Hamburg, 28 September 2016 – “The wind industry learns from the experiences made with the energy transition and is ready to continue the global success story of the German mechanical engineering industry. The energy transition is being adopted worldwide“, said Dr Markus Tacke, CEO of Siemens Wind Power and Renewables Division and chair of VDMA Power Systems at WindEnergy Hamburg. “Our wind industry can make a great contribution to this if we observe three things. Firstly, that we embrace the competition in Germany and worldwide and continue to impress with our innovative strength. Secondly, that we reduce the power generationelectricity costs in the system, and thirdly, that we support the grid with our technologies and accelerate the transition in the heat and transport sectors.”

Success through a culture of innovation along the value chain
It is no accident that most of the leading turbine manufacturers and suppliers have their headquarters and production plants in Germany. “The roots of this industry are in a concentration of mechanical engineering expertise and a strong supply chain. The energy transition profits from the culture of innovation that has grown up through the collaboration all along the supply chain”, says VDMA Power Systems managing director Matthias Zelinger. With its German production, the wind industry has generated revenue of around 14 billion euros, has an export quota of approximately 70 per cent and directly employs about 55,000 people in turbine engineering and construction. “This is where we always deploy the most advanced technology, which in turn finds its way onto the world market. We currently have a 40 per cent share of the world market outside China”, said Zelinger. The consequence for the wind industry is that the industrial base and trust in long-term development are also the foundation for a technology-based reorganisation of the energy system in the export markets.

Fair competition on the world market is crucial
The German wind industry is successful on the world market. It develops turbines for the specific local climatic and systemic requirements. The UN’s Paris climate agreement will in the long term open up additional markets for wind energy. “Fair competitive conditions on the world market are crucial for the future of the German wind industry”, said Dr Tacke. “The dismantling of trade barriers opens up the opportunity to offer competitive products on the world market sooner.”
National energy laws with local content requirements are quite common. They specify that a certain proportion of the supply chain of a wind energy project has to come from that country. “Local value creation is good, the mechanical engineering industry is used to manufacturing all over the world, and that also creates jobs in Germany. However, inflexible local content requirements often result in higher project costs”, continued Dr Tacke. “It would make sense if the local content were to grow with the market and as the local industry matures.”

Cost reduction can only be achieved with a powerful wind industry
The international trend to tendering for renewable energy shapes the demand for cost-optimised, reliable turbines. Industrial production levels, innovative value chains, investment in research and development – optimised for the wind and weather conditions –all this reduced electricity production costs by up to 60 per cent over the past twenty years. At present, the price per kilowatt-hour in Germany is between 5.3 and 9.6 euro cents. Under ideal conditions, 4 euro cents were achieved in export markets. As far as offshore wind is concerned, the goal of the industry in Europe is to get the costs in projects where the final investment decision is to be made in 2025 down to an average of under 8 euro cents per kilowatt-hour, including grid connection. In Germany the average costs are today slightly above 12 euro cents without grid connection. But to meet the target, Europe needs 4 gigawatts market volume, 2016 it will have a volume of about 2 gigawatts. To this end the industry is investing five to six per cent of its revenue in research and development. “We need an innovative and highly performant wind industry if costs are to be reduced further. But that is not enough. In addition a strong industry also needs strong political ambition”, said Zelinger.

Wind industry creates technology for the next phase of the shift to renewable energy 
Well over thirty per cent of Germany’s gross electricity production comes from renewable energy, and half of that from wind power. An electricity supply like the one in whole Germany, that logs only 15 minutes of downtime a year is world class. That is down to a good infrastructure, but also to system-friendly wind turbines, which are increasingly stabilising the grid. These must get full access to the market for system services. Wind energy will eventually make headway in heating and transport and thereby enhance the progress of the energy transition in these sectors. “Technically speaking, the groundwork has been done, but we are still missing athe business model for system services, storage units and for flexibility options for any party in the energy system. Yet the wind industry is still investing in technologies that serve the system, because it is quite obvious that a properly functioning energy system will be reliant on sophisticated turbines and grid technology”, concluded Markus Tacke.

About VDMA Power Systems
VDMA Power Systems is a division of the non-profit German Engineering Federation (VDMA). The association represents the interests of manufacturers of wind turbines, hydroelectric plants, thermal turbines and power plants, and engine systems. VDMA Power Systems serves them all as an information and communication platform for all energy issues, such as energy policy, legislation, market analyses, trade fairs, standardisation, and press and public relations.

About VDMA 
The German Engineering Federation (VDMA) represents over 3,100 primarily medium-sized member enterprises in the capital goods industry, and is thus one of the largest and most influential industrial associations in Europe. Machine and plant engineering is a key technology and the engine for the economy. With 1,003,000 employees (January 2015) in Germany, the industry is the largest industrial employer. Around 76 per cent of German manufacturing is for export. With a turnover of 218 billion euros (2015) it is one of the leading sectors of industry in Germany.