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Germany

Germany

Company report: Niche market focus gives global growth

Enercon is still the world's fourth largest wind turbine supplier, even while it deliberately shuns the huge growth markets of China and the US and determinedly retains its independence in the sole ownership of its founding owner.

Enercon, Germany's largest wind turbine producer and dominant player in the domestic market, topped EUR3 billion in annual sales in 2008, up from EUR2.5 billion in 2007 and EUR1.9 billion in 2006. The steady but unspectacular growth contrasts with that of Enercon's rivals and particularly with that of Vestas, which is the closest Enercon has to a competitor in the German market. Vestas stepped up its global sales by nearly EUR1.2 billion in 2008, more than twice Enercon's growth, to just over EUR6 billion.

Enercon, owned by its founder, Aloys Wobben, employs about 13,000 worldwide, sold 864 MW in Germany last year, taking a 52% share of the market, while Vestas sold 526 MW for a 32% share. Of the just under 24 GW of wind power in Germany in total, Enercon has supplied 8.7 GW, or 37%, ahead of Vestas' 6.9 GW, or 29%. By the end of 2008, Enercon had installed about 16.7 GW of wind power in 37 countries, half of it in Germany. After Germany, India is its second largest market with total sales of 1530 MW, followed by Portugal (1296 MW) and France (640 MW).

This year the company expects to produce 3 GW, up from 2.8 GW last year. So far it is more or less on track, with 592 MW churned out in the first three months of the year compared with 515 MW in the first quarter of 2008 and 465 MW in the same period of 2007. It says production runs at 50-60 MW each week. By 2013, the company expects to build 4.5 GW a year.

Losing market share

Installation of Enercon turbines in the first quarter was slower than last year, however, with 641.8 MW erected to bring its global total to 17,343 MW. This was 99 MW less than during the first three months of 2008, a drop of 13%. Global installations (rather than production) in 2009 are expected to reach 3200 MW, or a world market share of about 14%, compared with 3018 MW in 2008, a market share of 13%. In 2010, the company expects to install 3300 MW. Enercon says installations in Germany alone over the next three to five years will amount to around 800-1100 MW a year.

Globally, Enercon lost market share by 4% in 2008, according to the latest World Market Update report from Danish wind energy advisory firm BTM Consult. It retained its fourth position in the rankings of wind megawatt supplied, however, both in 2008 and in total market share, where it remains ahead of Suzlon by a hair's breadth. Enercon is led by Vestas, GE Energy and Gamesa, in that order.

The company is steadily spending more money. In 2008, it invested EUR175 million with a particular focus on three new factories in Portugal, compared with EUR142 million in 2007 and EUR100 million in 2006. In 2009, annual investment will be about EUR185 million. Enercon's global production capacity is split between 12 blade factories, six generator factories, four electronic component factories, eight tower production facilities and four assembly works. Aside from Germany these factories are in Brazil, India, Portugal, Sweden and Turkey.

The company is currently considering setting up production facilities in France. Its aim over the coming years is to expand in countries where there is a stable political framework and where electricity network expansion is on the agenda. Neither the US nor China are on the company's radar screen. In contrast, Canada is of considerable importance, with Enercon due to install 1 GW there starting from 2011, following a major tender success with energy company Hydro-Quebec last year (Windpower Monthly, June 2008).

Some 88% of Enercon's customers worldwide have signed up to its Enercon Partnership Concept (EPC), which is a 12 year guarantee package covering servicing, safety inspections, maintenance and repairs. The EPC fund to pay for any series failure in Enercon turbines stood at EUR100 million in 2008 and is to be expanded to EUR115 million in 2009 and EUR120 million in 2010.

Enercon continues to lay great store by independence and reliability. It argues that vertical integration in production gives independence in the production phase. It plans to build its own foundry at Georgsheil near the Aurich headquarters, but without disturbing relationships with existing foundry partners. With an A+ from German ratings agency Eules Hermer, Enercon says the Deutsche Bank wants to provide financing for the project.

The firm is also increasingly moving from truck to rail transport for component delivery to sites throughout Europe, believing this gives more autonomy. Local to its headquarters, Enercon has driven forward the revival of a rail route to link its production works at Aurich to the port of Emden.

Replacing old turbines with new is likely to become an increasingly important part of Enercon's business, particularly in Germany. While just 2% of its sales in Germany went to repowering projects in 2008, Enercon expects that to rise to 8% this year, and to 12% in 2010.

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