WindEurope 2017: German manufacturers prepare for tough three years

Continuing our coverage of WindEurope 2017, A Word About Wind considers the impact of political uncertainty on German wind.

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Richard Heap
November 28, 2017
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This content is from our archive. Some formatting or links may be broken.
WindEurope 2017: German manufacturers prepare for tough three years

German turbine makers face three tough years as the competitive tenders launched in onshore wind this year continue to bite, a leading figure in German wind has said.

WindEurope-logo-sm

Hans-Dieter Kettwig, managing director of Enercon, told the opening session of the WindEurope annual conference in Amsterdam today that the German government’s target of an average of 2.8GW installations a year until 2020 had raised uncertainty among manufacturers like Enercon. The average for the last three years is 4GW.

Kettwig highlighted some of the problems with the rules of this year’s auction. First, they gave priority to community groups by allowing them to bid for support without having all of the permits in place. Other developers had to bring permitted projects.

And second, community-led groups have around four-and-a-half years to complete their schemes, around two more than other developers. Kettwig said this results in a system where manufacturers like Enercon are unsure which projects will actually get to the construction stage, and when. This affects manufacturers’ production plans.

These rules also helped community-led groups to dominate the auctions this year. For example, community-led groups were responsible for projects that represented 99% of the winning capacity in the latest 1GW tender last week. As a result, Kettwig argued that manufacturers in Germany would “lose 2,500MW in terms of installations in the next two to three years”. We are already seeing companies such as Enercon, Nordex and Senvion restructuring their operations in response to this slowdown.

Kettwig explained that the average of 4GW in recent years meant that manufacturers could spend more on hiring new staff and training them up. This is now in jeopardy.

But he also brought a potential solution. Kettwig argued that Germany could afford to increase its target of 2.8GW new onshore wind installations on average in the years to 2020, and 2.9GW annually in the decade to 2030, because wind has got cheaper and now competes with coal and nuclear. This means the country can aim for more wind because it will not drive up costs: “They can increase the numbers,” he said.

The problem with that is political. Chancellor Angela Merkel is struggling to form a government and has been in coalition negotiations since September. It now looks likely that the country will be without a government until at least early 2018.

But, when there is, Kettwig said the government should do more to re-balance the auctions system. Political leaders in Germany are already taking steps to make the system fairer – by removing the favourable conditions for community-led groups – and Kettwig said it is right that they should compete on equal terms with others.

“I think the system was good in their mind, but we see now that it was not the right way,” he said. The problem is that the future of this system is now intertwined with Merkel’s negotiations. Manufacturers want certainty, but only once there is clarity over the government can there also be clarity over future energy policy.

Without that, an uncertain system looks set to only get tougher.

German turbine makers face three tough years as the competitive tenders launched in onshore wind this year continue to bite, a leading figure in German wind has said.

WindEurope-logo-sm

Hans-Dieter Kettwig, managing director of Enercon, told the opening session of the WindEurope annual conference in Amsterdam today that the German government’s target of an average of 2.8GW installations a year until 2020 had raised uncertainty among manufacturers like Enercon. The average for the last three years is 4GW.

Kettwig highlighted some of the problems with the rules of this year’s auction. First, they gave priority to community groups by allowing them to bid for support without having all of the permits in place. Other developers had to bring permitted projects.

And second, community-led groups have around four-and-a-half years to complete their schemes, around two more than other developers. Kettwig said this results in a system where manufacturers like Enercon are unsure which projects will actually get to the construction stage, and when. This affects manufacturers’ production plans.

These rules also helped community-led groups to dominate the auctions this year. For example, community-led groups were responsible for projects that represented 99% of the winning capacity in the latest 1GW tender last week. As a result, Kettwig argued that manufacturers in Germany would “lose 2,500MW in terms of installations in the next two to three years”. We are already seeing companies such as Enercon, Nordex and Senvion restructuring their operations in response to this slowdown.

Kettwig explained that the average of 4GW in recent years meant that manufacturers could spend more on hiring new staff and training them up. This is now in jeopardy.

