German Wind Expansion Is Approaching Its Peak; Barclays Prefers Cable Suppliers Over Wind Turbine Manufacturers

Overview

The report examines how much additional wind power Germany's electricity system actually needs and links system supply and demand, EEG 2027 policy, project execution bottlenecks and industry-chain profitability. Barclays believes Germany's renewable energy transition has achieved significant results, but simply continuing to add wind power can no longer resolve system stability issues. Future investment priorities may shift toward grids, storage and dispatchable generation, leading it to prefer cable suppliers on a relative basis.

Core views

Germany's renewable energy buildout over the past decade has significantly reduced its dependence on external energy and fossil fuels. Renewable energy currently contributes more than 60% of electricity generation, with wind and solar accounting for approximately 50%; meanwhile, the share of dispatchable and baseload generation fell from nearly 70% in 2015 to less than 40% in 2025. The policy trajectory includes EEG 2017 replacing fixed feed-in tariffs with auctions, the 2020 Coal Phase-Out Act establishing a coal-exit pathway by 2038 at the latest, EEG 2021 setting a target for renewables to account for 65% by 2030, the 2023 “Easter Package” raising the target to 80%, and completion of the nuclear phase-out in 2023. Barclays believes the direction of the transition is correct, but the simultaneous reduction in dispatchable capacity has made the system more dependent on weather conditions and imported electricity. Signs of saturation at the system level are increasing. After remaining a net electricity exporter for roughly two consecutive decades, Germany has become a net importer: it needs imports when wind output is low but curtails wind when output is high because of insufficient transmission and absorption capacity. The number of negative-price hours is expected to approach 650 in 2026 and continue growing at a double-digit rate, with compensation for wind curtailment rising accordingly. The report's supply-demand scenario analysis shows that, against a backdrop of stagnant electricity demand, mechanically achieving the government's wind targets would only increase excess capacity, curtailment and regional imbalances without resolving electricity supply problems during low-wind periods. Germany's electricity consumption in 2025 was at its lowest level in decades, 8% below 2019 and 12% below 2015. The system therefore needs more grid expansion, storage and dispatchable generation such as gas rather than merely additional wind turbines. Barclays also believes that traditional levelized cost of electricity (LCOE) understates wind power's total system cost. LCOE does not fully reflect four costs: differences in the value of wind generation at different times, curtailment costs when output cannot be absorbed, the cost of backup generation or storage required to maintain security of supply, and the cost of grid upgrades needed to address generation intermittency and the geographic mismatch between generation and consumption. Most of these costs continue to rise as wind penetration increases, gradually weakening the marginal economics of additional wind capacity. The report expects Germany to struggle to achieve its target of 80% renewable electricity generation by 2030, while its model produces a result of more than 70%. The draft EEG 2027 reflects a policy shift from maximizing installed capacity toward system integration. The new rules propose reducing wind curtailment compensation for new projects in “capacity-constrained regions” where curtailment exceeds 5% of generation, with uncompensated curtailment capped at 20%. They would also eliminate all developer upside when market power prices exceed auction award prices. The previous system effectively provided a “revenue floor with upside,” whereas the new system is moving toward a “revenue cap with downside risk.” Barclays estimates that the four to five regions with the highest wind density could exceed the 5% threshold. Together, these regions account for 45% of existing installed capacity and 55% of the future project pipeline, and more than 50% of potential projects could be affected. Reduced revenue certainty may raise financing costs for the small developers that dominate German wind construction, further weakening already pressured project economics. Policy signals appear contradictory: subsidy conditions are becoming stricter, but the government plans to add 5GW of auction volume in each of 2027 and 2028 and another 2GW in 2029, for a total increase of 12GW. The report believes the behavior of developers and industry associations better reflects the actual risks. To secure projects under the old rules, developers bid aggressively in 2026 auctions, driving awarded prices per kilowatt-hour down approximately 30% from their 2024 peak and to their lowest level since 2018. Barclays believes these low-price projects are more dependent on future market power price upside, their project pipelines may be more speculative, and their ultimate completion rate could fall below the historical level of approximately 90%. Germany's renewable energy federation and wind energy association warned of stalled renewable energy construction and a significant slowdown in wind expansion, respectively, while the chemical industry association believes the reform will help improve grid utilization and reduce system costs. Wind construction itself also faces execution bottlenecks. Germany's MaStR database shows that approximately 2.4GW of onshore wind capacity was commissioned in the first half of 2026, representing year-on-year growth of only about 10%. Barclays assumes that second-half installations will be approximately 60% higher than in the first half, exceeding the strongest seasonal acceleration seen over the past five years, and on this basis estimates full-year 2026 installations of approximately 6.3GW. Although 2026 could still set an installation record, wind turbine manufacturers are estimated to have secured more than 10GW of German orders in 2025, a clear mismatch with an annualized installation rate of approximately 6GW that reflects constraints from transportation, construction capacity and project delays. The report expects turbine installations to peak in 2027 and remain at a low level over the long term after 2030. Nordex's European orders have also declined slightly year on year for three consecutive quarters, suggesting that orders may be peaking. The geographic concentration of projects further amplifies policy and grid risks. As of December 31, 2025, the five regions with the highest installed capacity density per unit of area accounted for more than 50% of Germany's onshore wind capacity. High-density regions such as Schleswig-Holstein, Brandenburg, Lower Saxony and Saxony-Anhalt secured approximately 60% of auctioned projects during the year, above the 2025 level. If new projects continue to be concentrated in existing wind-intensive regions, more projects will fall within the capacity-constrained areas defined by EEG 2027 and bear the risk of uncompensated curtailment. At the industry-chain level, Germany was the largest source of onshore wind orders for Vestas and Nordex in 2025, estimated to account for more than 30% of both companies' orders. The report separately estimates that Germany may have accounted for approximately 30% and more than 40% of Vestas' and Nordex's respective orders that year, despite Germany representing less than 2% of global electricity generation. The German market has little competition from Chinese manufacturers and a relatively high proportion of small customers, so margins on new equipment may exceed company averages, but this unusually concentrated source of high-margin demand is unlikely to persist over the long term. Barclays expects German orders to peak in 2025-2026, with turbine manufacturer orders and earnings normalizing later this decade. Low auction prices have not yet affected turbine prices, but turbines are the largest cost item in onshore projects. If projects need to remain economic at lower awarded prices, turbine prices may ultimately come under pressure. Based on these views, Barclays prefers NKT, Nexans and Prysmian, which benefit from grid expansion, over wind turbine manufacturers Vestas and Nordex. For Nordex, the report believes peak earnings are still ahead and substantially raises near-term earnings forecasts: adjusted EPS for 2026 was raised 86% from €0.99 to €1.84, while adjusted EPS for 2027 was raised 112% from €1.12 to €2.37. Adjusted EPS is expected to rise from €1.01 in 2025 to €2.37 in 2027 before slipping slightly to €2.33 in 2028. The adjusted EBITDA margin is expected to increase from 8.1% in 2025 to 11.1% in 2027 and then decline to 10.9% in 2028. Using DCF, the report raised Nordex's target price by 122% from €15.80 to €35 but maintained its Equal Weight rating, reflecting the coexistence of near-term earnings improvement and the risk of medium-term normalization in German demand.

