions: 2016-2019 Group President & CEO, Hempel A/S (DK), 2013-2015 Group Chief Operating Officer, EMEA, ISS A/S (DK), 2011-2013 Group Chief Financial Officer, ISS A/S (DK).
The Price Revolution
The overall world market by in-take-orders has grown from 108 GW in 2021 to 147 GW in 2022, representing a remarkable 37% year-over-year increase. Notably, prices have been continuously rising during 2022 and early 2023 for American and European manufacturers, with Vestas increasing to €1.2 million/MW, Siemens Gamesa to €0.8 million/MW, and Nordex/Acciona to €0.9 million/MW. These price escalations can be attributed to various factors, including the rising costs of raw materials such as steel and critical minerals, supply chain disruptions, and quality issues.
The price increases were painful but necessary. For years, the wind industry had been caught in a deflationary spiral—each new turbine generation was expected to be cheaper than the last. The pandemic shattered this assumption, forcing Western manufacturers to rebuild their pricing power.
Russia Sanctions Impact
The state-owned Finnish company, Fortum Oyj, has initiated arbitration in Sweden against Vestas Wind Systems A/S. The arbitration claim, in excess of 200 mEUR, relates to Vestas' termination of Russian wind project contracts in order to comply with the European Union sanctions arising from Russia's invasion of Ukraine. Since the start of the invasion, the European Union has published a series of sanctions packages, which include comprehensive sanctions against the Russian "energy sector". Sanctions and export controls regulations issued in 2022 prevented Vestas from delivering, installing and servicing wind turbines in accordance with its contracts with Russian customer WEDF, which is owned by Fortum. Faced with this difficulty, Vestas invoked the sanctions-specific clause in each contract between Vestas and WEDF, which gave each party the unambiguous right to terminate the contracts if performance was impacted by international sanctions.
A Finnish client, Fortum, pursued arbitration against Vestas in 2023 for over €200 million (over $218 million) when Vestas canceled a contract to deliver wind turbines to Russia. Vestas was contracted to deliver over 50 wind turbines to WEDF, a Russian subsidiary of Fortum. Vestas was given advance payments on the project, but the project was canceled due to sanctions against Russia in the wake of its 2022 invasion of Ukraine. Vestas claimed it had invoked sanctions-specific clauses in the contracts that gave it the right to terminate the contract. Following the sanctions, the company attempted to smuggle out $11 million worth of wind turbines out of Russia but the country seized the turbines first.
Danish wind turbine maker Vestas and Nordic energy company Fortum announced a settlement in their arbitration on Russian wind energy. Vestas president and CEO Henrik Andersen stated: "Vestas and Fortum's differences have been both significant and uncharacteristically public, but over time it became clear it's in both parties' interest to settle the dispute. We look forward to keeping existing wind parks running and exploring new ones with Fortum for the benefit of Fortum, Vestas and Europe's energy system."
Quality Challenges
Ameren Missouri's High Prairie Renewable Energy Center has shut down after three Vestas turbine collapses in 2024. The incidents occurred in April, August, and November, with the latest collapse sending blade fragments scattering across the area. All turbines at the 400MW facility spanning Adair and Schuyler Counties are offline for inspection. Ameren and Vestas are investigating potential causes including manufacturing defects and weather conditions.
Three turbines fell last year, prompting precautionary measures from the facility's owner, utility company Ameren, and the manufacturer of the turbines, Vestas. The failures were linked to blade detachments, causing imbalances in the turbines, which led to the collapses. Most of the 175 turbines remain shut down, with no confirmed timeline for full reactivation.
These incidents highlight broader quality control challenges that have affected the entire industry. As turbines grow larger and more complex, the consequences of manufacturing defects become more severe.
IX. Modern Era: Value Over Volume (2024–Present)
Henrik Andersen, Group President & CEO said: "Vestas continued its positive trajectory in 2024 and achieved its outlook for the year with EUR 17.3bn in revenue and an EBIT margin of 4.3 percent for the full year, an improvement of 2.8 percentage points. The year didn't evolve as expected, but with a record-high value of the order intake, an all-time high order backlog and an extraordinary turnaround in Power Solutions, Vestas leaves 2024 stronger than we entered it. Our Service business had a challenging 2024, battling rising costs, but remains a strong, profitable business that is executing on its recovery plan, and is key to achieving our long-term ambitions. Our progress in 2024 was driven by our relentless focus on value over volume and improved execution amidst geopolitical uncertainty that is expected to cause disruption for societies and businesses in the coming years."
