Wind-energy pioneers could be blown away by multinationals | Business| Economy and finance news from a German perspective | DW | 05.11.2010
  1. Inhalt
  2. Navigation
  3. Weitere Inhalte
  4. Metanavigation
  5. Suche
  6. Choose from 30 Languages


Wind-energy pioneers could be blown away by multinationals

As big multinationals make greater inroads into the wind-energy sector, there is talk of an eventual oligopoly and a squeezing out of the founding members of what has become a very modern movement.

A wind turbine

Engineering giants are expanding into wind energy

Wind power has come a long way in the past decades. From its eco-warrior, garage-industry beginnings, it has evolved into a billion-dollar sector that is a beacon of hope in times of great environmental uncertainty.

Although it was not entirely spared the gales which battered the German economy during the financial crisis, the sector's technology stood tall enough to weather the storm.

An old wind turbine against a blue sky

Wind technology has come a long way in recent decades

"We got away with a black eye," said Ronny Meyer, managing director of the Wind Energy Agency, or WAE. "In the past we were growing at a rate of 30 percent and that has fallen slightly. But we still fared better than other industries," he told Deutsche Welle.

The prognosis for the coming year is good. According to Hermann Albers, president of the German Wind Energy Association, the market will regain ground it lost during the crisis, most notably in the US where lower gas prices led to a fall in orders. Growth is expected to reach modest new heights in 2011.

"The medium-term outlook is still good," Albers told Deutsche Welle. "The challenge to fight climate change is ongoing, the technology is clean and relatively inexpensive, and it is set to become more and more efficient over time. So it will continue to grow."

Creeping competition

REpower is one medium-sized company that, in the decade of its existence, has become one of the leading manufacturers of wind turbines both for on- and offshore applications. Company spokeswoman Daniela Puttenat confirmed Albers' growth prediction. She says the REpower order book for the first half of the 2010/2011 business period is up 61 percent over the previous year.

Despite this projected growth, smaller and medium-sized companies are worried - mostly because of growing strength among the competition.

A close up of a giant turbine

Wind power generation is a lucrative business

Last week Siemens announced plans to invest 91 million euros ($130 million) in a wind-turbine factory in the UK. Apart from providing the local workforce with 700 new jobs, the project will earn the German engineering giant a bigger piece of the wind-energy pie.

Similarly, General Electric is closing in on the growth of the long-standing market leader, Vestas, which flies under the motto: "Wind. It means the world to us."

The trend is set to continue, Wind Energy Agency's Meyer says. The sector could very well end up being ruled by the same kind of oligopoly that already exists in other energy sectors. Given its grass-roots beginnings, such a development might not sit well with the fiercest adherents of the technology. But smaller or medium-sized businesses simply don't have the financial wherewithal to fight off conglomerate competitors, so the development is almost inevitable.

"For a wind park, you need 1.5 billion (euros) and, while big companies have that kind of capital, smaller developers have to rely on loans or guarantees," Meyer said. "And because banks consider wind power a risky business, they are reluctant to offer credit."

Product vs. name

The math of the situation isn't complex, and it could easily leave a small wind-power business shaken. But REpower's Puttenat says she isn't worried about the arrival of big names on terrain that was once the preserve of companies like hers.

"I'm sure a big international name is advantageous, but what matters to us as manufacturers is providing our clients with reliable, top-quality, durable turbines and excellent service," she said.

Puttenat is not alone in her analysis that products must come before image. According to Albers, of the German Wind Energy Association, it is often the smaller developers that are most creative.

"Enercon started out as a very small company and is now one the most innovative in the world," he said. "They designed the first turbine without an engine, and now Siemens is playing catch-up."

A wind farm

Constructing a wind park requires huge investments

But what good is grand innovation to the smaller companies if they don't have the cash to see their products through to the point of manufacture and installation? Meyer says it can be a bitter pill to swallow, but points out that there are alternatives.

"In wind energy, everything is project-based, so they can develop their projects and then sell them to conglomerates," he said.

It's not an ideal solution, but without enough money to realize their dreams, it might ultimately be a case of selling their ideas and projects to a larger firm that can implement them. That - or be bought up by the big name companies and capital funds that are displaying a growing interest in the lucrative business of wind.

Reporter: Tamsin Walker
Editor: Jennifer Abramsohn

DW recommends