GERMAN WIND INDUSTRY CUTS 10,000 JOBS AMIDST SHARP DOWNTURN

 

 

The German wind energy market is threatened by a sharp downturn after years of continuous growth. Ten thousand jobs have already been cut last year.

 26/05/18

Düsseldorf: When Volker Malmen sat on stage in a hotel in Bremerhaven just over a week ago, the head of Orsted Germany could not help laughing when the moderator asked him which countries were important for the wind industry as a growth market. “Well, Germany probably not,” replied the managing director. And Malmen’s statement has weight in the industry – the Danish company is one of the world’s leading wind farm operators. The Orsted boss is not alone in his opinion.

According to a survey by the market research institute Windresearch, together with WindEnergy Hamburg, the largest wind fair in the world, the mood in the industry is basically positive – but in Germany the surveyed project planners, operators and manufacturers are not so optimistic about the situation, in some cases even consider it “very negative”. The survey is exclusively available to Handelsblatt.

Germany is the most important sales market for wind power in Europe; last year alone, more wind turbines were installed here than ever before. But while the global wind industry is booming, the German market is threatened by a sharp downturn after years of continuous growth.

In 2017, around 1800 new wind turbines with an output of 5330 megawatts were added in Germany, but in the worst case scenario it could only be 1100 megawatts in 2019. The German Wind Energy Association warns against the loss of thousands of jobs. Ten thousand jobs had already been cut last year.

On the one hand, the industry is facing enormous price erosion due to the worldwide reduction in subsidies and the switch to tenders. On the other hand, Germany is considered a particularly difficult market. Here, the demand for wind turbines had almost collapsed due to the auction system introduced only in 2017.

Over 1200 companies from all over the world were surveyed in the WindEnergy Trend Index 2018, both in the onshore and offshore wind sectors. In both cases, the interviewees assess the situation in Germany as significantly worse than for the rest of Europe, Asia or North America. The onshore industry seems to be particularly concerned, with 38 percent rating the current situation as negative to very negative.

Dirk Briese, Managing Director of windresearch, attributes this to the tenders. “In other countries such auction systems have existed for some time. In addition, the lowest results to date were achieved in Germany. And in the shortest time,” Briese explains.

The operators Orsted, EnBW, Vattenfall and also the Spanish energy supplier Iberdrola won part of the projects with zero-cent bids in two tender rounds. They then want to market their electricity completely without EEG compensation at the price traded on the stock exchange. To date a novelty in the wind industry. According to Briese, this is a very rapid and radical change.

Nevertheless, the majority of people believe that they have grown at this turn of time. They are already expecting a more optimistic mood in the offshore sector this year. It is hoped that the situation could brighten further from 2020. Only half of twenty percent currently believe that the German market is in a negative starting position. The prospects for onshore wind energy are not quite as bright. Here, 19 percent do not believe in an improvement in two years either. However, more than forty percent even assess the situation as positive to very positive in two years’ time.

One reason for this optimism could be further cost reductions in the construction of wind turbines. There’s still potential down here. All those surveyed agree that the biggest leap in offshore wind energy is imminent. Almost seventy percent of those surveyed estimate the chances of saving even more at high to very high levels.

Siemens offshore CEO Andreas Nauen recently called in an interview with the Handelsblatt newspaper for politicians to improve the general conditions in order to prevent Germany from falling behind. “If Germany wants to stay at the top and not fall behind other countries, something has to change. We hope that the expansion corridor for offshore wind energy will widen considerably,” said Nauen. According to the government’s targets, this is 15,000 megawatts (MW) by 2030, Nauen says, which is too little.

The operators Orsted, EnBW, Vattenfall and also the Spanish energy supplier Iberdrola won part of the projects with zero-cent bids in two tender rounds. They then want to market their electricity completely without EEG compensation at the price traded on the stock exchange. To date a novelty in the wind industry. According to Briese, this is a very rapid and radical change.

In the results of the second tender round for onshore wind energy last week, the tendered volume was not reached for the first time. Of 670 MW, only 111 bids with a volume of 604 MW were received.

Companies see markets such as China, India or Taiwan as more promising. The respondents see the best opportunities for the onshore sector from 2020 onwards in Asia, while in the offshore sector they see better conditions for Europe.

In principle, however, growth is increasingly shifting from Europe to Asia and is becoming smaller. This also became clear at the Windforce trade fair in Bremerhaven. The assessment of the industry experts: New projects are being implemented in Asia, while the German market is sluggish.

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