The year underlined that Vestas is on the right strategic path to improve the industry structurally and continue to build the commercial and operational maturity to achieve our financial ambitions. In that context, a 10 percent EBIT margin remains achievable in the mid-term, and Vestas is committed to deliver on this trajectory step by step.
Q3 2025 Results
Vestas has reported a jump in third-quarter 2025 profitability, with EBITDA before special items rising to €673m from €444m a year earlier, driven by improved onshore execution and reduced warranty costs. Vestas narrowed its full-year revenue guidance to €18.5bn-€19.5bn and said it expects an EBIT margin before special items of 5-6%. The company maintained its €1.2bn investment outlook for 2025 as it continues ramping up V236-15MW manufacturing. Group president and chief executive Henrik Andersen said: "Vestas had a strong third quarter of 2025 and achieved revenue of EUR 5.3bn and an EBIT margin of 7.8 percent."
Vestas' order backlog continues to grow, with Power Solutions backlog increasing to €31.6 billion, up €3.3 billion compared to one year ago. The Service order backlog also improved to €36.6 billion from €35.1 billion a year ago, with 159 GW under service contracts.
The Offshore Bet
The V236-15.0 MW™ is built on proven, world-class technology and engineered for efficiency in offshore environments around the world. The V236-15.0 MW™ turbine combines the strengths of our EnVentus™and 9 MW platforms, delivering outstanding performance at all wind speeds. With its 115.5-meter blades, this turbine achieves a capacity factor exceeding 60%. This means fewer turbines are needed to generate more energy annually than ever before. It also benefits from Vestas' excellent service and safety track record and is engineered for a lifespan of 30 years.
The V236-15.0 MW was the first ever 15 MW turbine to be introduced to the market in February 2021. Since the launch of the turbine, we have secured more than 11 GW of Firm Orders & Preferred Supplier Agreements. Across the entire Vestas value chain, we are getting ready to deliver on commercial projects.
X. Competitive Landscape: The China Challenge
The Global Wind Report 2025 by the Global Wind Energy Council (GWEC) confirms a historic milestone: the top four wind turbine manufacturers globally are Chinese. Goldwind, Envision, Mingyang, and Windey lead the rankings, consolidating China's dominance in a market increasingly reliant on Asian production. Amid this scenario, Vestas remains the only non-Chinese manufacturer within the top 5, reinforcing its leadership in Europe, where local content policies and industrial support programs have helped recover market share.
For the first time, the global the top 4 wind turbine suppliers came from China, with Denmark's Vestas rounding out the Top Five. Within Europe, European suppliers continue to dominate in 2024 with a 92 per cent market share, which is four percent higher than 2023. GWEC's Market Intelligence team found that in 2024, a total of 23,098 wind turbines were installed worldwide by 29 different wind turbine manufacturers. Last year continued to see Chinese wind turbine manufacturers increase their share of total installations due to strong growth in their home market. For the first time, the global the top 4 wind turbine suppliers came from China, with Denmark's Vestas rounding out the Top Five. Within Europe, European suppliers continue to dominate in 2024 with a 92 per cent market share, which is four per cent higher than 2023.
China has the largest and most fragmented wind market, with more than 12 domestic manufacturers, and fierce price competition has damped profit margins and seen many expand abroad. The price of Chinese-made turbines delivered outside the nation is about a fifth below those of US and European peers, according to BNEF.
For the first time, five OEMs installed more than 10 GW, with Chinese manufacturers benefiting from strong domestic demand, while Vestas remained dominant in markets outside China. The Chinese wind market grew by nearly 12% year-over-year, reaching a record of more than 80 GW and accounting for over 60% of global annual connected capacity. Meanwhile, installations outside China declined by 9%, affecting Western OEMs.
Vestas remained the leading non-Chinese OEM, connecting more than 10 GW in 2024, followed by Siemens Gamesa and Nordex. Western OEMs have responded to market challenges by concentrating on core regions, restructuring manufacturing operations, increasing outsourcing to Asia, divesting non-core businesses, and simplifying product portfolios. Commercial discipline has played a key role in their strategic adjustments.
