The German Perspective, Part 2: A Resilient Renewable Energy Leader

When Hermann Albers inherited his father’s 80 hectare farm in northern Germany in 1981, he soon realized that it would be necessary to supplement his income. At that time, many family farmers around the country were leaving for urban areas in search of higher paying jobs. But Albers was determined to stay. Finally, in the early 90’s with the introduction of the first feed-in tariff (FIT), he found his answer: Wind power.

In 1993, Albers finished installing 11 turbines, each 400-kW, on his plot of land. The project cost €8 million — a hefty price tag for a farmer. But the decision was the right one, he says. Today the project is comprised of three 5-MW turbines that produce 60 million kilowatt-hours each year, providing him with a sizable revenue stream that has allowed him to expand the original farming operations he inherited.

“I took the chance. I was young and stupid to do this,” Albers says with a chuckle. “Now it doesn’t seem so stupid.”

Since his initial investment, Albers has established a fruitful career in the field of wind power. He is currently the President of the German Wind Energy Association (BWE) and has participated in the development of four other projects over the last decade, including a planned 240-MW community-owned offshore wind park, which he hopes will be completed within three years.

It seems there are quite a lot of “stupid” people like Albers around Germany. Since the country’s FIT was revised in 2000, hundreds of thousands of citizens have pooled their money and invested in wind farms, making Germany a world leader in wind. Interest from both individual citizens and corporate developers has resulted in approximately 23,300 MW of installed capacity and 40 terawatt-hours of wind-generated electricity each year. That makes up about seven percent of Germany’s electricity demand.

“When I first started out, we had no idea how wind would function in the whole,” says Albers. “The utilities said ‘there will be no change.’ But we did it. And now we are producing seven percent of consumption and are working toward getting 25 percent by the year 2020.”

Reaching that goal will mean doubling current onshore capacity to 45,000 MW and adding around 10,000 MW of offshore capacity. Although there is limited space for land-based wind farms, says Albers, much of the new capacity will come as old, smaller turbines are replaced with new, higher capacity turbines through the “repowering” process.

As the world’s leading wind market, Germany is in a good position to reach these targets. However, the market is much more mature than most others, which means that wind projects are being installed at a slower pace. New capacity additions have slipped or flat lined in recent years, and the momentum of the industry has switched to countries like the U.S. and China.

Financing issues associated with the credit crisis have also reduced expectations for the German market in 2009. Earlier predictions were for 1,600 – 1,900 MW of installed capacity this year. That number could be as low as 1,000 MW when the year comes to a close. Industry professionals were hoping that an increase in the tariff price for wind of more than €0.01 would get the market moving faster, but it appears that the financial crisis could dampen some of those hopes in the short-term.

“For a variety of reasons, the German market is not growing as quickly as it once was,” says Peter Wasmuth, Chief Financial Officer of REPower Systems, a turbine manufacturer based in the country. “But that means other market opportunities are opening up and REPower and other companies are expanding their presence in those countries.”

German turbine manufacturers like REPower represent almost 40 percent of the global market. So even though Germany may not lead in yearly installations, the country’s technical know-how ensures that it will continue to be a major player on the world-wide renewables scene.

In the town of Husum, about 10 kilometers down the road from Albers’ wind farm, sits one of REPower’s facilities for assembling nacelles and hubs. The components that move through this facility will be fitted to around 400 of the company’s 2-MW turbines each year and shipped off to customers all over the world.

Although the global wind market may dip as much as 30 percent in 2009, there are no signs of a slowdown at the Husum production facility. Orders for turbines are often made two years in advance, meaning that there will still be strong demand for these components. If enough projects are delayed though, that will eventually impact the stream of orders here and at other facilities.

Standing in the middle of a long warehouse filled with wind components in various stages of production, RE Power’s Wasmuth surveys a group of workers testing the yaw breaks for a nacelle. A slowdown is inevitable, he says. But the company will still grow in 2009 and beyond, making these jobs some of the most secure of any industry.

