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German Wind Industry Says Too Early to Panic on Subsidy Cuts

A German agreement to cut support for wind energy isn’t a reason for the industry to panic as the extent of the changes is undecided, a lobby group said.

“There is no reason to cheer nor to panic,” Wolfram Axthelm, a spokesman for the BWE lobby, said today by phone.

Wind-power shares slumped today, with Nordex SE (NDX1) falling by as much as 25 percent in Frankfurt, the most in more than eight years, and Vestas Wind Systems A/S (VWS) down by as much as 6 percent in Copenhagen trade. German Chancellor Angela Merkel’s Christian Democratic bloc and the Social Democrats, or SPD, agreed to curb aid for new onshore projects to cut the cost of the country’s unprecedented switch from nuclear energy to renewables.

They also agreed on the weekend to cut a goal for sea-based wind farms to 6.5 gigawatts by 2020 and 15 gigawatts by 2030, from 10 gigawatts and 25 gigawatts, respectively. Merkel today resumes talks with the SPD to form a coalition by year-end.

Negotiators are seen backing a goal of raising green power to 40 percent of the nation’s total by 2020, from a target now of at least 35 percent, SPD lawmaker Heiko Maas said by phone.

Germany plans to reduce the cost of renewable power after deciding to close down its nuclear plants by 2022. German consumers and companies finance clean-energy subsidies by paying a surcharge on their power bills. The levy will jump 18 percent on Jan. 1 and has surged more than fivefold since 2009.

Central Project

Changes in the subsidy law, or EEG, “will be the central project of the grand Merkel coalition,” Environment Minister Peter Altmaier said Nov. 9 in Berlin after a deal was reached. Policy will be “more predictable and lastingly affordable.”

While new offshore wind targets don’t come as a surprise, 8.5 gigawatts would be possible by 2020, said Andreas Wagner of the Stiftung Offshore-Windenergie, a wind industry lobby.

“We need to know quickly how the new EEG will look in detail because offshore wind investors are currently holding back investments until there’s clarity,” Wagner said by phone.

Wind units above 5 megawatts will need to sell power to the market as quickly as possible, as will all clean-energy plants by 2018 apart from the smallest solar units, Altmaier said.

Onshore and offshore wind support will be reduced depending on the level of new installations, similar to current solar subsidies, Maas said. There’s “no final agreement yet” on the exact level of subsidy cuts for onshore and offshore, he said.

The parties, which also agreed to slow biomass expansion and temporarily ban hydraulic fracturing for natural gas, won’t make retroactive cuts to aid, the SPD’s Hannelore Kraft told reporters on Nov. 9. They will seek to draft new EEG legislation by Easter to bring it into law by Jan. 1, 2015, Maas said.

The BDI industry lobby representing about 100,000 companies says energy costs threaten jobs and investment.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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