Germany remains Europe's number one wind market

HSH Nordbank study examines domestic and international sector trends Offshore expansion targets too optimistic Continued stable growth in Europe

Hamburg/Kiel, September 14, 2012 - Wind energy recorded global growth of 40 gigawatts in the past year alone - meaning that the wind power turbine portfolio grew by more than 20% in 2011.

With a good 2 GW of newly installed capacity Germany comes top in the European ranking and takes fourth place worldwide. Wind energy in Germany is displaying a considerable degree of maturity with its increasing regional breadth and more than twenty years of use - the sector has come of age. This is the conclusion reached by HSH Nordbank's Wind Energy Study released today. The study examines domestic and international sector trends and assesses the future prospects for the wind energy sector. HSH Nordbank has been active in the renewable energies segment for about 25 years, making it one of the pioneers in the field.

Wind power makes important contribution to an affordable energy mix

By moving offshore and through the use of more efficient technical equipment in low-wind locations inland, this form of energy will remain an innovative sector in the future. "Electricity from wind power is likely to become even cheaper on account of the further decline in prices and the steadily growing efficiency of the plants used". Lars Quandel, Head of Renewable Energy at HSH Nordbank, is in no doubt. Even now, electricity from onshore facilities is capable of competing with oil and gas if conditions at the site are favourable. Quandel: "Wind power will make an important contribution to an affordable energy mix over the long term." Consequently, this regenerative form of energy will continue to grow over the next few years.

The will to exit from nuclear power is firmly anchored within German society and across political parties. Legal requirements are designed to support its implementation. However, the expansion of extra-high voltage power grids is making only sluggish progress as liability issues surrounding offshore expansion have caused uncertainty among investors. As long as these problems remain unresolved an accelerated expansion of offshore wind energy is not on the cards. "For this reason, the German government's expansion targets for the offshore segment appear to be especially ambitious and no longer realistic," Lars Quandel believes. These targets provide for 13 GW in installed capacity in the North and Baltic Seas by 2022, of which 11 GW in the North Sea. The German government quoted a target of 45 GW by 2020 for onshore wind energy. The Head of Renewable Energy at HSH Nordbank stresses that, "The onshore targets are easier to realise in view of the fact that 30 GW of installed capacity already exists." Germany's southernmost federal states - Bavaria, Rhineland-Palatinate and Sachsen-Anhalt - are increasingly opening up additional areas for wind energy production. There is still considerable potential in the North through an expansion of usable areas and through the repowering option. "Despite the obstacles facing the offshore wind energy segment, Germany is expected to remain the most important wind market in Europe," says Quandel.

Cost of generating electricity from renewable energy declining

Against the backdrop of the long-term rise in energy consumption, wind power is also gaining in importance from an economic point of view. Whereas the cost of generating electricity from renewable sources is tending to fall, while the price of electricity from fossil fuels is rising. Subject to favourable conditions, the production cost of offshore wind energy plants could thus drop to around 11 cents/kWh in 2020. The cost of electricity from those onshore plants that are already competitive currently ranges between 6 and 8 cents/kWh and is thus comparable to that of conventional power plants fuelled by black coal, lignite or nuclear power.

Large development potential in France

In a European comparison the UK wind market currently offers the most promising pros-pects. The development of wind power in the UK remains dynamic mainly thanks to the very strong expansion of offshore capacity - accounting for more than half of capacity expansion as a whole. France, whose electricity production is heavily dependent on nuclear power, has a comparatively high development potential with regard to wind power. The conditions found there are considered the second-best in Europe after the UK. Italy still has good growth prospects despite a lack of clarity about future subsidies and the uncertainty associated with the heavy public-sector debt load. The prospects for the Belgian wind energy market are cautiously optimistic, compared to a rather mixed one for the Netherlands. Steady expansion is expected in the Scandinavian countries; in the case of Denmark, an old hand at wind energy, additional capacity expansion is likely to be mainly in the form of offshore wind farms. Growth across Europe is expected to average 13.5% until 2016.