Seasonal dip for Danes in Germany -- Jostling for market share

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Germany's Enercon has boosted its share of the domestic wind turbine market to 47% in the first half of the year, up from 29% for the whole of 2001. Vestas, Nordex and, in particular, NEG Micon were the market losers, while American GE Wind also boosted its market share -- to 14.4% from just under 11% in 2001. These top five companies sold 80% of Germany's new turbines in the first six months of the year, reports wind association Bundesverband Windenergie. Whether the sudden market dominance of Enercon is due to seasonal fluctuations or a radical realignment of the industry in Germany remains to be seen.

The pattern follows that of previous years, however, with Enercon sales remaining consistent over the entire 12 months while its competitors clinch orders in the second half of the year, says the company's Nicole Weinhold. Enercon installed 502 MW of the 1088 MW developed in the first six months (table).

GE Wind Energy, the only other company to substantially increase its market share during the first half year, almost doubled installations, compared with the same period in 2001, to 157 MW. "We have won back customer confidence now that it's established that General Electric is our mother company," says Andrea Hein of GE, formerly Enron Wind. "But also the heavy work load last year meant some turbines scheduled for installation in 2001 didn't go in the ground until 2002."

NEG Micon's market share for the first six months fell sharply to under 4% compared with 10% in the first half of 2002. But the company's Catrin Petersen says that for the whole of the year it is nonetheless expecting to repeat its 11.4% market share from 2001. "The last quarter of the year will be extremely busy," she says. Vestas' market share for the first half of 2002 dropped by three percentage points compared with the same period last year, although the 115 MW installed is just 1 MW less than in the first six months of 2001. But like Petersen, the company's Andreas Eichler says Vestas expects the same slice of the German market this year as last, 10%.

Ralf Petersen of German/Danish Nordex echoes the comments of his competitors. Nordex, too, expects to secure the same 10% market slice as last year, up from just 6% so far. "The machines are ready, the contracts and project pipeline are there, and we have a significantly larger order book," he says.

The German market's seasonal swings are largely dictated by tax rules governing the country's wind fund financing mechanism -- and because the windy season starts in October, says Marcus Storr, wind market analyst with Dresdner Kleinwort Wasserstein. Investment in wind funds is tax deductible, but the incentive tends not to impact the market until investors start to look for ways of reducing their taxable income towards the end of the fiscal year.

Enercon feels the impact of this market quirk less than its competitors, adds Storr, because its projects tend to be less reliant on wind fund financing. "Enercon probably develops and installs a couple of dozen wind farms itself, enabling it to install and generate revenues, profits and a higher market share in the first half of the year," says Storr. Enercon's Weinhold declines to comment on this aspect of the company's business.

Other turbine manufacturers occasionally develop their own projects, but Nordex and NEG Micon say this is only in exceptional circumstances. "We do not want to compete with our customers, the development companies," says Petersen. Her view is echoed by Eichler. Vestas does not develop projects, he says.

Compounding the seasonal nature of the German market was a change in regulations in August 2001 affecting site permitting. Several projects have been delayed as a result, stress both Petersen and Eichler. Under the new rules, projects under six turbines have far simpler licensing procedures, while wind plant of six to 19 turbines must undergo public hearings and in some cases produce a full Environmental Impact Statement (EIS). Projects of 20 or more turbines must always produce an EIS.

Individual or pairs of turbines, however, continue to be licensed under the old building law. Turbine manufacturers like Enercon, that have many projects involving single or pairs of turbines, are less affected than companies like NEG Micon with fewer, larger projects.

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