But he also brought a potential solution. Kettwig argued that Germany could afford to increase its target of 2.8GW new onshore wind installations on average in the years to 2020, and 2.9GW annually in the decade to 2030, because wind has got cheaper and now competes with coal and nuclear. This means the country can aim for more wind because it will not drive up costs: “They can increase the numbers,” he said.

The problem with that is political. Chancellor Angela Merkel is struggling to form a government and has been in coalition negotiations since September. It now looks likely that the country will be without a government until at least early 2018.

But, when there is, Kettwig said the government should do more to re-balance the auctions system. Political leaders in Germany are already taking steps to make the system fairer – by removing the favourable conditions for community-led groups – and Kettwig said it is right that they should compete on equal terms with others.

“I think the system was good in their mind, but we see now that it was not the right way,” he said. The problem is that the future of this system is now intertwined with Merkel’s negotiations. Manufacturers want certainty, but only once there is clarity over the government can there also be clarity over future energy policy.

Without that, an uncertain system looks set to only get tougher.

German turbine makers face three tough years as the competitive tenders launched in onshore wind this year continue to bite, a leading figure in German wind has said.

WindEurope-logo-sm

Hans-Dieter Kettwig, managing director of Enercon, told the opening session of the WindEurope annual conference in Amsterdam today that the German government’s target of an average of 2.8GW installations a year until 2020 had raised uncertainty among manufacturers like Enercon. The average for the last three years is 4GW.

Kettwig highlighted some of the problems with the rules of this year’s auction. First, they gave priority to community groups by allowing them to bid for support without having all of the permits in place. Other developers had to bring permitted projects.

And second, community-led groups have around four-and-a-half years to complete their schemes, around two more than other developers. Kettwig said this results in a system where manufacturers like Enercon are unsure which projects will actually get to the construction stage, and when. This affects manufacturers’ production plans.

These rules also helped community-led groups to dominate the auctions this year. For example, community-led groups were responsible for projects that represented 99% of the winning capacity in the latest 1GW tender last week. As a result, Kettwig argued that manufacturers in Germany would “lose 2,500MW in terms of installations in the next two to three years”. We are already seeing companies such as Enercon, Nordex and Senvion restructuring their operations in response to this slowdown.

Kettwig explained that the average of 4GW in recent years meant that manufacturers could spend more on hiring new staff and training them up. This is now in jeopardy.

But he also brought a potential solution. Kettwig argued that Germany could afford to increase its target of 2.8GW new onshore wind installations on average in the years to 2020, and 2.9GW annually in the decade to 2030, because wind has got cheaper and now competes with coal and nuclear. This means the country can aim for more wind because it will not drive up costs: “They can increase the numbers,” he said.

The problem with that is political. Chancellor Angela Merkel is struggling to form a government and has been in coalition negotiations since September. It now looks likely that the country will be without a government until at least early 2018.

But, when there is, Kettwig said the government should do more to re-balance the auctions system. Political leaders in Germany are already taking steps to make the system fairer – by removing the favourable conditions for community-led groups – and Kettwig said it is right that they should compete on equal terms with others.

“I think the system was good in their mind, but we see now that it was not the right way,” he said. The problem is that the future of this system is now intertwined with Merkel’s negotiations. Manufacturers want certainty, but only once there is clarity over the government can there also be clarity over future energy policy.

Without that, an uncertain system looks set to only get tougher.

German turbine makers face three tough years as the competitive tenders launched in onshore wind this year continue to bite, a leading figure in German wind has said.

WindEurope-logo-sm

Hans-Dieter Kettwig, managing director of Enercon, told the opening session of the WindEurope annual conference in Amsterdam today that the German government’s target of an average of 2.8GW installations a year until 2020 had raised uncertainty among manufacturers like Enercon. The average for the last three years is 4GW.

Kettwig highlighted some of the problems with the rules of this year’s auction. First, they gave priority to community groups by allowing them to bid for support without having all of the permits in place. Other developers had to bring permitted projects.

