Future lies in regulation revision and repowering -- Steady market decline in Germany

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As the decline in the German wind market picks up speed -- it was 25% smaller in 2007 than in 2006 -- foreign turbines suppliers are taking flight. Home grown Enercon increased its long held market lead to install just over 50% of last year's total capacity of 1667 MW and German Repower also increased its share to 11% (table), reports the Deutsches Windenergie Institut (DEWI). In contrast, Danish Vestas' share declined to 25%, a 10% drop on the previous year. No other supplier achieved even a 5% market share.

Despite the decline, Germany still has more wind power than any other country. Last year's overall increase in installed capacity brought the German grand total to 22,247 MW, comfortably ahead of the United States in second place and Spain in third. But in terms of annual additions, Germany now lies in fifth position with both China and India also installing more.

The market decline is raising concern about the future of wind power in Germany. The market framework -- power purchase prices mandated by government, supported by low interest loans from the national development bank -- is no longer able to maintain the dynamic growth of the past. "The domestic market is increasingly under pressure because on the one hand rising raw materials and energy prices make turbine more expensive and on the other hand, the state-imposed fixed feed-in tariffs decrease each year," says Hermann Albers, president of Bundesverband Windenergie (BWE), the federal wind energy association.

In recent weeks, the energy debate in Germany has been dominated by discussion over the proposed revision of the national renewable energy law. The wind sector has been promised an improved offshore purchase price structure and is hoping for better onshore rates too (Windpower Monthly, January 2008). It is urging for a speedy treatment of the law's revision in parliament this month to enable it to already take effect in August.

"A delay until the start of 2009 would be bad for the market. Nothing will move as everyone waits," says BWE's Thorsten Paulsen. Back in January, the Verband Deutscher Maschinen und Anlagenbau, a powerful national engineering association, warned that in a worst case scenario new wind installations could drop to 1 GW this year -- the lowest volume since 1998 when the fledgling market scored what was then was a record breaking 793 MW. "There are projects in the pipeline that will get built, but no developer is going to clinch new business under current payment conditions," says Paulsen.

A brighter view

Not all see the picture as quite so dark. "Onshore installations this year are likely to be little affected. Wind developers are well positioned, although the new installed capacity may drop slightly," says energy lawyer Hartmut Gassner of law company Gassner, Groth, Siederer & Coll. The firm is the base for EnergieVerein, a forum for energy law, policy and renewable energies.

Indeed, the state of the market in 2007 was actually slightly better than predicted. In its most recent two-yearly report on German wind energy, published in mid-2006, DEWI had anticipated a continuing decline in yearly installations as sites good for development become ever harder to find. From the peak year of 2002, which saw 3240 MW of new wind capacity, the market was expected to bottom out in 2007 before rising again as offshore installations gradually bring new impetus. Yet 2006 was a surge year, 22% better than 2005, and last year's 1667 MW was a deal better than DEWI's predicted 1348 MW. But there is no denying the general pattern of decline. It remains to be seen whether 2008 installations will exceed DEWI's prediction of 1425 MW.

The statistics

Wind generated power reached 39.5 TWh in 2007, enough to meet 7.2% of German electricity consumption. It was less, however, than the 41.4 TWh predicted by the network operators' association, VDN, based on the high output achieved in the first months of the year. For 2008, the VDN anticipates wind output of 40.6 TWh, just a 1 TWh increase compared with the 9 TWh hike from 2006 to 2007. Half the rise in wind generation predicted for 2008 is expected to come from Germany's first offshore installations.

In taking half the German market last year, Enercon installed 839 MW, just 20 MW less than in 2006. Of the domestic manufacturers other than Repower, Nordex held its 4.8% share and Fuhrländer saw a slight increase to 2.7%. American GE Energy, fully occupied on its booming home market, was barely visible on the German scene.

Of the 883 turbines newly installed last year, 65% were 2 MW machines, 13% had capacity ratings in the 2.1-2.9 MW range, while another 13% were machines rated at less than 1.5 MW. Machines with a rated output of 1.5-1.8 MW accounted for 7% of installations, while 2% were seriously big machines with capacity ratings up to 6 MW.

In an indication of just how hard it is to find unoccupied sites along Germany's short but windy coastline, much of the development last year took place inland where winds are relatively poor. Although the coastal state of Lower Saxony topped the league in installed capacity last year, second and third ranks were taken by the two rural inland eastern German states of Saxony Anhalt and Brandenburg (table/map)

Not much effort is being put into replacing the hundreds of old and small turbines taking up the best sites in Germany, many of which are now a decade old. The small number of repowering initiatives continues to disappoint the industry. In 2007, 108 old plant were replaced by 45 new turbines, raising the generating capacity of those sites from 41 MW to 103 MW. "This shows the enormous potential of repowering for climate protection but also that sufficient incentives still don't exist," says Albers.

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