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Germany

Germany

Dip in growth catches firms unawares

Münster University's wind energy working group has published its annual survey of 20 turbine manufacturers, showing that the German wind market has dipped following years of expansion. The sudden stop has caught companies at a bad time when most had just invested in expanding production capacity and is mainly a result of continuing attacks on the Electricity Feed Law (EFL) by the utility sector. Payment for wind generated power in different countries is tabulated.

The German wind market has left the path of expansion travelled over the last few years and entered "a phase of consolidation." This is how this year's market dip is described by the wind energy working group at Münster University in its latest annual survey of 20 turbine manufacturers. The survey reveals wind industry plans to install around 480 MW in 1996, only 15 MW down on the 1995 figure of 495 MW, though the actual number of turbines to go in the ground is expected to drop to around 950 from 1035 in 1995.

By the end of 1996, Germany will have around 1600 MW of rated wind power capacity in operation, bringing it within spitting distance of overtaking the current world wind leader, the United States, which has around 1670 MW on line. This prospect has been greeted with enthusiasm by the German press, but manufacturers are finding little time for celebration.

According to Norbert Allnoch of the working group, the sudden stop in the German market's rate of expansion has caught companies at a bad time: most had just invested in expanding production capacity. The market lull is mainly a result of continuing attacks on the Electricity Feed Law (EFL) by the powerful utility sector, which objects to being forced to buy renewable energy at a premium price. Although the EFL stands firm, the investment climate remains decidedly uncertain.

Manufacturers are also struggling to adjust to a remarkably fast transformation from a seller's to a buyer's market in Germany. Allnoch says that average gross investment costs (including value added tax) per MW fell by 10.7% in 1995 to DEM 2.5 million. This downward pressure on prices is one reason why only 12% of the companies surveyed describe the current market as "good." At the same time, however, 18% of firms view the outlook for 1997 as "good." Allnoch adds that direct employment in turbine manufacture has been reduced from some 1400 in 1995 to 1200. More positively, new jobs are being created in technical services for the maintenance of wind plant already in operation.

Airing their views on other issues, several manufacturers are now unhappy with the highly political profile of the wind energy associations in Germany, wishing instead for a more sober professional approach which they believe would make a better impression on potential foreign buyers. Allnoch comments on the international potential for wind, not only in China, India and South America, but also in Europe where there is a trend towards providing more support for development. He cites France as an example, where a 500 MW wind programme has been initiated and Greece, where the price paid for renewables has been improved.

According to the working group survey, payment for wind generated power varies considerably in different countries (see table). Allnoch pleads for a harmonisation of market conditions to level the playing ground across Europe.

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