And second, community-led groups have around four-and-a-half years to complete their schemes, around two more than other developers. Kettwig said this results in a system where manufacturers like Enercon are unsure which projects will actually get to the construction stage, and when. This affects manufacturers’ production plans.

These rules also helped community-led groups to dominate the auctions this year. For example, community-led groups were responsible for projects that represented 99% of the winning capacity in the latest 1GW tender last week. As a result, Kettwig argued that manufacturers in Germany would “lose 2,500MW in terms of installations in the next two to three years”. We are already seeing companies such as Enercon, Nordex and Senvion restructuring their operations in response to this slowdown.

Kettwig explained that the average of 4GW in recent years meant that manufacturers could spend more on hiring new staff and training them up. This is now in jeopardy.

But he also brought a potential solution. Kettwig argued that Germany could afford to increase its target of 2.8GW new onshore wind installations on average in the years to 2020, and 2.9GW annually in the decade to 2030, because wind has got cheaper and now competes with coal and nuclear. This means the country can aim for more wind because it will not drive up costs: “They can increase the numbers,” he said.

The problem with that is political. Chancellor Angela Merkel is struggling to form a government and has been in coalition negotiations since September. It now looks likely that the country will be without a government until at least early 2018.

But, when there is, Kettwig said the government should do more to re-balance the auctions system. Political leaders in Germany are already taking steps to make the system fairer – by removing the favourable conditions for community-led groups – and Kettwig said it is right that they should compete on equal terms with others.

“I think the system was good in their mind, but we see now that it was not the right way,” he said. The problem is that the future of this system is now intertwined with Merkel’s negotiations. Manufacturers want certainty, but only once there is clarity over the government can there also be clarity over future energy policy.

Without that, an uncertain system looks set to only get tougher.

German turbine makers face three tough years as the competitive tenders launched in onshore wind this year continue to bite, a leading figure in German wind has said.

WindEurope-logo-sm

Hans-Dieter Kettwig, managing director of Enercon, told the opening session of the WindEurope annual conference in Amsterdam today that the German government’s target of an average of 2.8GW installations a year until 2020 had raised uncertainty among manufacturers like Enercon. The average for the last three years is 4GW.

Kettwig highlighted some of the problems with the rules of this year’s auction. First, they gave priority to community groups by allowing them to bid for support without having all of the permits in place. Other developers had to bring permitted projects.

And second, community-led groups have around four-and-a-half years to complete their schemes, around two more than other developers. Kettwig said this results in a system where manufacturers like Enercon are unsure which projects will actually get to the construction stage, and when. This affects manufacturers’ production plans.

These rules also helped community-led groups to dominate the auctions this year. For example, community-led groups were responsible for projects that represented 99% of the winning capacity in the latest 1GW tender last week. As a result, Kettwig argued that manufacturers in Germany would “lose 2,500MW in terms of installations in the next two to three years”. We are already seeing companies such as Enercon, Nordex and Senvion restructuring their operations in response to this slowdown.

Kettwig explained that the average of 4GW in recent years meant that manufacturers could spend more on hiring new staff and training them up. This is now in jeopardy.

But he also brought a potential solution. Kettwig argued that Germany could afford to increase its target of 2.8GW new onshore wind installations on average in the years to 2020, and 2.9GW annually in the decade to 2030, because wind has got cheaper and now competes with coal and nuclear. This means the country can aim for more wind because it will not drive up costs: “They can increase the numbers,” he said.

The problem with that is political. Chancellor Angela Merkel is struggling to form a government and has been in coalition negotiations since September. It now looks likely that the country will be without a government until at least early 2018.

But, when there is, Kettwig said the government should do more to re-balance the auctions system. Political leaders in Germany are already taking steps to make the system fairer – by removing the favourable conditions for community-led groups – and Kettwig said it is right that they should compete on equal terms with others.

“I think the system was good in their mind, but we see now that it was not the right way,” he said. The problem is that the future of this system is now intertwined with Merkel’s negotiations. Manufacturers want certainty, but only once there is clarity over the government can there also be clarity over future energy policy.

Without that, an uncertain system looks set to only get tougher.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.