Wind farm construction in the east, potentially generating substantial profits in the western regions?
In the heart of Europe, Germany is making significant strides in its energy transition, with renewable energy sources taking centre stage. However, a closer look reveals an uneven distribution of profits from wind energy, largely favouring West Germany.
Four years after the allocation of 22 billion euros for concrete projects, only 1.9 billion euros had been disbursed by summer 2024. Despite this slow pace, the impact of wind energy is undeniable. Germany boasts over 63.55 GW of onshore wind capacity, distributed among about 28,717 turbines.
Manufacturers and wind energy companies, such as Enercon, Nordex, and Senvion, have their headquarters and main operations in the western part of Germany. This concentration of profits and economic gains is a significant factor in the skewed distribution of wind energy profits.
The value generated by wind energy is not just tied to operation but also to production, maintenance, and servicing contracts. For instance, Vestas, a major turbine supplier with service contracts in Germany, projects substantial revenue and profits from a mixed revenue model combining hardware sales and 20-year service agreements. This ensures long-term income predominantly in Western Germany where industrial infrastructure is more developed.
German states in the East, such as Brandenburg, Saxony, Saxony-Anhalt, Thuringia, and Mecklenburg-Vorpommern, have significantly lower Gross Regional Product (GRP) compared to Western states like North Rhine-Westphalia, Bavaria, and Baden-Württemberg. This reflects less industrial and economic activity attracting wind revenue. While Eastern states have some wind turbine installations, the main economic benefits tend to flow through Western-based companies and investors.
Offshore wind auctions, primarily conducted in the North Sea, have recently struggled to attract bids under zero-subsidy conditions. Since many offshore projects tie into Western companies and markets, difficulties here may further consolidate profits to where companies and investors with less risk exposure are located.
However, not all is lost for the Eastern states. Municipalities like Görlitz are expected to receive 3.25 billion euros from the coal phase-out in the coming years. Many central German municipalities now receive a share of the profits from wind turbines and solar parks, which can significantly boost their revenues. For instance, Torgau could take in around 35,000 euros per year with twelve solar parks, and Stendal with eight wind turbines and 20 solar parks could generate around 450,000 euros in revenue.
The Institute for Economic Research in Halle (IWH) has drawn a largely positive interim assessment of the use of the billions in funds, stating that they are predominantly being invested in growth-promoting areas. Yet, more than two-thirds of participants in a recent website survey have no confidence that the regions will benefit adequately from the funding.
The current distribution of profits from wind energy has sparked debates, with calls for a simpler legal framework to compete against commercial project developers, like the BürgerEnergie Saale-Holzland cooperative led by Thomas Winkelmann. The Erfurt state government also wants to involve local residents in the design of the regional plan.
The energy transition is controversial in East Germany, with 2/3 of respondents considering it correct but debates dominated by increased electricity prices and resistance to infrastructure projects. A thematic week "Billion Project Energy Transition" is taking stock of the energy transition's impact on Central Germany in August 2025.
Germany is expected to phase out coal-fired power generation by 2038, with 40 billion euros in tax revenue to be invested in coal regions over the next 15 years as compensation. While the distribution of profits from wind energy remains uneven, the future of the energy transition in Germany remains a topic of ongoing discussion and development.
- The renewable energy industry in Germany, particularly wind energy, is undergoing a significant financial expansion, with 22 billion euros allocated for concrete projects, but the disbursement rate is slow, leading to concerns about the equitable distribution of profits.
- Personal finance and budgeting can be impacted by the energy transition in Germany, as coastal municipalities, like Torgau with solar parks or Stendal with wind turbines and solar parks, are anticipated to generate substantial revenue from renewable energy sources, which could contribute to their local economies.
- As the energy transition in Germany progresses, the finance sector, particularly in the wind energy industry, is increasingly focused on the future, with entities like Vestas projecting substantial revenue and profits from a mixed revenue model that combines hardware sales and 20-year service agreements, predominantly in Western Germany.
