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Quo vadis, Germany?

Renewable energies would need some strong support from the German government. Instead signals look fatal especially regarding the reform of its Erneuerbare Energien Gesetz (EEG). Germany is about to do away with the 'Energiewende'.

The expert commission comes to the conclusion that the EEG is neither a cost-efficient instrument for climate protection, nor is there any measurable innovation effect happening. For these two reasons there is no need to continue the EEG.”

German officials sounded dry while the Expert Commission for Research and Innovation of the Bundestag (EFI) blew this bomb to the public. This 'expertise' could bring on the end of the German 'Energiewende'. The paper has been released at a time when critics and supporters of the reformation of the EEG are taking the battle to the media.

Is there any truth in this 'expertise'?

At the moment Germany is still one of the pioneers of the Energiewende. The EEG has been copied by more than 50 nations worldwide.

There is no doubt though about the 15-year-old German EEG needing reformation.

But to state that there have been no innovations coming from the German renewable energies sector is just untenable. Right after installing the EEG Germany became world market leader in photovoltaics. Although growth was too fast and the market collapsed Germany gave the essential impulse for research.

Taking a closer look to wind energy, Germany has been one of the world's leaders in the construction and installation of turbines since the beginning of the 1990s.

Make Consulting has released the Top Ten turbine makers just last week and there are still three German names to be found: Enercon, Siemens and Nordex.

The young branch of offshore wind industry is also dominated by German research and innovation. Siemens by far holds the world market leader position in installation of offshore turbines.

An analysis of patent applications through germanwind, a subsidiary of the Windenergie-Agentur Bremerhaven (wab), underlined this fact: The company examined 3000 patents submitted by the three leading countries in wind energy through the years of 1992 to 2013 – Germany, England and Denmark – and concluded that Germany headed categories like 'Blades and Rotors' or 'Offshore Towers'. More than 65% of the patents are of German origin.

“That is a very good result and it shows an innovative, highly developed branch”, commented Ronny Meyer, CEO of the Windenergie-Agentur Bremerhaven.

But this picture is at risk to change. A closer look to statistics shows some disillusion. Germany only holds place 12 in Europe when it comes to the percentage of renewable energies used (12,4%). Leader is Sweden with an impressive 51%, followed by Latvia (35,8%) and Finland (34,3%).

And signs hint at Germany even missing her climate goals. Rumors speak of installation caps. Even extending the running time of nuclear power plants over the year 2022 is in talks by some conservative politicians of the German-Bavarian 'CSU' (Christlich-Soziale Union) party.

Germany's leading position in research is at stake, too. The germanwind analysis states patent applications in the German offshore branch have been declining since 2012.

Development periods are long in offshore wind – the process of getting the first permit up to a running, grid-connected turbine can easily last up to 10 years. Most important are secure, stable politics. Since the 'Große Koalition' has been elected last autumn there is no sign of stability though.

The heated debate about a reformation or even end of the EEG leads to stagnation of trade. There are jobs at stake – or have been lost. Today there are more than 18,000 employees in German offshore wind industry, but last year alone 2000 were abolished. In January turbine manufacturer Areva had to announce short time. They are still producing turbines at the moment, but there are no follow-up orders.

Negative example: USA

Missing political support has fatal consequences as the US show. Because of Congresses' decision not to extend the PTC in time not one single turbine was installed in the first quarter of 2013 on US soil. Nobody dared to invest into wind energy.

Due to much longer planning periods such gaps are far more fatal in offshore wind. If the market collapses there will be no chance for Germany to regain its leading position as all the neighboring countries would overtake.

Most important subject in the offshore wind discussion is high costs. But the potential for cost reduction is nowhere that great either. The technology has been well developed in the last years. Now research focuses on reducing the costs. Several studies show possible cost reductions of up to 40% in construction, installation and grid-connection until 2020 alone – this is 40% in just 6 years.

Now would be the right time to back up this industry in Germany. Most of the world leading research facilities are located here – where many turbines are constructed and installed. But this can change very fast. If political stability is missing the companies will move towards the places where it can be found. At the moment this would be the UK.

England is already world market leader in installing offshore turbines. The country used their knowledge from oil and gas production and adopted it to offshore wind energy. There are not as many turbines installed in the rest of the world as are in the UK alone.

Game-Changer for the UK

The industry in the UK does have a different problem though: All the turbines have to be imported and most suppliers come from abroad as well. Time of delivery is long and costs for transport are high.

But the situation was altered last week. RenewableUK talked about a “game-changer” when Siemens announced their construction of two offshore wind power factories in Hull. “This is a major coup for the British wind industry”, RenewableUK’s Chief Executive, Maria McCaffery, commented. “This is just the start – where Siemens are leading, a cascade of others will follow.”

Indeed, this could be the turning point for the British offshore wind energy market. There are 12.800 direct and indirect employees in the offshore industry at the UK today. Siemens will create at least 1000 new jobs in their new factories.

Another study by 'ORE Catapult' shows the potential strength of the British market: If it continues to grow steadily until 2020, it can reach an annual volume of £6.7 billion creating 34.000 direct and indirect jobs in the offshore industry.

And Germany does have equal potential.

Last week's development is a slap in the face for the German government. Siemens could have built these factories in Germany. “Our decision to construct a production facility for offshore wind turbines in England is part of our global strategy: we invest in markets with reliable conditions that can ensure that factories can work to capacity. The British energy policy creates a favourable framework for the expansion of offshore wind energy. In particular, it recognizes the potential of offshore wind energy within the overall portfolio of energy production”, said Michael Suess, member of the managing board of Siemens AG and CEO of the Energy Sector, in a press release.

To talk frankly: German policy is not supporting offshore wind energy anymore. If the government continues with its current course more companies will follow the lead of Siemens and wander off to other countries. If conditions aren't supportive in your home country you go to where you find support. That's called globalization.

Until now Germany has been one of the biggest beneficiaries of globalization like a recent Bertelsmann study states. This might be up for a change thanks to the 'GroKo'. The young offshore wind industry might be destroyed even before it reaches its full potential, because the government follows the leads of oil, nuclear and gas lobbyists.

With the current development continuing in Germany the quoted EFI study will indeed proof right.


Katrin Radtke

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