Danish
Wind Energy in 1999:
Danish Wind Turbine Manufacturing Sextuples in Five Years
The Danish wind turbine industry (including foreign subsidiaries)
sold 2,241 MW (megawatt generating power) in 1999 compared to
1,216 MW the year before.1)
Manufacturing
has increased sixfold in the course of five years, corresponding
to an annual growth rate of 44% per year. The number of wind
turbines produced reached the second largest number in the history
of the Danish industry, 2,814 machines. (In 1985 3,812 machines
were sold, but these machines were small, with a total generating
power of only one tenth of the modern machines).
The
Danish Wind Turbine Manufacturers Association expects a growth
in industrial activity of some 10% in the year 2000, and slightly
stronger growth in 2001.2)
The
growth in 1999 is partly caused by a boom in the US market due
to the temporary lapse of the federal production tax credit (PTC)
for renewables which caused a buying spree before closing time.
A similar situation occurred in Germany where uncertainty about
the future payments regime for wind caused a dramatic temporary
increase in demand. Sales in Germany are expected to decline
this year and sales in the US market will be close to zero.
50%
World Market Share
The Danish turbine manufacturers had a global market share of
the wind turbine market of approximately 50% in 1999, and close
to 65% if foreign joint ventures (associated companies) are included.3) These companies sold 534 MW in Spain and
Italy. Thus Danish wind turbine technology accounted for a total
of 2,775 MW gene-rating capacity out of a world market of 4,000
MW in 1999. This made 1999 the first year with more new capacity
invested in wind energy world wide than in nuclear energy (approx.
3,000 MW). The most important markets were Germany, the United
States, Spain and Denmark.
Largest
Employment Increase Ever
Employment in the Danish turbine factories increased by more
than 1,000 employees, from 2,821 to 3,828. To this should be
added some 10,000 jobs in component manufacturing, e.g. LM Glasfiber
A/S employs approximately 2,000 people in rotor blade manufacturing.
Turnover
of 1.7 Billion Euro in 1999
The turnover of the Danish turbine manufacturers increased from
7.7 to 12.5 billion DKK, equivalent to a growth from 1 billion
euro to 1.7 billion euro. To this should be added an estimated
1 billion DKK of exports by component suppliers to non-Danish
manufacturers.
17%
of the turbines were sold on the Danish market in 1999. The Danish
wind turbine industry is now about three times the size of the
shipbuilding industry, and employs more people than the Danish
electricity supply industry (generation, transmission and distribution
included).
Average
Wind Turbine Size Increasing
From 1998 to 1999 the average wind turbine size has increased
from 701 to 807 kW in export markets and from 689 to 751 kW in
the Danish market. The German market in particular tends to demand
machines above the 1 MW size (more than 60 m rotor diameter).
New
Record in Denmark
Danish sales increased once again in 1999 to 516 wind turbines
with a total power of 388 MW, against 460 turbines with 317 MW
of total power the year before.
Out
of the 516 wind turbines sold in 1999, 364 (275 MW) were turbines
bought by individuals, 66 (47 MW) were bought by co-operatives
while 86 (66 MW) were bought by power companies in accordance
with an executive order from the Ministry of Environment and
Energy.
13%
Wind in the Danish Electricity System
Wind energy is expected to cover 13% of Danish electricity consumption
in 2000, if this turns out to be an average wind year. Danish
energy plans say that 20% of Danish electricity consumption should
come from renewables by the end of 2002. Approximately 15 to
16% may be expected to come from wind energy. By 2030 50% of
Danish electricity consumption should come from renewables, in
particular 4,000 MW of offshore wind power.
86%
of the electricity from wind turbines in Denmark comes from privately
owned wind turbines (co-operatives or individually owned) and
14% comes from power company owned turbines.
There were 5,620 wind turbines in Denmark at the end of 1999
totalling 1,771 MW installed capacity. More than two thirds of
the wind electricity in Denmark comes from the one third of the
wind turbines erected during the past four years.
