The outcome Senvion is working hardest to avoid but one that is still on the table. Taking the decision to enter insolvency — albeit a self-administered one — is a step towards bankruptcy and an end to operations.
The company has secured funding from owner Centerbridge Partners and from a €100m loan to provide some breathing space and continue operating for the foreseeable future. The improvement in project execution is also providing welcome revenue.
But if it can’t find more investment from somewhere, it is going to be very hard to turn its fortunes around on its own.
Senvion cornered less than 2% of the market in 2018. It has announced very few orders since entering insolvency proceedings, so its share could be set to fall further.
It has practically been squeezed entirely out of the big-ticket offshore industry, and it can no longer depend on its home market of Germany for volume.
Without new investment, the company could be forced on to life support, selling off its manufacturing businesses and becoming a service-only entity, maintaining its 18GW global fleet of turbines for as long as it can before other service providers take over.
New owner — private investment
The most likely option facing the company is a new owner. There are a few rumours swirling around the wind-osphere about which companies may be considering a takeover.
Much like after its separation from Suzlon in 2015, Senvion may find salvation from a private investment fund or asset owner — similar to Centerbridge.
In an interview with news agency Reuters in April, CEO Yves Rannou said the company had seen interest from private equity firms, and discussions between Senvion’s management team and unnamed parties are known to be ongoing.
The move would make sense, just as it did in 2015. It would give the company more security and independence to operate as one of the last remaining wind-only players left on the market.
It could make its own technology choices and target markets it deems commercially fruitful.
But it could then end up where it is now. Having that autonomy comes with the risks, which led to the "operational mistakes" Rannou admitted to when he took the helm at the start of the year.
New owner — OEM
The wind industry has witnessed a swathe of mergers and acquisitions since the turn of the new decade and the consolidation is expected to continue.
There may be a number of interested parties who want to use Senvion’s global footprint to expand their own.
A Chinese OEM that may want to get a foothold in Europe? Or a company that is looking to perhaps get a jumpstart in the offshore market — even if Senvion is now behind the pace technologically with the leading companies like Siemens Gamesa or MHI Vestas.
This may mean an eventual phase-out of the Senvion name, however, and almost certainly some job losses in the resulting synergy of business processes.
New owner — Conglomerate
There would also be interest in, perhaps, an engineering company that is looking for an entrance in to wind to compete with the likes of GE or Siemens.
Japanese electricals firm Toshiba has been named as a potential suitor and the two parties have previous knowledge of each other.
In October 2018, the companies entered a licensing arrangement, under which Toshiba’s Energy Systems & Solutions division would market, sell, install and operate the German manufacturer's turbines in Japan.
This pathway has several benefits. It would retain much of the company’s existing identity and infrastructure as well as offer R&D benefits and more financial security.
In return, it offers the conglomerate a PR win, entering the wealthy power sector with green credentials at a time when wind is winning almost everywhere.
But many of these conglomerates are risk averse, so any potential owner would need to see a clear pathway to profitability to make it worth the efforts.
One thing for certain is that whichever of these options, or others, Senvion selects, the road ahead will be bumpy, with tough choices to be made.
The wind industry is consolidating, with fewer and fewer players on the scene as margins are squeezed in a competitive post-subsidy world.
But competition is also healthy. It drives innovation and standards, and staves off complacency.
It is for that reason Senvion’s continued presence is essential for the industry.