These are the main conclusions of the Autumn Wind Report, an annual publication compiled by Norbert Allnoch of the Geography Institute at Münster University. "Many wind generator manufacturers are currently operating at or even above their actual production capacity," he points out. The signs are that the ability to supply turbines of around 500 kW will be the overriding factor determining who gets how much of this year's market. For this reason, Allnoch says the current market uncertainty surrounding installation of single wind turbines -- following a high court ruling on interpretation of German planning law earlier this year (see previous story) -- will not cause wind turbine manufacturers to shed more than a few crocodile tears .
Tougher times for small firms
The German wind industry is generally optimistic about the outlook for 1995 even though price competition will become stiffer, making life harder for niche products. "The small companies supplying small numbers of single turbines will have an increasingly hard time to match the ever lower costs of larger companies with substantial series production," remarks Allnoch.
However, in the results of his survey of 20 turbine manufacturers, representing 95% of the German market volume, Allnoch also discerned growing uncertainty and nervousness about the wind market's supportive framework. The important Electricity Feed Law -- which requires utilities to buy renewable energy at a premium price -- is up for review at the end of the year and faces stiff opposition to its renewal from the all-powerful electricity industry associations which regard the law as an unfair subsidy.
The muddled plethora of market support systems in the individual states and their many different requirements also concerns the industry. At any moment a state budget could run dry resulting in the abrupt closure of its programme for an indefinite period. The effect would be for investors to put projects on the back burner and postpone all new plans in the hope that the support programme would be resumed. This stop/go pattern where the market boils over and then fizzles into thin air undermines both turbine manufacturers' planning and cash flow projections, says Allnoch. The turbine manufacturers favour support by means of the neutral Electricity Feed Law rather than quixotic investment support which can lead to an unofficial quota system of producers -- not conducive to encouraging healthy market competition. Allnoch draws the conclusion that a premium price for kilowatt hours generated is the best way of supporting the wind market.
Almost as important for wind power's continued growth are conditions on the capital market for long term loans. Allnoch notes that although long term interest rates rose in 1994 -- and may well have had a braking effect on the market -- interest rates for the ten year loans usual in wind energy are expected to relax again slightly in 1995.
Even though the industry has been expanding fast for four years now, wind turbine operators still face a thick fog of uncertainty over new projects. "Without concrete indications as to the chances of success of a project, extensive applications for planning permission, state subsidies and grid connection still have to be made for each individual case, " says Allnoch. In addition, it was only recently that the industry was considerably shaken by the fierce public reaction against giving single wind turbines a fast lane route through German planning permission process. Public acceptability apparently still hangs on a tenuous thread in Germany, even though the continuing high level of interest in investing in wind plant shows that grass roots opinion is not as negative as the press likes to make out. Allnoch warns, however: "Positive developments should not be allowed to veil the fact that disturbing influences could at any time cause the highly sensitive market to leave its expansion path."
Allnoch's view is that in order for the German market to function relatively smoothly, at least 600 turbines need to be installed per year. As wind turbines are expected to operate for at least ten years before being replaced, and are written off accordingly, the German market needs to absorb around 6000 turbines over a ten year period for a stable development of the industry. In 1994, some 800 machines will be installed compared with 586 in 1993. Even better would be a steady development of an open European market to give the whole industry a broader base, he says.
Allnoch favours a new market programme for wind where both federal and state support is granted according to fixed parameters, but with a formula allowing for different levels of support (for formula details see Windpower Monthly's December 1994 issue).