New Energy Parks

Winds Pick Up in Offshore Sector

windpark paul langrock
And still more windpipes are on the way.
  • Why it matters

    Why it matters

    Germany’s offshore wind-energy sector offers plenty of opportunities but not without their risks.

  • Facts

    Facts

    • For Siemens, the cost of building the “Bard I” wind park doubled from €1.5 billion to €3 billion.
    • Germany is expected to triple capacity of sea-based wind parks by the end of the year, from one to more than three gigawatts.
    • Last year, Germany’s offshore wind-energy sector generated revenues of €1.9 billion and employed nearly 19,000 people.
  • Audio

    Audio

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For equipment suppliers, Germany’s foray into offshore wind-energy has at times been more fiasco than guaranteed success.

Siemens is a case in point. The Munich-based industrial group has underestimated the difficulties of connecting sea-based wind parks to the main power grid — and paid dearly for its mistakes.

It has seen the cost of building the “Bard I” wind park, for instance, balloon from €1.5 ($1.7 billion) to €3 billion. And delays in connecting the “Riffgat” wind park off the coast of the North Sea island of Borkum to the grid have resulted in additional maintenance costs.

But now the wind turbines are turning, generating not only electricity but also jobs. And politicians in the coastal region couldn’t be happier.

“The offshore branch is a motor for job creation in the north,” said Social Democrat Olaf Nies, the economics minister in the state of Lower Saxony.

“Offshore wind is a growing market but many firms expected even more growth based on initial political forecasts.”

Dirk Briese, managing director, Trend-Research

Mr. Nies’ optimism stems from not only existing but also planned new ventures. Siemens, for instance, is investing about €200 million in a new wind-power manufacturing plant in Cuxhaven. From 2017, the company will assemble generators, rotating hubs and gondola components into complete units for the high-seas operation. It expects to employ around  1,000 people.

“There’s enormous potential for offshore wind energy in Germany,” said Michael Lewis, the head of wind power at German energy company E.ON, noting the firm has already invested €1.1 billion in two offshore farms. “And we’re planning further investments in this country. We’ll know by next year at the latest if we have permission to build a new windfarm in the Baltic Sea.”

Globaldata, an industry research firm, expects Germany to triple capacity of sea-based wind parks by the end of the year, from one to more than three gigawatts. The market researchers predict global capacity to increase to 40 gigawatts by 2020.

German wind-power operators and equipment suppliers are eager to profit from the upswing. Sigmar Gabriel, the economics minister and vice chancellor, aims to sustain the momentum by maintaining the high initial tariff for offshore wind energy of around 18 cents per kilowatt-hour established in the Renewable Energy Sources Act, or EEG.


Video: Bard 1 offshore wind park.

The energy bill has been a boon for business, according to Ralf Hubo, managing director of Steelwind, a subsidiary of the Saarland-based steelworks Dillinger Hütte. The company, which produces foundations for offshore installations, is involved in the new Nordeham offshore wind park, where it currently employs 70 people, a number expected to rise to 230 in October.

Last year, Germany’s offshore wind-energy sector generated revenues of €1.9 billion and employed nearly 19,000 people.

The energy bill has been a boon for business.

But problems remain. “Offshore wind is a growing market but many firms expected even more growth based on initial political forecasts,” said Dirk Briese, managing director of the market research company Trend-Research, noting that Berlin has since reduced its original goal of expanding offshore wind-energy production by 40 percent. He warned that consolidation was “unavoidable.”

Offshore wind energy was and still is a risky business. Plenty of blood was shed in the past. Among the victims forced to file bankruptcy: Bard, DSD Steel filed and CSC, as well as Weserwind, TAG Energy Solutions and NSW. And several more, including Mannheim’s Bilfinger and Essen’s Hochtief, have announced their intention to exit the sector.

 

Franz Hubik and Daniel Delhaes are editors with Handelsblatt in Düsseldorf. To contact the authors: hubik@handelsblatt.com and delhaes@handelsblatt.com

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