German wind energy sector

Politicians love it when they get the chance to present a successful investment project – Germany’s transport minister Peter Ramsauer was able to talk about “pioneering work with worldwide relevance” when he visited an offshore energy plant in Cuxhaven on Germany’s North Sea coast this week.

A quarter of German electricity already comes from renewable energy sources. Far out front, the wind energy sector is growing faster than it has for years. However, business could be a lot better.

A harbor and industrial area has been built there in which offshore wind turbines, along with all the necessary components, can be built and shipped. Wind energy on the high seas could become a winning export with which Germany could score points worldwide, said Ramsauer.

But there’s actually not a lot of energy being generated right now off the German coast. There were just nine offshore wind turbines with a total output of 45 megawatts supplying the electricity grid in the first half of 2012. For Thorsten Herdan, director of the wind industry association VDMA Power Systems, that is below expectations: “It’s highly unsatisfactory in comparison to federal government targets, and highly unsatisfactory in comparison to the industry’s targets and investment efforts.” That applies to everyone who invested in the industry, trusting in the government’s Energy Industry Act and its timetable for the provision of a network to bring the electricity to land.

Billions of euros in investments

But there’s still nothing much for the offshore wind turbines to plug into. And it’s not yet clear who is legally liable when things go wrong. Who has to pay if the network isn’t completed on time, or if a technical error occurs on the cables? The question of the financing of the network also seems to be still unresolved. Herdan says neither he nor the banks understand how a network operator with an annual turnover of one billion euros ($1.23 billion) could be expected to manage a borrowing requirement of 15 billion euros.


Offshore wind turbines with a small service vessel steering between themThe wind will be blowing in a distinctly less favorable direction for the industry in 2013

The lack of clarity is ending up costing the offshore investors. The manufacturers and suppliers have delivered what was ordered, says Herdan, and they’d been paid. “Whoever wants to see how things are, should go to Bremerhaven, then they will see everything just stored there – it’s all been paid for and it should already be standing in the water and what has been paid for and what should actually already be standing in the water. And we’re talking about billions of euros.”

More onshore wind turbines

The onshore wind industry also views the future with skepticism. The clear pattern of growth last year seems to have continued in the first half of 2012. An especially high number of tall wind turbines with large rotor-blades were installed in the states of Brandenburg, Saxony-Anhalt and Rhineland-Palatinate. Now, 22,664 wind turbines across the country provide a total output of more than 30 gigawatts. Around 25 percent more wind turbines were erected in the first half of 2012 than in the first half of 2011. With wind power forming the backbone of Germany’s move to renewable energy, there’ll soon be enough to replace nuclear power entirely, says Hermann Albers, President of the Federal Association for Wind Energy (BWE).

However, the wind will be blowing in a distinctly less favorable direction next year. Foreign markets, which are very important for German manufacturers, will be much tighter. Albers points out that construction of wind energy turbines in the US, for example, has nosedived. China also looks set to push its “gigantic surplus capacity” onto the global market in 2013. The outlook is bleak for German producers, who plan to tackle the situation with efficient and cost-effective technology. There are few options left if they don’t want to find themselves in the same position as the majority of German solar panel manufacturers. They have already been forced to capitulate to China’s superior power.