Crisis industry draws hope: "Wind power will come back with power"

Germany wants to get away from Russian gas as quickly as possible and is also relying on the massive expansion of renewable energies.

Crisis industry draws hope: "Wind power will come back with power"

Germany wants to get away from Russian gas as quickly as possible and is also relying on the massive expansion of renewable energies. At the same time, the wind power industry is deep in crisis. The federal government now wants to correct earlier decisions.

The Russian attack on Ukraine roused Germany from its fossil slumber in the most rude manner possible. In view of the gas dilemma, the federal government is pushing ahead with the expansion of renewable energies with the new Easter package. Suddenly wind power is very popular again. The decision by the local wind turbine manufacturer Nordex to close the Rostock rotor blade production site on June 30 does not fit in at all. The Green politician Johann-Georg Jaeger verbalized the paradox on the day of the closure, which should also concern the around 600 ex-employees: "We are closing this plant, although we know that in one or two years we will need every rotor blade - and The ones from India and Germany."

The fact that Nordex will in future produce rotor blades on the Indian subcontinent instead of on the Baltic Sea is primarily based on business logic. Nordex was forced to optimize the "global production and procurement processes" in order to "produce profitably and ensure competitiveness", Nordex boss José Luis Blanco justified this "painful" step. Translated, this means: Production in Germany is simply too expensive.

In fact, there is no gold rush mood among German and European manufacturers. Whether the Hamburg group Nordex, Siemens Gamesa, or the Danish market leader Vestas: they are all in the red. Nordex had a net loss of 230 million euros last year. Companies are suffering from the massive increase in raw material prices and in particular from the tough price war. "The plant closure in Rostock is the grinding mark of the massive slump in the industry," explains Wolfram Axthelm in an interview with Between 2018 and 2020, 40,000 jobs were lost in Germany, says the managing director of the German Wind Energy Association.

The Federal Government’s Renewable Energy Sources Act of 2017 was disastrous from the point of view of German producers. The previously stipulated remuneration was replaced by a tendering process, which pushed the industry into competition. As a result, yields fell. In addition, the government capped the tender volume to an increase of only 2800 megawatts per year, explains Axthelm. "You suddenly had a halving of the market."

The expansion of wind power in Germany has stagnated to this day. Also because the bureaucratic mills grind slowly: It takes an average of six years for a plant to be approved. The towering wheels also spoil the landscape in the eyes of many citizens, making them politically unattractive. In Bavaria, the federal state with the strictest distance regulations to residential buildings, not a single new wind turbine was built in the first quarter of this year. The pioneer Schleswig-Holstein had 25 wind turbines on land in the same period. Companies are increasingly receiving their orders from up-and-coming countries such as Brazil and China. So it pays to produce locally.

The federal government is aware of the problem. Economics Minister Robert Habeck wants two percent of Germany's land area to be reserved for wind power. The corresponding "wind on land" law from the Easter package states that the aim is to "drastically accelerate the expansion of renewable energies and remove all hurdles and obstacles to accelerated expansion". The federal states are obliged to implement the area specifications.

Within 13 years, Germany is to obtain most of its electricity from renewable sources. The demand for wind turbines is likely to increase enormously. She is still limited. In the first half of 2022, only 235 new plants were built, according to figures available to the "Handelsblatt". With 281 wind turbines, the permits are 15 percent below the previous year's figure.

Such a meager order situation will not get the manufacturers out of the crisis. Habeck himself is said to have tried to save the Rostock location in talks with Nordex. Without success. Is wind power threatened with the same fate as the solar industry once faced? While German manufacturers were still booming in the early 2000s, the market collapsed from 2011 onwards. Here, too, the reason for this was a lack of state remuneration. Chinese companies came knocking and, thanks to comfortable subsidies, were able to offer their photovoltaic systems at low cost. This resulted in a mass bankruptcy for German industry and tensions in trade relations with China. Experts consider the energy transition to be dead without the help of the People's Republic. But: For some time now, the industry has been feeling an upswing again.

Axthelm is certain that wind power will also be on the up again in the future. "We are already experiencing that new hires are being made across the value chain and staff are being sought everywhere." After years of uncertainty, the Easter package has given the industry new security, for example by significantly increasing the tender volume to 10,000 megawatts from 2024. "We see the clearly defined political will to push ahead with the rapid expansion of renewable energies".

Federal Chancellor Olaf Scholz also does not believe that wind turbine manufacturers will be hit by a wave of bankruptcies. "We are the country that has very successful companies that have very good technological skills in solar energy, but also in wind energy," he said on ARD. The aim is that the companies continue to produce in Germany. Manufacturers will benefit from the massive investments in renewable energies, Scholz promises.

According to Axthelm, Germany as a location offers a number of advantages. "The experiences of the corona pandemic have shown that you cannot always rely on supply chains." The industrial conditions are also good. "Wind energy is deeply anchored in German mechanical engineering and plant technology. We can fall back on solid production sites here," says the industry representative.

For the crisis-ridden plant manufacturer Nordex, the second quarter was already a small ray of hope. Significantly more orders were received than in the same period of the previous year. Incoming orders amounted to around 1836 megawatts, after 1534 megawatts in the comparable quarter. Nordex announced on Sunday that it would raise EUR 212 million from its shareholders with a capital increase. The fresh funds are "protection against short-term, industry-specific risks" and would improve the market position, Nordex said. The company hopes to benefit from the expected wind power boom.

According to Axthelm, it is now in the hands of the federal states to implement the political framework, i.e. to provide space and boost approval processes. Because a production high can only result from real orders. However, with sufficient pressure from industry and small and medium-sized enterprises, progress will be made, says the expert. "The federal government was just able to pull the lever again. Now there is great optimism that the German wind power industry will come back with power."