INTERVIEW: Hermann Albers, BWE

Hermann Albers: 'Tenders have led to a reduction in the diversity of participants from round to round'

Hermann Albers: 'Tenders have led to a reduction in the diversity of participants from round to round'

The president of the German wind association discusses the ramifications — positive and negative — of renewables reform.

What’s next for Germany’s wind sector after the EEG [Renewable Energies Act] reform? There will be an intensified build-up of wind energy this year that we could have avoided with a continuation of the previous legal framework. Everyone is trying to save himself by completing projects this year, particularly if they had a permit before 22 January [the cut-off for getting higher pre-reform feed-in tariff (FIT) levels].

What’s your estimate for onshore expansion this year? It will certainly exceed the 2.5GW cap laid down in the new law. We will reach a value between 3GW and 4GW, but closer to 4GW, even without offshore. There will be a backlog in planning and implementation for the first half of 2015, so a significant build-up is likely to happen then. But it is also clear that from mid-2015, it will be much calmer in many areas. Neither manufacturers nor other companies can estimate exactly how things will go from mid-2015 on, let alone in 2016 or 2017.

Is the tendering model the government plans from 2017 doable for onshore and offshore wind? We have analysed tenders in various European and global countries. As a conclusion, you can say that tenders have led to a reduction in the diversity of participants from round to round. You can see that very well in Brazil and South Africa, where almost every round led to a halving of participants until only a handful are still in the market. You won’t be able to maintain the diversity of actors in Germany or the variety of market participants. That is a great problem.

Will tendering lower the cost of energy? The absolute spread of results from tenders around the world in past years has been €0.046-0.15 [$0.06-0.20] per kWh. Whether support levels were high or low as a result of tenders didn’t necessarily depend on whether the capacity tendered was in strong wind areas. Sometimes, tenders resulting in high support payments were in areas that have weaker average winds than Germany. The UK, for example, had a tariff of more than €0.12/kWh for a long time.

Even if you take the historic lowest value [€0.046 in Brazil] this contained a payment to compensate for inflation and thus rises every year... Germany’s EEG has the enormous advantage for consumers that support isn’t adjusted for inflation and is fixed for 20 years. If you take that into consideration, the FIT at a good location in Germany today would be only €0.046. That means we are actually equal to the best result globally from a tender so far... On average, I believe that support in all tendering models across the world comes in at €0.10-0.11, which is clearly above the German level.

What will the importance of repowering be in Germany in coming years? Repowering could become important, as by 2005, 18GW was already installed in Germany, and by 2025, those machines will gradually drop out of the EEG [subsidy regime] and those projects can be redeveloped and become eligible for FIT support again. Technologically, we would welcome that, as it could double capacity, with triple the energy yield on the areas used today. But I believe that there will be a shift arising from the EEG reform as many operators say, “My old project is more profitable than new installations, and I will continue to operate my old installations instead of planning new ones” — especially since when machines reach the end of their financing phase, it is often the time when they become economically attractive.

What is the importance of the German wind industry beyond its borders? Germany has an export figure of close to 70% in wind. This industry is leading the world. There are no better machines than those with German technology in regard to grid integration and stabilisation or energy efficiency. Of course, that has its price. But you could argue that in connection with its efficiency, German technology is worth it. But energy minister Sigmar Gabriel says that in the future the cheapest price of energy should be the most relevant factor in a tender. That will favour the big utilities and lead to changes in the market at the expense of small players.

  • Hermann Albers was president of the German wind energy association, BWE, from 2007 until mid-2013, then took over the position again early this year
  • A successful farmer, he planned his first wind turbine in 1989. Today, he still works in project development, supports citizens’ wind parks and is an entrepreneur in the field of electric mobility
  • Albers co-founded the Windenergie Westküste industry group, is a board member of the German Wind Energy Society and the European Wind Energy Association, and is vice-president of the Germany renewables federation, BEE

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