Economic conditions
The global economy cooled substantially in the year under review. After rising by 5.2 percent in 2007, world GDP grew by only 3.4 percent in 2008. The economic downswing triggered by the financial crisis was particularly underpinned by the weakness afflicting mature economies such as the United States (1.1 percent) and Europe (1.0 percent). In Germany, GDP expanded by only a moderate 1.3 percent according to the Federal Bureau of Statistics and actually contracted by 2.1 percent quarter on quarter in the final three months of 2008. Emerging markets such as China (9.0 percent) and India (7.3 percent) exhibited resilient growth compared with the industrialized nations. In the course of the year, however, it became increasingly evident that they, too, would not be able to escape the general downswing.
The leading central banks lowered their interest rates substantially in 2008, with the US Fed cutting its base rate to a target range of 0.0 - 0.25 percent on December 16, while the ECB also pared its main funding rate substantially to 2 percent in the second half of the year. At the beginning of March 2009, the European Central Bank lowered its base rate to 1.5 percent, i.e. below 2 percent for the first time since the establishment of the euro.
In addition, numerous countries such as the United States, China, Japan and Germany have launched economic stimulus packages worth billions in an effort to spur the economy and to protect important sectors, companies and banks.
The price of crude oil was extraordinarily volatile in the year under review. Up until mid-year, it shot up to around USD 146 a barrel, propelled for the most part by speculation rather than heightened demand. The high price of oil increasingly took its toll on the global economy. At the same time as the collapse of US banks, however, it retreated to well under USD 100 per barrel. This trend was fueled by fears of a global recession; from July to December 2008 alone, it dropped by some 73 percent and was trading at just under USD 40 a barrel at the end of the year.
Over the next few years, the European Union will be imposing strict restrictions on emissions of green-house gases. A climate protection package approved by the heads of government and state in 2008 focuses on emission trading and places on power station operators the obligation to acquire all of their emission certificates by auction as of 2013. In addition, the cost of CO2 emissions is to be increased by means of the planned straight-line cut in the total volume of emission certificates. At the moment, certificates are trading on the EEX electricity exchange at between EUR 11 and EUR 12 per ton of CO2 (as of early February 2009). An increase in prices to around EUR 40 per ton of CO2 emissions will render electricity from wind power cheaper to produce than from coal or gas-fueled power stations. (Source: EER)
In the United States, newly elected President Barack Obama’s administration plans to reduce the country’s emissions of greenhouse gases to 1990 levels by 2020 and to cover around 25 percent of national electricity requirements using regenerative energies. To this end, the US government has assembled an investment package worth around USD 150 billion and is working on a compulsory emission trading system for all companies. The Chinese government has set itself the goal of increasing wind power production to a total installed capacity of 30,000 megawatts by 2012. Meanwhile, the German government is committed to reducing CO2 emissions by 40 percent compared with 1990 by 2020. In this connection, the German parliament passed the amended Renewable Energies Act on June 6, 2008, under which the remuneration for wind power produced on shore is to increase to 9.2 euro-cents per kWh and for wind power produced off shore to an initial amount of 15 euro-cents per kWh as of 2009. As well as this, repowering, i.e. the replacement of old wind power systems by new ones, is being encouraged with a higher initial remuneration rate of 0.5 euro-cents per kWh. As wind power systems will have to contribute to grid voltage and frequency control in the future, the legislation provides for a system service bonus of 0.5 euro-cents per kWh on top of the initial remuneration to cover the additional technical efforts required for this.
Euro-zone industrial production contracted by 12 percent year on year in December 2008. In the year under review, German mechanical engineering output increased by a real 5.4 percent over the previous year, underpinned in particular by exports (+ 8 percent). The global economic downswing left increasingly deeper traces on German mechanical and plant engineering companies’ order books as the year progressed, however. In fact, according to VDMAVerband Deutscher Maschinen- und Anlagenbau (German Association of Mechanical and Plant Engineering Companies)., the fourth quarter of 2008, in which demand contracted by 29 percent, was the worst since 1958.
Up until August 2008, commodity prices continued to rise substantially before sagging in the second half of the year in the wake of the general economic slowdown. Even so, they remained at a level which was still well up on the previous year.
Within a short space of time, the wind power industry has become an important global operator in the energy market. According to the Global Wind Energy Council (GWECGlobal Wind Energy Council.), new turbine installations in 2008 were valued at a total of some EUR 36.5 billion. Driven by high order backlogs, the wind power market expanded again last year, exceeding the average for the past ten years. In 2008, new global capacity came to 27,056 MW, an increase of 34.6 percent over 2007 (20,098 MW).
The most important wind power markets in 2008 were the United States, Asia and Europe. In terms of new installed capacity, the United States came in first with 31 percent of the market, followed by China (23 percent) and India (7 percent).
In the United States, new installed capacity increased by 59.4 percent from 5,244 to 8,358 MW. This disproportionately strong growth is very likely due to delays in the renewal of the production tax credit (PTCProduction Tax Credit. The PTC guarantees a tax credit on the income tax to be paid in the United States for companies operating wind power systems there.) program, which would normally have expired at the end of 2008. Numerous projects were brought forward to benefit from the tax allowances. Wind power production capacity increased by 50 percent in the year under review, with a total of 35,000 new jobs created in this sector (total: approx. 85,000 jobs).
China exhibited dynamic growth, advancing at great speed to become one of the top operators of wind power systems. This country ranks fourth in terms of existing capacity and second after the United States with respect to new installed capacity in 2008. New capacity of 6,300 MW was installed last year, an increase of 80 percent over 2007 (3,500 MW). Total capacity doubled in 2008 for the fourth consecutive year and now stands at 12,210 MW.
According to the European Wind Association (EWEA), wind power accounted for roughly 43 percent of new installed energy production capacity in the European Union in 2008, thus contributing more new capacity than all other energy sources (including gas, coal and nuclear). With a share of 31.4 percent of new installed capacity (cumulative 53.8 percent) and an investment volume of around EUR 11 billion, Europe is also the largest market for wind power systems. In Germany, new installed capacity came to 1,665 MW in a relatively saturated market, thus maintaining the previous year’s high level (-0.1 percent) and pushing Spain (1,609 MW) to second place. The sharp decline (down 54.2 percent) in Spain is primarily due to the absence of spending which had been brought forward into 2007 as the feed-in rate was lowered as of January 1, 2008.
Italy (1,010 MW, + 67.5 percent), France (950 MW, + 7.0 percent) and the United Kingdom (836 MW, + 95.8 percent) as “secondary league” countries all made a material contribution to overall growth in the European market in 2008.
The share of off-shore wind power systems rose by 357 MW or 70 percent to a total of 1,471 MW in 2008, thus accounting for around 2.3 percent of total installed capacity in the European Union. This segment contributed 1.3 percent (2007: 1.0 percent) to global new capacity.