The competitive dynamics are stark. Chinese manufacturers dominate their enormous home market and are beginning to expand internationally, offering turbines at prices Western manufacturers cannot match. Vestas's response has been to focus on markets where local content requirements, quality expectations, and service infrastructure create barriers to Chinese entry—primarily Europe, North America, and Australia.
XI. Bull Case, Bear Case & Strategic Analysis
Porter's Five Forces Analysis
Threat of New Entrants: MEDIUM While wind turbine manufacturing has high capital requirements and technological complexity, Chinese manufacturers have demonstrated that well-funded entrants can achieve scale rapidly. The key barrier is establishing trust with utility customers who make 20-30 year commitments to turbine suppliers.
Supplier Power: MEDIUM-HIGH Critical components like rare earth magnets, specialty steel, and advanced composites come from concentrated supply bases. The pandemic exposed these vulnerabilities, with component shortages contributing to the 2022 losses.
Buyer Power: HIGH Utility customers are sophisticated, price-sensitive, and have multiple supplier options. However, Vestas's service capabilities and installed base create switching costs that partially mitigate buyer power.
Threat of Substitutes: LOW (for wind energy overall) Solar competes for the same renewable energy dollars, but the two technologies are often complementary rather than substitutes—wind produces at different times than solar and can be sited in different locations.
Competitive Rivalry: INTENSE Chinese manufacturers control 60%+ of global installations by volume. Outside China, Vestas competes directly with Siemens Gamesa, Nordex, GE Vernova, and increasingly with Goldwind and Envision for international projects.
Hamilton Helmer's 7 Powers Analysis
Scale Economies: MODERATE Vestas benefits from spreading R&D, manufacturing overhead, and service infrastructure across ~10 GW of annual installations outside China. However, scale economies are partially offset by the project-based nature of the business and transportation costs for massive components.
Network Effects: WEAK Unlike software platforms, wind turbine manufacturing does not exhibit direct network effects.
Counter-Positioning: STRONG Vestas's "value over volume" strategy represents counter-positioning against Chinese competitors who pursue scale and low prices. By focusing on service quality, technology leadership, and customer relationships, Vestas operates in a different competitive space that Chinese manufacturers would need to fundamentally transform their business models to address.
Switching Costs: MODERATE-HIGH Service contracts averaging 11 years create meaningful switching costs. A utility that has Vestas turbines will naturally prefer Vestas service, and replacing turbines with a different manufacturer's equipment involves significant additional cost and complexity.
Cornered Resource: WEAK-MODERATE Vestas's engineering talent and 40+ years of accumulated knowledge represent a human capital advantage, but this is not a truly "cornered" resource—competitors can hire talent and accumulate experience over time.
Process Power: MODERATE The company's OptiSlip®, OptiTip®, and other proprietary technologies provide efficiency advantages, but competitors can develop similar solutions over time.
Branding: MODERATE In an industry where utility customers make technically sophisticated purchasing decisions, brand matters less than demonstrated performance and reliability. However, Vestas's track record of 182+ GW installed capacity provides credibility that newer competitors cannot easily replicate.
Bull Case
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Secular tailwinds remain intact: Global decarbonization commitments require massive expansion of wind capacity over the next 25 years. Even if Vestas loses market share to Chinese competitors, the addressable market is growing fast enough to support revenue growth.
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Service business provides earnings stability: The €37 billion service backlog with 11-year average contract duration provides highly visible, higher-margin revenue regardless of new turbine order fluctuations.
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Offshore leadership: The V236-15.0 MW turbine positions Vestas as a leader in offshore wind, a faster-growing segment where Chinese competitors have made less progress.
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Margin recovery underway: From losses in 2022 to 4.3% EBIT margin in 2024 to 7.8% in Q3 2025, the trend is clear. Management's 10% mid-term EBIT margin target appears achievable.
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Policy support strengthening: The U.S. Inflation Reduction Act and Europe's Net Zero Industry Act provide long-term policy frameworks that reduce the boom-bust cycles that historically plagued the industry.
Bear Case
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Chinese competition is existential: If Chinese manufacturers can gain regulatory acceptance in Europe and North America, Vestas's 20% price premium becomes untenable. The European market's 92% share held by European OEMs could erode rapidly.
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Quality issues damage reputation: The High Prairie turbine collapses and ongoing warranty provisions suggest quality control challenges that could affect customer relationships and profitability.
