Germans conquer the world by tilting at wind turbines

Michael Woodhead

As the workforce at the only wind-turbine factory in Britain was laid off at the end of April, Rene Umlauft, boss of the renewable-energy division of Siemens, the industrial giant, was enjoying a run of turbine sales. He had sold more than 120 in Britain, Turkey and at home in Germany.
The Vestas factory on the Isle of Wight was closed by its Danish owner — in the face of an occupation by some of its workforce — because of a lack of orders in Britain.
Yet Umlauft has managed to sign a €450m (£407m) deal for 88 wind turbines — part of the Sheringham Shoal offshore wind farm development off the Norfolk coast — and followed it with an announcement in May that Siemens was spending €60m on a production facility in Shanghai that would create 400 jobs. In June, Umlauft sealed a deal to build a solar park near Rome to supply electricity to 1,200 homes.
The Vestas saga is testament to Britain’s failure to gain even a toehold in the boom for the renewable-energy industry. It has been left to the Germans to dominate the world market and create at home an entire industry almost from scratch.
The passing of a renewable-energy law in 2000 galvanised the industry. As a result, Germany has cornered 18% of the renewable-energy market, leaving America in second place. Germany’s share is equal to the combined market share of Britain (with a meagre 4%), France and Italy.
The Germans are determined to defend this dominance in the face of growing competition from Asia, particularly China, and America. So much so that Karl Theodor zu Guttenberg, the German economics minister, has turned his back on the glories of the smoke-stack years.
“Nostalgia does not deserve a place in our industrial policies,” said Guttenberg.
He binned his ministry’s economic strategy paper and told his mandarins to stop living in the past.
Guttenberg is aware the Germans are in front partly by default. The British government ended years of dithering only with the publication of its Renewable Energy Strategy in July.
“As a nation we are guilty of coming up with the best ideas and then dropping the ball at the critical moment,” said Philip Wolfe, director of the Renewable Energy Association. “In the 1980s we were in a strong position but then carried on tinkering with the technology while the Danes and the Germans stimulated their home markets.”
Roland Berger, the business consultancy, reckons that in the next decade the German green energy industry will almost double in size and account for 14% of GDP, making it the country’s leading industrial sector.
Berger found that in the main areas of what it calls “environmental technology” the Germans have a significant hold. In heating and airconditioning they have 10% of the world market. In energy-efficient white goods they have 15% of the market. They have 90% of the biomass market.
Berger predicts this market will grow 5% annually and by 2020 will be worth €2.2 trillion worldwide. “Environmental technologies are ... expected to leave traditional industries in the dust, including the automotive and plant engineering sectors,” Berger said in a report for the German environment ministry.
Germany has moved from supplying 6.7% of its electricity from renewables in 2001 to 15% last year. The key has been the feed-in tariff that paid anyone who fed renewable energy into the grid four times the market rate and guaranteed income for 20 years.
From Bavarian farmers with plenty of barn space for solar panels to alternative life-style trendsetters in Hamburg, green energy became a money earner. Now Germany accounts for half the world’s installed solar panels.
Five years ago Siemens beefed up its renewable-energy division and bought a Danish manufacturer. Siemens is now the world leader in offshore wind turbines.
It generates a quarter of its earnings — €19 billion in 2008 — from green technology.
“We aim to increase that to €25 billion by 2011,” said Peter Löscher, Siemens chief executive. “The environment and climate protection are part of our growth story — financial crisis or no financial crisis.” Some 90% of all wind turbines in Britain come from Siemens.
In 2004 the industry employed an estimated 160,000 people. By 2008 that had grown to 278,000. Contrast that with Britain, which has a mere 25,000 in the industry.
The demand for domestic and small-scale green energy in Germany has been phenomenal. Vaillant, a heating and airconditioning company, last year earned 25% of its sales from renewables. “We do seven times the volume of business in green energy that we did in 2003,” said Ralf-Otto Limbach, the managing director. Sales of heat pumps rose 55% last year. Sales of solar panels rose 60%.
So confident is Vaillant of the renewable market that despite the recession it has embarked on a worldwide expansion. In Europe it has so far bought four service companies in France.
“The industrial base in Britain has shrunk dramatically in the past 20 years and that is a huge problem. What makes Germany successful is the high-end technical expertise to match market needs. Above all the market demands quality,” said Limbach.
“We would love to have a partnership with a company in Britain but there just isn’t one up to our standards.”
Charles Anglin of the British Wind Energy Association said: “Because of the planning system, and as a result of decisions made in the 1990s, manufacturing has gone to primarily Germany and Denmark.”
Ian Draisey, director of Dulas, named as company of the year in the 2009 British Renewable Energy Awards, said: “Fifteen years ago Britain had the opportunity to invest and didn’t. The Germans and the Danes did. Now I am afraid it will be scraps from the table for us.”