German Wind Energy Business Picks up Speed

Once considered the realm of Birkenstock-wearing nature lovers whose business savvy didn't extend much beyond the beads they might sell at the local crafts market, wind energy has come a long way. In fact, these are boom years for the industry and new numbers out about its performance in 2005 and the first half of 2006 indicate that wind energy is on an upward trajectory, particularly when it comes to the export market.

According to the German Engineering Federation (VDMA), the German wind energy sector is the world leader, making up about four billion euros ($5 billion) of the global industry's 10.6 billion euros ($13.4 billion) in sales.

"For all of 2006 we're counting on good results similar to those of 2005, because of the booming export market," said Norbert Giese, a wind energy expert with the VDMA and director of Siemens Wind Power GmbH.

According to the German Wind Energy Institute (DEWI), exports of German-made wind energy equipment rose 55 percent between 2004 and 2005 to just under 2.9 billion euros ($3.6 billion). Of the wind energy equipment manufactured in Germany, some 71 percent was exported in 2005, up from 59 percent in 2004.

The biggest buyer of German exports is the US, where wind energy production is expanding. While normally only rotors and turbines are exported, the US is also buying the supporting steel towers, since equipment manufacturing levels there do not meet current demand.

Domestically, however, sales decreased by 11 percent to 1.16 billion euros. Much of that has to do with unclear rules about the establishment of wind power facilities and protests from citizens' groups about wind farms near their localities.

Healthy growth forecasts

Growth levels overall, however, look positive, especially in the wake of increasing energy insecurity, rising oil prices and environmental catastrophes that are thought to be a result of the burning of fossil fuels. According to DEWI, the percentage of energy generated by wind energy doubles every three years. Even though increasing numbers of countries, notably India and China, are building their own wind energy facilities, German firms still often act as suppliers.

In Germany, there is still the worry that wind energy could never wean itself from the exports it still largely depends on. And right now, wind energy accounts for just 6.8 percent of the German energy production, according to Ralf Bischof of the BBW wind energy association. Therefore, there is still some ways to go before wind energy makes a real dent in the need for energy production with fossil fuels.

"At some point we're going to see energy prices from wind energy and those from fossil fuels or other methods come together," Giese said. "That's not happening everywhere on the planet, but there are already regions where wind energy is cheaper than, for example, energy from a new natural gas plant."

Natural limits

Another problem stems from the nature of wind energy, namely, nature. Germany can be a windy place, but if the winds die down over a period of time, that 6.8 percent of energy production will not be reached and other energy producers have to jump in. That could limit the future expansion of wind energy farms, although wind energy advocates say Germany has some way to go before it reaches that limit, which they say lies between 20 and 25 percent.

The federal government has said its goal is to produce 20 percent of its energy needs through environmentally friendly methods by 2020. Giese and Bischof have called on the government to use its next energy summit, likely to take place in October, to put more resources behind wind energy production, such as removing barriers for offshore energy production in the North Sea and Baltic Sea through the development of a publicly financed energy transportation network.