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Policy dependency remains: Despite the IRA and European support, the wind industry remains fundamentally dependent on government incentives. Policy reversals—like those seen in the 1986 and 2010s crises—could recur.
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Offshore economics uncertain: Offshore wind projects have experienced widespread delays and cancellations. Vestas's significant investment in the V236-15.0 MW platform may not generate expected returns.
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Service margin pressure: The Service segment's EBIT margin fell from historical levels near 25% to 16-18%, suggesting cost pressures that may be structural rather than temporary.
Myth vs. Reality
| Consensus Narrative | Reality |
|---|---|
| "Vestas is the global market leader" | Technically true, but Chinese manufacturers now hold the top 4 positions globally. Vestas leads only outside China. |
| "Wind is now cheaper than fossil fuels everywhere" | True for levelized cost of energy in most markets, but intermittency costs, grid integration, and permitting challenges mean total system costs are higher than headline numbers suggest. |
| "The service business provides recurring revenue like software" | Service contracts create visibility, but margins are under pressure and contracts can be lost at renewal. It's more like equipment service than SaaS. |
| "IRA solved the U.S. policy uncertainty" | IRA provides 10-year visibility, but implementation challenges, tariff uncertainty under new administrations, and grid bottlenecks continue to create project delays. |
XII. Key Performance Indicators & Investment Considerations
Critical KPIs to Track
For investors monitoring Vestas's ongoing performance, three metrics matter most:
1. Order Backlog Value (in EUR billions) The combined Power Solutions and Service backlog—currently EUR 68+ billion—represents years of future revenue. Declining backlog would signal demand weakness; growing backlog indicates strong commercial execution. Watch both absolute value and average selling price (ASP) per MW.
2. EBIT Margin Before Special Items This is management's primary profitability metric. The trajectory from negative margins in 2022 to 4.3% in 2024 to 7.8% in Q3 2025 shows operational improvement. The mid-term target is 10%. Each percentage point of margin improvement on €17+ billion revenue represents €170+ million in additional EBIT.
3. Service Backlog and Service Margin The Service segment's €37 billion backlog and target 25% EBIT margin are critical for long-term earnings power. Current margins around 16-18% suggest work to be done. Monitor both backlog growth and margin trajectory.
Regulatory and Accounting Considerations
Revenue Recognition: Vestas recognizes revenue when control passes to the customer, either at a point in time or over time. Large project-based contracts can create lumpiness in quarterly results.
Warranty Provisions: Warranty costs have been elevated due to quality issues. Watch for changes in warranty provision levels as an indicator of underlying product quality.
Russia Arbitration: While settled with Fortum, the dispute highlights exposure to geopolitical risks.
Currency Exposure: As a Danish company selling globally with manufacturing across multiple continents, Vestas has significant currency translation and transaction exposure.
Conclusion
Vestas's 127-year journey from a blacksmith shop in Lem to the world's largest wind turbine company is a masterclass in industrial reinvention. The company has pivoted repeatedly—from milk coolers to intercoolers to hydraulic cranes to wind turbines—each time in response to changing market conditions. It has survived two near-death experiences, in 1986 and 2012, emerging each time more focused and financially disciplined.
Today, Vestas faces its most formidable challenge yet: competing against Chinese manufacturers who dominate global volume while maintaining the margins and quality that Western customers expect. The company's response—emphasizing value over volume, building a massive service business, and investing in next-generation offshore technology—represents a coherent strategy, even if execution remains uncertain.
Since 2005, the world's number one developer of wind turbines had operated under the banner "Failure is not an option." Yet in an industry with long lead times that is prone to volatility, Andersen decided this phrase was not only outdated, it also risked creating an environment where people were afraid to speak up when they saw things going wrong. To emphasize how serious he was about changing the culture, Andersen staged a burial for this principle, going as far as playing funeral music and saying, "Rest in peace." The "funeral" created enormous focus and fellowship for Andersen's team, helping to cement trust and an acceptance that sometimes setbacks will happen.
Henrik Andersen's symbolic burial of "Failure is not an option" captures the cultural transformation underway at Vestas. In a business this complex, with products this large, and timelines this long, acknowledging that setbacks will occur—and building systems to detect and respond to them—may be more valuable than pretending perfection is achievable.
The wind industry's role in the global energy transition ensures secular demand growth for decades. Whether Vestas captures its share of that growth—and at what margins—will determine whether the company's reinvention continues.
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