Germany-based wind turbine maker Senvion will press ahead with plans to introduce short-time work later this month for the 246 employees at its PowerBlades unit in Bremerhaven, due to a lull in German offshore wind orders caused by investment insecurity.
“Offshore orders are subject to a lengthy development period (for offshore wind farms),” Senvion chief executive Andreas Nauen told Recharge.
“Due to investment insecurity, several offshore orders didn’t materialise.”
Senvion – previously named REpower – is a unit of Indian wind turbine manufacturer Suzlon.
Nauen in November had warned that jobs in Bremerhaven were at stake if the company didn’t achieve another significant offshore order in time. The company had already reduced the staff at its Bremerhaven blade manufacturing plant to its current level from a peak of close to 700.
The announcement today came after Areva Wind in late January said it is cutting hundreds of jobs at its German manufacturing facilities at Bremerhaven and nearby Stade, also due to a lull in turbine orders.
Senvion says that since mid-January it hasn’t had work any longer to fulfil orders for the production of offshore blades. The company expects this lull to continue until the end of 2014.
Senvion says it is opting for short-time work to avoid redundancies, and that it is expecting fresh offshore orders by the end of the year. Until then, Senvion plans to use the PowerBlades factory to produce an onshore blade from July onwards to create work for at least part of its employee base.
German labour legislation foresees the use of short-time work to avoid mass layoffs during times of crises. The programme has probably helped save hundreds of thousands of jobs in the country during a deep recession in 2009 at the high-point of the financial crisis.
Unlike Senvion, and to the chagrin of labour unions, Areva had opted for layoffs in Germany instead of short-time work, although like Senvion it also said it believes the German offshore wind market will heat up again.
“The situation temporarily isn’t very nice. We’re attempting to bridge that phase with our measure (short-term work),” Senvion’s Nauen said.
“But I believe that there is a future in offshore wind in Germany.”
The lull in orders was caused as investors throughout almost all of last year held back financial commitments into the German offshore industry, due to insecurity about the future of the country’s support system for offshore wind. Previously, delays with offshore grid-connections had also slowed down the sector.
Germany’s new government eventually late last year pledged to extend the current “compression model” for offshore feed-in tariffs (FITs) for two more years, clearing the way for further investments in the sector, but the industry is still waiting for the fine-print of the regulation.
Under the “compression model” that will now be extended until the end of 2019, developers and operators of offshore wind parks can opt for higher FITs for the first eight year of energy production to meet elevated construction costs for offshore wind farms. The FIT subsequently goes down to a very low rate for another 12 years.
“The extension of the compression model is a good thing,” Nauen said.
“But the latest proposals are somewhat different from the original plan. Clients now need to verify how high FITs will really be – at least for projects that start operating in 2018 or 2019.”
While the new government last year simply pledged it will extend the compression model by two more years, the cabinet last week approved an outline to a reform of Germany’s Renewable Energies Act (EEG) with further detail.
The outline now also stipulates a cut in initial support by €0.01 per kWh each year in 2018 and 2019 that wasn’t on the books before.
Nauen added that a reduction in Germany’s offshore wind target to 6.5GW by 2020 from 10GW previously envisaged was mostly an adaptation to what was realistically doable by the sector.
Translating that lower target into orders for Senvion, he still thinks the company will receive enough orders to have a sufficiently high utilisation rate.
The short-time work plans are still subject to an agreement with the company’s workers council.