Poorer
Sites
The statistics from the Danish Wind Turbine Manufacturers Association
show that the average electricity production for the wind turbines
installed during the past three years in Denmark has been declining
- even when adjusted to a normal wind year. Kilowatt hours per
square metre rotor area is normally used to express wind turbine
productivity. Historically, the productivity of wind turbines
in Denmark has improved by some 5% per annum. The decline for
the wind turbines erected during the past three years is solely
due to poorer siting.
Boom-Crash
Policy in Denmark
Year 2000 is expected to be as good a year on the Danish market
as 1999, since electricity from turbines contracted before 1
January 2000 are paid a tariff based on a temporary set of regulations
negotiated in connection with the Danish Electricity Reform Bill
from March 1999. On the other hand, the Danish market has crashed
completely thereafter, and not a single turbine has been contracted
in 2000 for delivery in Denmark in either 2000 or 2001.
This
is due to the fact that there is no EU-approved payment regulation
for electricity from new wind turbines in Denmark. The EU Commission
approval may be given by 1 January 2001 at the earliest, but
there are neither any regulations for - nor any usable analysis
of - the future (green certificate) payments system for wind
energy in Denmark. Under these circumstances no financing is
available for investing in wind energy in Denmark. In this connection
it is immaterial that the Government has recently revised its
ownership rules for wind turbines and removed the discrimination
against owners outside the local municipalities, since there
are only buyers for shares in wind turbines which were contracted
in 1999. The Ministry of Environment and Energy has not yet issued
new rules for replacement of old, poorly sited wind turbines,
as promised in the Electricity Refom Bill of March 1999.
The
End of Wind Co-operatives?
Even though Danish wind turbine co-operatives had a comeback
in 1999 and more turbines will be erected by co-operatives in
2000, the Danish Wind Turbine Manufacturers Association foresees
that the Danish market will be taken over by developers and institutional
investors in the future. This is not due to the abolition of
Danish ownership restrictions mentioned above, but due to new
extremely complex financing models for wind turbines with futures
contracts, financial options and performance bonds. These forms
of advanced financial engineering will be necessary in order
to make the new green market for electricity from renewables
operational. This will be the most complex support scheme for
renewables in the world. The industry believes that there will
be large transactions costs and a lack of transparency for small
investors, so that the economies of scale for international investors
will gradually erode local ownership of wind turbines in Denmark.
Activity
and Employment in 2000-2001
Employment in the wind turbine industry is expected to increase
slightly in 2000 due to a sales increase of 10-20% on the world
market. The majority of the growth will take place in foreign
subsidiaries of Danish companies or in associated companies.
For
2001, the Danish Wind Turbine Manufacturers Association foresees
a decline in employment in the Danish wind turbine factories
of approximately 25% (1,000 jobs) plus an unknown number of jobs
with component manufacturers, if the Danish market comes to a
halt in 2001. The association expects Danish sales of 400 MW
in 2000 out of total domestic manufacturing of some 1,600 MW.
Depending
upon whether the tender for the first large Danish offshore wind
park of approx. 150 MW (of which half is expected to be manufactured
in 2001) is won by a Danish producer, the drop in employment
could be somewhat smaller. The effect on domestic employment
may also be softened by a temporary renaissance of the U.S. market.
Danish turbine manufacturers have already signed a number of
option agreements in order to ensure installation of wind turbines
before the present PTC (mentioned above) expires at the end of
2001. The forecast for 2000 includes future deliveries for the
US market in 2001.
__________
1) The official statistics
from the Danish Wind Turbine Manufacturers Association differ
slightly from the figures from BTM Consult ApS, since approximately
330 MW for the USA and Canada are accounted for in 1999 by the
manufacturers, while they are included in the 1998 figures from
BTM. The difference in method is due to the fact that BTM accounts
for deliveries to final installation while the industry association
calculates the figures according to the principles used by manufacturers.
2) Due to the fact that approx. 330 MW from 1998 are
included in our 1999 figures, our future statistics for year
2000 may exhibit a slight decline in sales, despite a quite real
10% growth.
3) These percentages which may be calculated from
our figures overstate the Danish market share by approx. 5 percentage
points because of the 330 MW phenomenon explained in footnotes
1) and 2). The percentages given in the text are more accurate.
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