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Germany’s dramatic decision to close down by 2022 its nuclear plants – currently providing about a quarter of the country’s electricity needs – means a significant boost to its status as a renewable energy powerhouse.

At the end of 2010 renewable sources were responsible for about 17% of the country’s electricity. The government’s target is that this ratio will soar to 35% by 2020.

The government decision has not been welcomed by all in Germany. Many businesses expect it will lead to higher prices for electricity. Some are even predicting the possibility of blackouts at periods of peak demand.

But the government argues that any short-term pain will be easily offset by long-term gain, as German industry solidifies its position at the forefront of global green technological developments.

The focus is expected to be on wind energy, where costs are becoming competitive with mainstream energy sources, although solar energy – where Germany already leads the world - will also be important.

Germany adopted a feed-in tariff for wind energy as early as 1991, and at the end of 2010 it had an installed wind capacity of 27,214 MW. This placed it in third place globally, behind China (42,287 MW) and the U.S. (40,180 MW).

In 2010 wind generated 6-7% of the country’s electricity requirements.

Three states generated more than 40% of their electricity from wind – Saxony-Anhalt (52.1%), Mecklenburg-Vorpommern (45.4%) and Schleswig-Holstein (44.1%).

Before the government’s decision to close down nuclear plants, the German Wind Energy Association had been expecting that the country’s wind capacity would rise to about 55,000 MW by 2020. This figure will now likely be exceeded.

In particular, it is expected that the government will promote the development of a series of large-scale offshore wind farms.

At the end of 2010 offshore wind capacity totaled just 108 MW. But already at least 24 new offshore projects with a total capacity of 7,000 MW have received licenses. Longer term, the goal is for 25,000 MW of wind from offshore farms by 2030.

German companies are at the forefront of global wind energy technology. Germany's four top wind energy companies are Enercon (unlisted), Siemens, REpower and Nordex.

Siemens AG (SI), with a history of more than 160 years, is a giant corporation, with operations around the world and high market shares in many areas of business.

In both 2009 and 2010 it was ranked ninth in the world in the amount of wind turbines sold, with a 5.9% share in both years.

Since initiating this business it has sold more than 7,800 turbines, with an installed capacity of around 9,000 MW. It has been moving into innovative new gearless turbines and has also developed floating turbines that can operate in high winds on the open sea. It sees particular growth potential in offshore wind farms.

In mid-2011 it installed the first prototype of its new 6 MW offshore turbine, at Hovsore in Denmark. A particular feature was that it weighed no more than many turbines in the 2 MW to 3 MW range.

REpower Systems AG (OTC:RPWSF) is another of the world’s leading wind turbine manufacturers. Since a takeover in December 2009, more than 95% of the company’s shares are held by Indian wind turbine manufacturer Suzlon Energy.

REpower was in 2009 the world’s 10th largest wind turbine manufacturer, although its position slipped a little in 2010 with the rapid rise of Chinese rivals.

Though now an Indian-owned company, it maintains its headquarters in Hamburg, and it has operations in many countries.

It manufactures turbines with a capacity of 1.5 MW to 6.15 MW. Altogether it has sold more than 3,000 turbines with a total capacity of over 5,400 MW.

The company is moving strongly into offshore wind developments, where it sees strong growth prospects, and its turbines are being used in offshore projects in Germany, Belgium and the U.K.

Nordex AG (OTC:NRDXF) with a history dating back to 1985, has supplied more than 4,400 turbines with a total capacity of some 6,500 MW to 34 countries.

The company is steadily gaining business in non-European markets. In the March 2011 first quarter the U.S. was responsible for 15% of sales, compared to just 1% in the 2010 first quarter. Asia was responsible for 5%, up from 3%.

It sees particular potential in offshore wind developments, and it claims its new 6 MW, 150-meter rotor turbine – intended particularly for offshore applications - represents a new generation of direct-drive devices that are lighter and more powerful than predecessors.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: German Renewable Energy: A Bright Future for Companies Focused on Wind Energy