The World's #1 Renewable Energy Network for News, Information, and Companies.

Nordex Sees Wind Installs Climbing in Germany Even as State Aid Is Cut

Nordex Sees Wind Installs Climbing in Germany Even as State Aid Is Cut

Nordex SE, the best performer among Germany’s biggest stocks in 2013, expects its wind-turbine installations in the country to gain as much as 30 percent this year as developers rush to beat a reduction in state subsidies.

Nordex, which almost tripled German installations in 2013, is benefiting from an increase in orders by customers seeking to lock in aid levels before the cuts take hold, Chief Executive Officer Juergen Zeschky said in a Jan. 31 interview at the company’s headquarters in Hamburg. The shares rose.

Germany, which added a record 2,998 megawatts of onshore turbines last year, plans to reduce aid by as much as 20 percent in 2015 from 2013. While the first cuts could take effect this year, onshore developers may be able to claim the current amount if they secure a construction permit by Aug. 1, instead of Jan. 22, after state premiers negotiated a delay, Zeschky said.

“Some clients in Germany are bringing forward orders as government plans to cut aid for renewables have caused uncertainty among investors about the profitability of wind farms in the future,” Zeschky said.

Nordex’s Rostock plant is ramping up production of nacelles, which house the generator, gearbox and drivetrain, from about 550 units a year and could double output if demand increased further, Zeschky said.

Nordex expects installations in Germany to climb 20 percent to 30 percent from last year’s 251 megawatts, he said.

That compares with estimates by Germany’s BWE wind lobby for installations in 2014 to remain stable at about 3 gigawatts or drop to 2.5 gigawatts.

Asian Peers

Nordex is among European wind-turbine makers including Siemens AG and Vestas Wind Systems A/S trying to increase sales and lower production costs after companies cut prices to compete with their Asian peers as governments trim subsidies.

While a “moderate” reduction for locations with strong winds is understandable, “it would be unfortunate if the German government, after all the progress that has been made and the targets it has set, were to choke this development,” he said.

Modern turbines such as the company’s N117 model will still be viable in weak wind locations in southern Germany if aid cuts are “modest,” the CEO said.

Nordex, the best performer on the HDAX Index of 110 largest stocks last year, rose 1.4 percent to 9.636 euros as of 3:08 p.m. in Frankfurt. The HDAX declined 0.4 percent.

Capital Increase

“While some Nordex clients may bring forward orders as they fear the planned aid cuts and it may have a positive impact in the short term, there are still concerns in the market about what might happen thereafter,” said Sebastian Growe, an analyst at Commerzbank AG with a hold rating on the shares.

The sale of 7.35 million new shares, equivalent to 10 percent of Nordex’s stock, on Nov. 27 to more than 40 investors from 10 countries has helped talks with banks to refinance debt, Zeschky said.

“The capital increase in November was maybe the most important element for us to ensure financing until 2016-2017,” Zeschky said. Nordex is in the “final phase” of the discussions with its creditors and expects an agreement “soon,” the CEO said.

Bond Sale

Vestas, the biggest wind-turbine maker, late yesterday said it was seeking to raise capital after a two-year turnaround program dragged the company out of debt and resulted in its first quarterly profit since mid-2011.

Nordex also collected 150 million euros from investors in a bond sale in 2011. The bonds have a coupon rate of 6.38 percent and mature in April 2016. “We have a clear solution on how we pay back our bond, so banks now offer us loans under more favorable conditions,” Zeschky said.

The company is “very confident” it can achieve its targets of a 5-percent earnings before interest and tax margin, 1.5 billion euros ($2 billion) in sales and a 15 percent reduction in production costs over 2012 levels in 2015, Zeschky said. Sale prices will probably decline 2 percent to 4 percent a year, he said.

Nordex plans to increase sales in France, Scandinavia, the U.K. as well as smaller markets such as Thailand and the Philippines this year, he said.

The company, which is scheduled to report 2013 figures on March 24, in November raised its order intake forecast to as much as 1.4 billion euros, from as much as 1.3 billion euros previously. While the company will pay a dividend once its “free cash flow is large enough,” there’s none planned for 2014 or 2015, Zeschky said.

Nordex services about 3,200 windmills for clients. It seeks to increase the number of such contracts about 15 percent in 2014, matching growth of recent years, he said.

Zeschky said while wind-company executives regularly talk to each other about possible combinations and partnership, the industry may consolidate through cooperation agreements rather than “big mergers or takeovers.”

Copyright 2014 Bloomberg

Lead image: Wind turbine via Shutterstock

RELATED ARTICLES

Stock graph

Green Bonds Sprout as Wall Street Embraces Renewable Energy Debt

Cordell Eddings, Bloomberg Bonds backing clean energy and other sustainable initiatives are booming. Investors are snapping up green bonds at the fastest pace on record, as big banks like Morgan Stanley and Bank of America Corp. pile in with new iss...

The Big Question: What Is the Most Frustrating Part about Working in Renewable Energy?

Renewable Energy World Editors

Every industry has its challenges and misunderstandings. Sometimes the obstacles we face in simply trying to do our jobs can be very frustrating.

Wind turbines sunset

UK Plan to Cut Wind Subsidies Irrational, Scotland Minister Says

Alex Morales, Bloomberg

Plans by U.K. Prime Minister David Cameron’s government to end subsidies for onshore wind power make no sense, Scottish Energy Minister Fergus Ewing said.

Norway and Sweden flags

Nordic Renewables Boom Set to Exceed Wind Energy Target

Jesper Starn, Bloomberg

Sweden and Norway will probably exceed a joint target for renewable energy production by the end of the decade, industry consultant Nena AS said.

CURRENT MAGAZINE ISSUE

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

FEATURED PARTNERS



EVENTS

Doing Business in Brazil – in partnership with GWEC, the Global Win...

Brazil is one of the most promising markets for wind energy.  Ranke...

Mastering RETScreen® 4 for Clean Energy Project Analysis

Hands-on modeling class using RETScreen 4. Michael Ross designed this co...

RECAM WEEK

RECAM WEEK will bring together the incredibly successful SPG Central Am...

COMPANY BLOGS

Meteorological Technology International Magazine - SENSORS AND SENS...

Over the past 10 years, these sensing technologies have spread tre...

SunEdison Expands Residential Market Offerings with New PPA, Sales ...

SunEdison has largely focussed on the commercial and utility-scale solar...

Are You Ready for a Natural Disaster?

Guest post by Jenna Clarke  Living in the Shenandoah Valley of Virg...

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS