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Thursday, April 10, 2014
Europe’s Wind-Turbine Makers Are Pleading For More Political Support Tokyo Westward Group Energy Alternatives
EUROPEAN climate policy
has spent vast amounts of public money, sent power utilities to the brink and
done little to reduce emissions of carbon dioxide, an impressive display of
multi-pronged incompetence. But might all that money at least have built a robust,
world-beating European renewables industry?
Not yet. European makers
of solar panels have been largely wiped out by a combination of the financial
crisis and competition from cheaper Chinese rivals. Q-Cells of Germany, once
the world’s largest solar manufacturer, went bust in 2012. SolarWorld, Germany’s
largest remaining maker, begged successfully for investors’ patience to avoid
bankruptcy late last year. The EU, like America, is bringing anti-dumping
complaints against Chinese firms, but even if these were to succeed it is clear
that the future of solar-panel manufacturing lies beyond Europe.
biomass, geographically limited hydropower and unproven tidal power, that
leaves wind turbines as the best hope for European green energy. The picture is
brighter than for solar. But Prokon, a German wind-park developer that offered
generous profit-shares to small investors, filed for bankruptcy in January. And
Europe’s makers of wind turbines have gone through a dark few years, shedding jobs
and racking up losses.
of Denmark, was once the pin-up of the wind-turbine industry. But it
overinvested just as others piled into the market. As its balance-sheet
deteriorated, investors took fright, forcing the management to announce huge
cost-cuts and lay-offs, culminating in the sacking last year of Ditlev Engel,
its boss. His successor, Anders Runevad, announced last month that the
restructuring was paying off, producing €211m ($288m) in operating profit
before special charges.
Kristian Tornoe Johansen,
an analyst at Danske Bank, thinks that Vestas’s new “asset-light” model, with
many of its production processes outsourced, puts it in a strong position to
compete in Europe, America and emerging markets. HSBC’s wind-sector analysts
are also bullish on Vestas, as they are on two European competitors, Nordex of
Germany and Gamesa of Spain, saying that the industry is ready for a
turnaround, as it were.
Perhaps it is appropriate
that Mr Runevad came from Ericsson, a Swedish telecoms-equipment maker. Tom
Brookes of the European Climate Foundation compares the renewables firms’ boom
and bust to Nokia and Ericsson, which lost their early lead in mobile telephony
when Apple and Google entered the market and became “killers”. The two killers
the wind-turbine makers should fear are not the Chinese but GE and Siemens, two
huge Western conglomerates. GE has overtaken Vestas to become the world’s
biggest wind-turbine maker. Siemens outsells Vestas in the small but growing
market for offshore windpower installations. Both conglomerates boast that they
can offer their customers a complete package of transmission, storage and other
capacities, in contrast to Vestas’s focus on generation only.
In some countries, such as
Brazil, windpower is already competitive without subsidies, and as the
technology continues to develop there will be more such markets. But in Europe
that point is still far off: Siemens is aiming to cut the cost of electricity
from offshore turbines to ten euro cents a kilowatt-hour by 2020, from around
14 cents now, but this is still well above the current cost of fossil-fuel
So Europe’s specialist
renewables firms are pleading for help. A group of the firms’ bosses, including
Mr Runevad, has gone to Brussels to call on the EU to impose a further round of
binding renewable-energy targets on each member, for the decade to 2030. The
EU’s initial proposals for energy policy during this period, announced in
January, did not include these.
Mr Runevad and his fellow
windpower bosses argue that compulsory targets would encourage power utilities
to buy lots of wind turbines, helping their makers achieve economies of scale.
Maybe, but there is a more sensible way for Europe to accelerate the switch to
renewable energy and boost its wind-turbine makers. It should reform its
crippled market in emissions permits, in particular by scrapping the exemptions
from having to buy permits that many polluting industries enjoy. If the
turbine-makers were to lobby for this, rather than pleading for a guaranteed
market share, it would be a sign of an industry confident of its future.