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Germany

Germany

Wind market surprises with another surge -- Germany passes 20,000 MW

Wind development in Germany in 2006 bucked the downward spiral in annual installations of the two previous years (table). Maintaining its position as the second largest wind market in the world behind the US, Germany installed 1208 turbines with a combined capacity of 2233 MW, compared with 1808 MW in 2005 and 2037 MW in 2004. The 2645 MW achieved in 2003 remains a global national record. By end 2006, wind power capacity in Germany stood at 20,622 MW, reports the federal wind energy association Bundesverband Windenergie (BWE), not far from double that of any other country.

Germany's continuing wind market is based on long term purchase prices fixed by government, streamlined permitting laws, and two state support programs providing favourable financing of wind projects: the environmental protection and energy saving program under the post-war European Recovery Program (ERP) and the environmental protection program run by KfW, the bank in charge of state development aid. Both programs provide long term credit for wind projects, typically up to 20 years, at favourable interest rates. The loans are made available by KfW through local savings banks.

Interest rates under the ERP program are available for 50% of project costs and are fixed for up to ten years. The rate currently varies from 3.96% to 6.92%, well towards the lower end of commercial capital market rates. The loan term is up to 20 years in eastern Germany and up to 15 years in western Germany. Under the KfW program, which provides loans for up to 75% of eligible costs, typically up to EUR 10 million per project, the interest rate lies in a range of 4.49-7.54%. Again, the interest rate is fixed for ten years for a 20 year loan.

Last year more than 50% of the new wind capacity, just over 1226 MW, was installed across the three leading wind states: eastern Germany's Brandenburg installed 507 MW, Lower Saxony 378 MW and Saxony Anhalt 340 MW (map). Lower Saxony, with a total capacity of 5283 MW, remains way ahead of its nearest rival, Brandenburg, with 3128 MW by the end of 2006.

Enercon just managed to fend of its Danish rival Vestas to again reign as top wind turbine supplier in its home country, though its market share dropped 38.4% from 41.7% in 2005. Together, the two firms took 73% of the 2006 market, reports Deutsches Wind-Energie Institut. Even with a slight decline in market share, Enercon's 875 MW installed last year was 100 MW up on 2005. Vestas significantly increased its share, up from 26.8% in 2005 to 34.6% in 2006. The nearest rivals are Repower, GE Energy, Nordex and Siemens in that order, although none have yet to secure a double digit percentage share (table). Among these companies, Repower and Siemens increased their market shares slightly, while GE and Nordex both lost out.

For 2007 and 2008, wind development action is expected to be concentrated offshore, says Thorsten Herdan of engineering association VDMA. BWE says for onshore wind there needs to be an improvement in market conditions for repowering old projects with new turbines. Modern turbines can extract three times the energy of older turbines from the same area, points out BWE's Peter Ahmels. In 2006, 79 old turbines totalling 26.19 MW were replaced by 55 turbines totalling 136.4 MW, according to DEWI.

"Germany is well on course to achieving the European Union's 12.5% target for renewables' contribution to electricity consumption by 2010," says Ahmels. Indeed, even with weak winds in the first six months of the year, wind power generated 30.6 TWh of output, equivalent to 5.7% of Germany's electricity needs. In all, renewable energy supplied 11.6% of the country's electricity, so significant repowering of older wind turbines could see the EU target easily achieved, he notes.

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