Thursday

28th Mar 2024

EU wind sector blown off course by crisis

  • Some smaller wind projects are having trouble finding financing (Photo: Tom Jensen/norden.org)

European wind energy projects are finding it hard to get finance as the economic crisis begins to pinch, with smaller manufacturers announcing hundreds of lay-offs despite the robust performance of the sector heading into the downturn.

"There was such high demand six months ago, you had to stand in line to purchase windmill parts, but now the order books seem to have lightened somewhat," a senior EU financing official told EUobserver.

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Two days ago, Siemens Wind Power laid off some 400 production workers in Denmark, following similar recent cutbacks at LM Glasfiber - also based in Denmark - and the largest producer of wind turbines in the world.

Experts, such as Christian Kjaer of the head of the European Wind Energy Association say actual orders for turbines in Europe have not dried up. But expectations of explosive growth in the sector are being re-adjusted.

"The lay-offs are not because of a drop in demand - yet," the EU official explained. "Hiring had been based on the expectation that such growth would continue, and now there are doubts that it will."

The contact said the problem is the difficulty of finding financing for wind projects and laid the blame squarely with banks, who, despite billions in bail-outs, are still reluctant to lend money to businesses.

"The problems lie especially with those who have to go to the project finance market - the commercial banks - to find the money. But it's not all projects - the big utilities, who have lots of cash themselves, won't be as affected."

"It's having an impact on the sector, and frankly I don't understand it. If I were a bank, I would look at wind projects particularly favourably," he went. "They have a great future ahead of them, unlike, say, a chain of high-street fashion shops, which are much more likely to be affected by the economic crisis."

In 2008, more wind power was installed in the EU than any other electricity generating technology, according to statistics released by the European Wind Energy Association (EWEA) this week. Annual growth rates before the economic crisis struck were 30 to 40 percent.

Wind represents 43 percent of all new electricity generating capacity built in the bloc last year, exceeding all other technologies, including gas, coal and nuclear power.

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