Projects on Hold Offshore Wind Farms Fall Victim to Financial Crisis
The German government and energy companies have made a big fanfare about their plans to build offshore wind parks in the North Sea. However the financial crisis is forcing several projects to be put on hold, with smaller companies in particular feeling the pinch.
Severe winter storms raging across the North Sea this winter season. Huge waves are crashing against Germany's northern coast -- and against a large platform that has recently been anchored near the island of Borkum in the North Sea. The structure will eventually become a substation serving the 12 massive wind turbines at Alpha Ventus, Germany's first offshore wind farm.
Wind turbines in Brandenburg. Germany's much heralded wind farms have failed to materialize.
Some of the parts for the project -- backed by German energy firms E.ON and EWE along with Swedish power company Vattenfall -- have been delivered. The huge three-legged bases that are produced in Norway have already arrived on specially designed ships, ready to be erected 45 kilometers off the German coast. High swells and strong winds initially delayed the beginning of construction. The components are still lying on the outfitting quay in the port of Wilhelmshaven.
But the hold-up is seen as a bad omen by those involved in the project. Some fear the delays for offshore wind farms could get worse -- due to storms far away from the North Sea coast on the financial markets. "We are sliding towards a dangerous crisis in offshore wind power," says Fritz Vahrenholt, director of RWE subsidiary Innogy, which operates wind farms along the British coast.
However, the financial crisis is putting the company's ambitious plans in jeopardy. While the big energy firms have deep pockets for the development of renewal energy, the smaller companies are feeling the pinch.
The pioneering technology is supposed to help Germany reach its goals of cutting greenhouse gases by 40 percent by 2020. Still, banks are reluctant to lend money to these kinds of project development companies, most of which are heavily reliant on outside financing. The smaller wind farm investors have obviously overextended themselves in their rush to sink money into pioneering technology. And the big companies like E.ON or EWE are delaying putting down the expensive cables that would connect the offshore wind farms to the grid because none of the turbines are in operation yet.
The German government had planned to use wind energy to considerably boost renewable energies' share in the electricity mix from the current 14 percent to a goal of 20 percent. Last July the government announced plans to build up to 30 offshore wind farms to meet the country's renewable energy targets.
On Thursday the German Environment Ministry hosted an "Offshore Summit" to address the financial difficulties being encountered by the smaller energy companies. The result of the meeting was an agreement that the offshore industry would be considered in the second stimulus package the German government has come up with to deal with the developing economic crisis. According to a survey of its members by the German Wind Energy Association (BWE), "Due to the financial crisis, no big offshore projects can be realized at the moment."
Time is running out for many of these struggling smaller firms. For example Butendiek, the first so-called "citizens' wind farm" -- a cooperative project with over 8,000 shareholders -- had planned to start the operation of 80 wind turbines off the coast of the North Sea island of Sylt back in 2006 but it has since had to make major changes to its schedule. The project has only been kept alive due to new investment from the Irish company Airtricity.
Energiekontor is facing similar difficulties with its plans for a wind farm at Nordergründe. The company plans to build 18 big turbines capable of generating 5-megawatts of energy at the mouth of the Weser river, north of Wilhelmshaven. It was only able to keep the project alive after the Dutch bank NIBC stepped in to help with financing. Ubbo de Witt, director of the Sandbank 24 offshore wind farm, says the "timetable for the government's climate program is being jeopardized by the delays to the construction of the offshore parks."
"We are sticking to our goals for the construction of the offshore wind parks," Gabriel's spokesman Michael Schroeren responded, before admitting: "But the finances are in fact causing a problem."