Merkel’s Offshore Wind-Power Dream for Germany Stalls
RWE AG (RWE) is delaying investments. SIAG Nordseewerke GmbH filed for insolvency. REpower Systems SE is cutting temporary staff. All show how German Chancellor Angela Merkel’s 550 billion-euro ($734 billion) plan to replace nuclear reactors with renewable sources is stalling.
About 700 workers demonstrated in Hanover last week calling for more support from Merkel to the offshore wind industry. Her 2011 plan to shutter atomic plants and add sea-based wind farms that could cover an area six times the size of New York City remains bogged down amid wrangling over financial risk-sharing and upgrading the transmission grid.
“It’s a chaotic standstill,” Claudia Kemfert, who heads the energy unit at the Berlin-based DIW economic institute and advises the government, said in an interview. “Actions have failed to live up to promises.”
Merkel wants to more than triple the share of renewables in Germany’s power mix by 2050 in the biggest energy overhaul in the country’s post-World War II history. The costs and scope of the project have moved energy to the center of the political agenda as the chancellor seeks re-election this year.
Merkel wants to add 25,000 megawatts of sea-based turbines by 2030, about the same capacity as 25 nuclear plants. About 200 megawatts are working now. Germany added 45 megawatts of offshore wind in the first half of 2012, less than expected, as the expansion is already delayed by more than a year, said Thorsten Falk, of the Foundation Offshore Wind Energy, a German industry group.
“I fear an existential crisis of the young offshore industry,” Stephan Weil, the Social Democrat trying to unseat Merkel ally David McAllister as premier of the state of Lower Saxony in a Jan. 20 vote, said in an interview in a Hanover coffee shop. “You can no more build a house without an architect and concrete than you can overhaul Germany’s energy foundation without a plan.”
Essen-based RWE, the country’s second-biggest utility that last year postponed a decision on building the Innogy Nordsee 1 project in the North Sea, said Jan. 10 the grid connection for the Nordsee Ost farm was delayed about two years to 2014.
Repower, a Hamburg-based wind-turbine maker owned by India’s Suzlon Energy Ltd. (SUEL), will this year cut most of the 400 temporary workers at its Bremerhaven-based PowerBlades GmbH unit because developers are delaying or canceling investments, Rebecca Lange, a company spokeswoman, said by phone Jan. 15.
J.J. Siestas, a shipyard founded in 1635 that is building vessels for the installation of turbines at sea, has until the end of next month to find a new order or ``it's going to be increasingly difficult'' to find an investor needed to ensure the company's survival, its insolvency administrator Berthold Brinkmann said in a phone interview yesterday.
While Hamburg-based J.J. Siestas, which employs about 400, had planned to build a ship to help install a wind farm in the North Sea, the order was canceled when developer EnBW Energie Baden-Wuerttemberg AG (EBK) postponed a decision to invest more than 1.5 billion euros, Brinkmann said.
Campaigning in Lower Saxony’s Wilhelmshaven port on Jan. 5, Merkel said she is in “weekly” contact with grid companies. Her government has drafted a law aimed at unlocking investments by reducing risks for developers and grid companies.
TenneT Holding BV, a Dutch grid company that operates power lines stretching from the North Sea to the Austrian border South of Munich, announced financing yesterday to connect turbines in the German North Sea to its power network and said the tide is turning.
Mitsubishi Corp. (8058) agreed to invest 576 million euros in TenneT’s offshore wind grid projects BorWin1, BorWin2, HelWin2 and DolWin2. The agreement shows “that the German legal and regulatory framework is attractive for institutional investors,” TenneT Chief Finance Officer Eelco de Boer said in a statement.
The company still hasn’t gotten “acceptable offers,” for its newer BorWin3, BorWin4 and DolWin3 projects as potential suppliers evaluate the new legislation, said Ukrike Hoerchens, a spokesman for the company’s German unit.
RWE said the law that took effect on Jan. 1 doesn’t go far enough. It “eases the pain but doesn’t heal it completely,” Hans Buenting, chief executive officer of the company’s Innogy renewable-energy unit, told reporters Jan. 10 in Essen.
“Offshore wind plays a special role in the future German energy mix, considering its large industrial supply chain involving turbines, power cables, vessels and ports,” said Sophia von Waldow, an analyst at Bloomberg New Energy Finance. “It’s about jobs and the development of an industry Germany has the potential to lead in.”
“We see further companies getting in trouble if the offshore wind delays aren’t properly dealt with,” Geiken said by phone. “The chancellor must make this her top priority.”
Weil’s SPD, if successful in national elections, wants to delay by three years a planned cut in subsidies for offshore wind plants and support struggling companies with money from state-owned bank KfW Group.
It also plans to set up a joint venture with investors that would build power lines to ship wind power as far as southern Germany. The government would own 51 percent of the new unit Netz AG in a step that would mark a partial re-nationalization of the national grid.
“If that’s what it takes to get things moving, so be it,” said Matthias Miersch, a federal SPD lawmaker whose constituency is in Hanover. “We can’t leave anything to chance anymore.”
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