In turn, management “expects the agreement to normalise relations between Enercon and its suppliers”, which may have feared payment defaults.
Enercon plunged into the red in 2018 with a pre-tax loss of €199 million on a turnover of €4.4 billion, which was down 20% on the 2017 turnover of €5.6 billion with a €423 million pre-tax profit. Figures for 2019 have not been published yet, but losses are expected to run into 2020 as the company drives to complete its turnaround within three years.
Following the collapse of German onshore wind, which had been the focus of Enercon‘s activities, the company is now concentrating on international growth markets. The new guarantee facility with its banks enables Enercon to provide the guarantees necessary in other countries for large-scale onshore projects, the firm said in early June.
Export credit guarantees
Having failed to heed warning’s over the onshore wind market’s demise, the German government is now offering an olive branch by introducing the special renewable energies initiative (SREI) to improves conditions for wind and other renewables under the Hermes export credit insurance scheme.
Announced in mid-May, the SREI makes German export credit guarantees available for foreign renewable energy projects that include up to 70% foreign-sourced goods or services, compared with a 49% cap for other domestic industries.
This helps companies that have had to shift production out of the country to save costs. Enercon plans to move some of its manufacturing to India — making generators, hubs, nacelles and E-modules for EP3 and EP5 turbines there from Q4 2020 and rotor blades from May 2021.
Hermes provides state cover to protect German companies against non-payment by foreign debtors, facilitating long-term financing of investments. Since global competition for renewables projects is increasingly decided not only by technology and price but also by the finance package provided, state guarantees along with company guarantees can help tip the balance.
The SREI brings German renewables into line with the OECD renewables sector agreement, long since demanded by the German sector to create a level playing field in the global fight for projects, and could help Enercon in its international expansion drive.
Enercon installed 1,885MW worldwide in 2019, taking its total installations to more than 52GW. However, last year's installation figure was about 1GW down on the 2,840MW it supplied in 2018. It was an even more dramatic fall from the 3,458MW and 3,833MW it supplied in the previous two years.
But the real story is revealed by looking at the Germany onshore market, where Enercon has long been the leading supplier. The company supplied just 33% of a much smaller total in 2019, amounting to 378MW. This was a dramatic decline from the 1,282MW — 57% — it installed a year earlier.
For 2020, the company expects to install some 2.4GW worldwide, a 27% improvement on 2019, but still far from the company's peak performance of nearly 4GW within a single year. "The company realignment is intended to bring performance back to this level, albeit with profitability given clear priority over growth," Enercon told Windpower Monthly.