"Policy debate just getting interesting"
2012 was a bumper year for wind power in Germany, and the outlook is also good for 2013. Nonetheless, the ongoing debate about a reform of the country's feed-in tariffs could make investors hold back. Our Tilman Weber spoke with Sylvia Pilarsky-Grosch, Vice President of the German Wind Energy Association.
Renewables International: Why was 2012 such a good year?
Sylvia Pilarsky-Grosch: Because what the states have claimed for some time finally happened: they issued permits. Thus, the planning requirements were accomplished for many new wind farms. However, the number of wind turbines has not increased to the same extent.
Renewables International: That explains your subdued, positive appraisal of 2012 as the year of growth? At the presentation of the installation statistics in Berlin, you only spoke of a “slight increase” in the growth of wind energy in Germany, even though the capacity extension increased by a good 20 percent. You then argue that the 1,008 newly installed turbines are only slightly more than the 952 in 2009 – the year before the economic and financial crises hit wind energy – despite the long-promised approval of new construction sites for wind farms.
Sylvia Pilarsky-Grosch: Yes, between 1999 and 2006 we also installed many more turbines. The marked growth in the annual capacity addition of turbines will happen this year. By the end of 2013, our forecast states there will be an expansion of up to 2,900 megawatts (MW) onshore alone, without the expansion of offshore wind energy.
Renewables International: That means that the progress of turbine technology with larger turbine sizes for inland sites will only seriously affect the capacity extension if given support by the states?
Sylvia Pilarsky-Grosch: Yes.
Renewables International: Is there a repowering trend, replacing old and often small turbines whose outputs are measured in kilowatts with modern multi-megawatt wind turbines? The industry posted a gross capacity of 431 MW here, nearly a third of the repowering gross capacity up till now, and dismantled 141 MW.
Sylvia Pilarsky-Grosch: Yes, but better statistics are also being kept now, which is one reason for the apparent success. In recent years, repowering was not valued enough.
Renewables International: The expansion of turbines and capacity are important criteria for the German wind energy market. Another criterion is the achievable turbine prices on a global market, where strong international competition between wind turbine manufacturers, turbine production overcapacity, and many crashing national markets are putting pressure on margins. Did installation prices prove stable thanks to the good economic situation in Germany?
Sylvia Pilarsky-Grosch: We have a global production capacity of 80 gigawatts (GW), with only 40 GW installed annually. That certainly has an impact on the German market. Nevertheless, the German wind energy market has peculiarities, so that a comparison with the world market is often difficult.
“Don’t take Altmaier’s demands seriously”
Renewables International: Falling turbine prices are at least good for wind farm planners. Nevertheless, could recent statements from the German government, especially from Environmental Minister Peter Altmaier about reforming the Renewable Energy Act (EEG) this summer slow down growth this year?
Sylvia Pilarsky-Grosch: I don't think so. For one thing, the wind turbines that will be delivered in 2013 have already been funded, approved and ordered. Furthermore, I do not take the Minister’s proposal seriously. The idea will not happen; it’s more of a campaign strategy. But if Altmaier’s reform proposal was approved, wind turbines would no longer receive guaranteed feed-in tariffs, so even some approved and financed projects would not be built. At the same time, there would a lot of pressure to build the projects in 2013 as manufacturers continued to produce.
In photovoltaics, we saw what happens with quick fixes. After the repeated reductions in their compensation, the solar industry did not build fewer solar panels. Instead, the market overheated, and the manufacturers who could not keep up in the price war are going bankrupt.
Renewables International: Are wind energy projects for 2014 already on hold because the EEG debate makes for uncertainty?
Sylvia Pilarsky-Grosch: Yes, but all parties concerned have known for a long time that parliamentary elections will be held in fall 2013. That was a general uncertainty factor, which has not yet had an effect in 2013. However, next year’s planned projects were most recently financed with contingencies.
Renewables International: So you think that Altmaier’s recent proposal to make feed-in tariffs dependent on the impact renewable energy growth on power bills will not become a law? Altmaier wants to put a lid on the current surcharge of five cents per kilowatt-hour, mainly paid by retail ratepayers and SMEs. And only if that price stability is in sight would the new green electricity projects receive the EEG compensation, which is above the market price…
Sylvia Pilarsky-Grosch: Altmaier’s reform idea is not only not sensible, but also a departure from the core of the EEG. Incidentally, what he is suggesting is, in part, legally questionable. We will challenge it. I don’t see any support for his idea from anywhere. Even those that still want to be parliamentary candidates and representatives after the election in September are campaigning in 2013. And they cannot identify with steps that cut off renewables owned by communities and small businesses. That would not be a good campaign theme.
“Citizen and small business projects would be impossible”
Renewables International: Because renewables have become too important as an economic factor?
Sylvia Pilarsky-Grosch: Not only as an economic factor. The implementation of Altmaier’s proposal would mean that community and small business projects could not be implemented anymore. Typical project financing would not be possible without a guaranteed EEG compensation. And those that have failed to invest in renewables over the years would then have the market to themselves.
Renewables International: You mean the energy companies that could pull the money for project investments from their own balance sheet. What growth capacity would the conditional EEG tariff for wind energy allow yearly?
Sylvia Pilarsky-Grosch: What does a growth cap mean? That would mean a stop to growth. How is that supposed to work? The EEG surcharge…
Renewables International: …which grid operators pass on to customers to cover the additional cost of renewable power…
Sylvia Pilarsky-Grosch: …the EEG surcharge is apparently to be frozen with the notice: Only if surcharge budget still has money left over can the EEG continue building all technologies. This is nonsense. The levy account is essentially controlled by the current market price. The lower the trading price of power is thanks to an increased renewable supply, the bigger the difference to the EEG tariff is, so the EEG surcharge increases. Altmaier has not described any way to influence the market price. His reform proposal is alien to the system, because you would have to plan projects basically as if there was no EEG.
Renewables International: But you support a systematic reform of the renewable supply nevertheless? The German Engineering Federation (VDMA) is calling for the reform, right?
Sylvia Pilarsky-Grosch: Of course, cost is also an important issue for us and we need to further develop the EEG. But first, we must define what the EEG is good for. If we say that we want to continue to grow renewables, we really need incentives so that both the producers of renewable power and grid operators will support the system. This is where the EEG debate would really get interesting.
Interview conducted by Tilman Weber (Craig Morris / Marisa Irwin)