Market won’t recover if Berlin goes through with ill-designed climate package, company chief Kettwig warns
Thousands of workers will lose their jobs at Enercon and outsourced production companies closely aligned to the German wind turbine manufacturer as a collapse in the wind power expansion in its home market hits the country’s leading turbine seller.
Due to the dramatic collapse in German onshore wind installations, Enercon is forced to end its cooperation with several domestic production partners, which will hit rotor blade plants in Aurich and Magdeburg. Jobs will also be shed at Enercon headquarters in Aurich and at suppliers.
A combination of ill-designed first onshore wind auctions in 2017, a permitting malaise, bureaucratic hurdles, and anti-wind protests have pushed German onshore wind additions to their lowest figure since 2000. Enercon during the first ten months of this year has installed turbines with a combined capacity of around 210MW in the country, compared to 2GW still erected in 2017.
The company blames politics for the slump.
“The current energy and climate policy endangers not only know-how that has been built up over years and jobs in our industry, but also climate protection and the Energiewende [energy transition] as a whole,” said Enercon managing director Hans-Dieter Kettwig.
“Worse, after the presentation of the climate protection package of the federal government, it becomes clear that problems for us will become even bigger.”
Although Berlin targets to boost the share of renewables in Germany’s power mix to 65% by 2030 (up from 38% in 2018), the government as part of its recently presented climate package plans to introduce a minimum distance of 1km between new wind farms and settlements for the entire country.
The economics ministry in a draft of the distance rule has laid down that it will kick in even if a ‘settlement’ has only five houses.
“Under such circumstances, the German onshore market will not recover,” Kettwig warned.
The planned distance rule could reduce areas available for onshore wind by 20-50%, according to calculations published earlier this year by Germany’s environmental agency UBA.
The German turbine installation slump has also hit rival manufacturers, such as Vestas and Siemens Gamesa, which recently also have announced job cuts in Northern Europe. Embattled wind OEM Senvion earlier this year had to file for insolvency, and Siemens Gamesa last month said it will take over key parts of its European business.
Kettwig acknowledged that Enercon due to the German market troubles for the first time has incurred “significant losses.” The privately-held company doesn’t publish quarterly financial results, but a press official told Recharge Enercon last year had a loss of €200m ($220.6m), which is likely to worsen this year.
The turbine maker now needs to consequently determine a strategy to overcome the crisis, Kettwig added, and will implement a turnaround programme to become profitable again.
As part of the programme, Enercon will concentrate on international markets with a good growth perspective, such as southern Europe, Scandinavia, South America or South-East Asia (with the exception of China), the company said.
An Enercon official told Recharge that the number of job losses at its headquarters and outsourced production plants in Aurich and Madgeburg may add up to be around 3,000, with further job losses feared at suppliers, logistics firms and service providers.
“We have no choice. Only through a consequent new direction we will be able to improve our economic situation and strengthen our competitiveness in a sustainable way,” Kettwig said.
The German wind industry estimates that jobs losses in the sector in recent years by the end of 2019 will have jumped to 40,000, and is questioning why Berlin plans to pump billions of euros into regions that will lose jobs in the wake of the country’s planned exit from coal and lignite, while no aid is being offered to the wind industry.
“Although jobs in the renewable energy sector clearly have a greater potential for the future and are essential for climate protection, there is no outcry. Could it be that double standards are applied?” asked Reiner Priggen, chairman of the renewable energy association of the state of North-Rhine Westphalia.
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