“We are adjusting our projections as we look at the problems some of our customers may have,” he says. “But we are still going to grow by 30 to 40 percent as we export these turbines to a variety of promising markets. That says a lot about how strong the wind industry is.”

Katrin Evers, Manager of Public Relations for the Berlin-based Photovoltaic module manufacturer Solon SE, says she sees the same thing happening in the global solar industry. Standing on a catwalk above the floor of Solon’s 50-MW capacity manufacturing plant, she describes the company’s positive-yet-cautious outlook for 2009.

“The books are full…but it would be naive to think of course that we won’t feel it next year…we will see an impact due to problems in the financial markets. That is why we’ve adjusted our figures accordingly,” says Evers.

She says that Solon may grow around 60 percent in 2009 — less than the 90 percent growth the company has seen over the last couple of years — but still impressive.

Other manufacturing companies in the solar industry are reporting similar growth adjustments due to financing issues between banks and project developers. Q-Cells, the world’s largest manufacturer of photovoltaic (PV) cells, says that sales dipped around 10 percent in 2008. The company also lowered its 2009 growth projections to 40 percent, down from 50 to 60 percent growth rates in recent years.

“We can’t be sure anymore whether our customers will be able to get the financing for the large projects,” says Solon’s Evers. “These are problems that all companies are seeing in Germany and throughout the world.”

Germany may be better equipped to bounce back from the current slowdown than countries like the U.S., say some analysts. Small- to mid-sized rooftop installations make up more than 80 percent of Germany’s solar market. Those projects are generally easier for banks to finance because of the country’s 20-year guaranteed payments for solar electricity.

These tariffs have made Germany one of the most attractive places for companies to invest, according to a new report from Ernst and Young. The analysis firm looked at the attractiveness of various renewable energy markets around the world and rated Germany the top country, along with the U.S. Although both countries are considered the best for investors, Ernst and Young says that Germany is in a much better position because of its incentive structure.

In the U.S., because incentives for solar and wind are based on tax obligations, the economic downturn has reduced the number of individuals and corporate entities eligible for the credits. Related problems in the tax equity financing market will make it more difficult for the American market to get moving in 2009. The German market will be more resilient in the short-term, says Christian Junior, Senior Vice President of Commerzbank AG, a financier in the renewable energy industries.

“Larger projects are still extremely hard in Germany, but the smaller projects are much less difficult right now,” says Junior. “There are many reasons for this, but the feed-in tariff plays an important role. We do expect there will be a significant turn-around after winter and for the German market to be resilient.”

This resiliency is a defining characteristic of the German renewable energy market.

Germany is one of the cloudiest in the world, yet it continues to be a leader in solar; the country has very poor geothermal resources, yet developers are digging kilometers beneath the earth to generate electricity and heat; and wind resources throughout most of the country are mediocre, yet citizens like BWE’s Hermann Albers are becoming entrepreneurs and finding new ways to create wealth.

Albers stands proudly in his pressed black suit, looking more like a polished businessman than a pig farmer. He thinks about his experience as a wind entrepreneur and what it says about Germany in general.

“I made a difficult decision, investing in my wind farm. But I see that it was right. Over time, we had many other people make the decision because they knew it was right,” he says. “This kind of push is what we need to help get us through this rough [financial] period. This kind of push from the ground up that we see in Germany is necessary for all countries.”

In December 2008, as part of a trip organized by Inwent, Podcast Editor and Staff Writer Stephen Lacey, traveled through Germany and met with the country’s political leaders and renewable energy industry executives. This is the second installment of his three-part series on renewable energy and climate change from the German perspective. 

For an audio program exploring the German perspective on the industry, listen to the December 21st edition of the Inside Renewable Energy podcast. This podcast is a great opportunity to hear from the experts in a fun and engaging way!

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I am a reporter with, a blog published by the Center for American Progress. I am former editor and producer for, where I contributed stories and hosted the Inside Renewable Energy Podcast. Keep in touch through twitter! My profile name is: Stphn_Lacey

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