German Nuke Reprieve Could Hurt Wind

Plans by Germany's new coalition government to postpone a shutdown of the country's nuclear power plants may delay the growth of wind energy

It's a gigantic plan—huge wind turbines are to be planted offshore along the German coast with blades boasting a diameter bigger than the width of a soccer pitch. The transport ministry says a total of 2,500 turbines have been approved or are in the process of being approved in projects that the government says will create 30,000 jobs in northern Germany. Many millions of euros in taxpayers' money and corporate investments have already been pumped into expanding ports, business parks and infrastructure.

The plan is that these turbines will one day generate 12,000 megawatts, enough electricity for 12 million households. It would take 12 medium-sized nuclear power stations to produce the same amount of electricity—and that's where the problem lies. Each individual giant wind turbine could cost around €10 million because installing it and maintaining it at sea is extremely expensive.

Such projects can only be afforded by large corporations capable of investing hundreds of millions of euros, and the only viable players are the big German energy companies that also run nuclear power stations: E.on (EONGn.DE), RWE (RWEG.DE), Vattenfall and EnBW. Those companies are believed to have reserved two thirds of the planned coastal zones earmarked for wind power generation.

So far little can be seen of this offshore investment drive apart from the Alpha Ventus test wind farm run by E.on, Vattenfall and the Oldenburg-based power company EWE. And environmental groups and energy analysts suspect the various projects will grind to a halt if the new German government goes ahead with its plan to postpone the phase-out of nuclear power stations, originally scheduled to be completed by 2020.

Firms in No Hurry to Expand Capacity

"There's a conflict within the big companies," says Ulf Gerder of the German Wind Energy Association. The firms are relying on a mix of new coal-fired power stations and longer running times for nuclear power in addition to renewable energy. But if they proceed to quickly with their offshore projects, they will generate so much added capacity that they may inadvertently drive down the price of electricity.

Gerder says the lack of progress in building the necessary infrastructure shows that the power companies aren't in any hurry. There aren't enough power cables in place to transmit all the electricity that will be generated by the wind farms. Germany's new law on renewable energies says wind power takes precedence—but the fewer power lines there are, the more scope companies will have to produce conventional power, which earns them more money.

"They're not going to ruin their balance sheets if they don't have to," says Bärbel Höhn, deputy floor leader of the Green party. She suspects that as long as the nuclear power stations go on producing ample amounts of electricity, companies won't be in a hurry to proceed with expensive offshore projects. Höhn says the returns from offshore wind power amount to just 10 to 15 percent, which is a fifth of the profits generated by nuclear power.

Officials from the German environment ministry also sound concerned at the slow pace of investment. They say E.on and Vattenfall have made no major progress for some time on wind farm projects that have been approved.

"No Expansion in the Foreseeable Future"

If the energy giants were serious about the offshore drive they would be expanding power line capacities at the same time. "That isn't happening so far," says Gerder. It's different in the United Kingdom where RWE has a strong interest in building offshore wind farms so that it can get into the British energy market.

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