Analysis - Avoiding US keeps Enercon healthy

GERMANY: With many wind manufacturers sliding into the red during 2012, Germany's biggest onshore wind turbine builder Enercon installed a record number of turbines, simultaneously increasing both sales and net profits over the period.

Enercon founder Aloys Wobben... created foundation in 2012
Enercon founder Aloys Wobben... created foundation in 2012

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Briefly lifting the veil on its business performance at the Hanover industry trade fair on 11 April, Enercon reported it had installed 1,747 wind turbines around the world in 2012, with a total capacity of around 3.5GW, compared with about 3.2GW in 2011. The company will continue its policy of incremental growth. Around 3.8GW of installations are due in 2013, on course for 4GW in 2014, according to the firm.

In parallel, Enercon's operating performance grew to EUR 3.9 billion in 2012, up from about EUR 3.8 billion in 2011, and expected to reach around EUR 4.0 billion in 2013. Net profits reached roughly EUR 500 million in 2012, an increase of up to EUR 100 million on 2011, the company indicated, without revealing exact figures.

Recipe for success

Several factors account for the success of Enercon, which was family-owned before being transformed into a foundation last year to protect it from being split up or taken over. For one, its business policy of not participating in the US market has saved it from the turbulence of the uncertain production tax credit support mechanism. Second, the long-term focus on its home market Germany continues to provide a steady flow of business.

The German market accounted for 40% of Enercon's production last year. Of the other 60% installed elsewhere in world, Canada is currently playing a more prominent role, with Brazil falling back, according to managing director Hans-Dieter Kettwig. Aside from in Germany, the company has production facilities in Sweden, Brazil, Turkey, Portugal, Canada, France and Austria, serving both local and other markets.

Looking ahead, Enercon is increasingly diversifying into a turnkey supplier, Kettwig said. Activities now span research and development, production and logistics — such as the company's own German rail operation employing 18 train drivers, which it hopes will eventually include passenger transport — to marketing, project management and service cooperation. Parteners for the latter include German renewables companies Energiequelle and Enerfin, German wind developers and municipal energy utilities Stadtwerke Magdeburg, SWE Emden and Stadtwerke Osnabrück, and Brazilian utility Eletrobras.

More service and development activity

Service is of increasing importance. Enercon's Partnership Concept (EPC), the name for the 10-15 year service package launched in its original form some 20 years ago, clocks up turnover of around EUR 350-380 million a year and currently covers around 14,800 turbines. Enercon has 5,400 people employed in service around the world — or just over one third of its total workforce — working out of a total 300 service stations. Further, the EPC fund to cover any big problems that could arise has a volume of EUR 180 million in 2013, increased from EUR 170 million in 2012, Kettwig said.

The company is stepping up development activities in connection with requirements on wind turbines when connected to "smart" transmission grids and itself owns around 700MW of wind capacity in Germany, mainly for testing and development purposes. Further, although focused mainly on onshore wind, Enercon has ventured into the booming solar sector, primarily seeking a new use for its control electronics, but has found the know-how transfer has flowed in both directions.

"Aspects of solar controls have been useful for our wind turbines," commented Michael Strobel, director of the technology and innovation centre at Wobben Research and Development, named after Enercon founder Aloys Wobben.

Enercon currently has 30MW of photovoltaic capacity in Germany, with the largest facility, in Oldenburg in the firm-s home state of Lower Saxony, having 13.8MW.

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