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Experts warn of global stagnation -- Wind market in next four years

Repeated warnings by international stock market analysts that the wind market in Germany -- representing about 35% of the world market -- will peak this year have been confirmed by the Deutsches Wind-Energie Institut (DEWI), an independent wind energy consultancy. DEWI, which bases its projections on a survey of the German wind industry, also reports that the German decline will mean world market stagnation, with the annual growth rate static at about 9000 MW through to 2006 (chart). In contrast, the 6765 MW installed globally last year represented a growth rate of 38%.

Just 2400 MW of new wind plant will go up in Germany in 2003, compared with a projected installation of 2900 MW this year, reveals DEWI. Over the following five years, annual sales will continue to sharply decline until they bottom at 1060 MW in 2008. From that point, says DEWI, the German offshore market will kick in and the curve will rise again.

Released in conjunction with the first International Wind Energy Trade Fair -- and thus promoted by the considerable marketing apparatus of Hamburg Messe und Congress GmbH -- the contentious DEWI report, which is disputed by at least some German wind project developers, had wide ranging media impact. An eight page pre-fair special by Germany's influential Handelsblatt business newspaper painted a gloomy picture.

"Share prices of companies that develop wind stations and sell these to investors as tax saving models have plunged. The new energy branch is now assessed with considerably more scepticism than it was a year ago, despite Germany's system of guaranteed prices," stated Handelsblatt last month. The gloom quickly spread from Handelsblatt to the Danish press, impacting the share prices of Vestas and NEG Micon, traded on the Copenhagen bourse, and prompting more sell warnings from analysts.

"Wind turbine stocks have fallen more than 15% in the last few days as investors have been disappointed by the news emanating from the Hamburg wind energy trade fair," said Roddy Bridges from HSBC, an international bank, on June 20. He also maintained a "sell" recommendation on Vestas. The market decline, he pointed out, "is not a major surprise as it is well recognised that the German market is maturing. The greater shock is that [DEWI] only sees some 800 MW of new onshore installations in 2006, augmented by 120 MW replacement (repowering) and 200 MW offshore." He points out that rival Danish consultancy BTM Consult has been forecasting 2050 MW for 2002 and 2600 MW for 2006.

Whether other markets can take up the German slack is disputed. DEWI bases its global market projections on statistics from BTM. These are considered conservative for some international markets, particularly for the US.

Nonetheless, Norbert Allnoch of the German International Economic Forum for Renewable Energy, has earlier warned that wind's meteoric global expansion is likely to be tempered by short periods of weaker growth. "The expected decline in the German onshore market cannot in the short term be compensated by the national offshore market, but only by expansion abroad," he says. "When the decline sets in, it could be dramatic."

The market for repowering of old wind plant in Germany will not be strong enough before 2010 to compensate for the decline, according to DEWI. Until 2006 it will be less than 100 MW a year and even in 2010 it will be under 500 MW. Not all agree. Fritz Vahrenholt from wind turbine maker REpower Systems expects a repowering market of 400-600 MW a year from 2005.

DEWI forecasts a German market recovery to the 2002 growth rate in 2014 -- if offshore wind growth reaches 2400 MW a year and onshore project repowering of around 1700 MW is achieved. The German market -- offshore and onshore -- will then peak again in 2016 at 4500 MW of new wind before consolidating at around 2500-3000 MW a year from 2020. By that time Germany will have nearly 43,000 MW of wind plant, nearly double the 22,100 MW in 2010, predicts DEWI.

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