Analysis framework

The report first reviews changes in Germany's generation mix resulting from the nuclear phase-out, coal phase-out and renewable energy support policies. It then uses its proprietary power supply-demand model to compare supply-demand surpluses, imports, negative power prices and wind curtailment under the government's buildout targets. The report next analyzes the impact of EEG 2027 on compensation, auctions and developer financing, and uses MaStR registration data to estimate 2026 installations, linking orders, installation capacity, auction prices and regional concentration. Finally, it maps its power-system and policy views to industry-chain profitability, compares cable suppliers with wind turbine manufacturers, and uses DCF to update Nordex's target price.

Methodology notes

• Industry/Sector Analysis FrameworkSupply-demand framework

  German Electricity Supply-Demand Scenario Analysis

  The report compares Germany's generation capacity and demand under different renewable energy buildout scenarios to assess the capacity surplus, wind curtailment and import requirements during low-wind periods that could result from the government's installed-capacity targets.

• Industry/Sector Analysis FrameworkUpstream-Midstream-Downstream Industry-Chain Transmission

  Transmission of Policy and System Costs to Developers, Turbine Manufacturers and Cable Suppliers

  The report first maps grid congestion and changes in compensation rules to developer project returns and financing costs, then analyzes their impact on turbine prices, turbine manufacturer orders and demand for grid cables.

• Valuation MethodDCF Discounted Cash Flow

  Nordex DCF Valuation

  Based on updated earnings and cash-flow forecasts, the report uses a discounted cash flow valuation and raises Nordex's target price from €15.80 to €35.

• (Out-of-Vocabulary Method)

  Comparison of Levelized Cost of Electricity and Total System Cost

  The report notes that LCOE measures only the average cost of generation and does not fully include the value of generation timing, wind curtailment, backup generation or storage, and grid upgrade costs. It therefore reassesses the economics of additional wind capacity from a total-system perspective.

• (Out-of-Vocabulary Method)

  Installation Estimate Based on MaStR Registration Data

  The report uses commissioned turbines in Germany's MaStR database as a proxy for installation activity during the year and assumes that installations in the second half of 2026 will be approximately 60% higher than in the first half, yielding an estimate of approximately 6.3GW of full-year onshore wind installations.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• NKT A/S (NKT.CO), Nexans SA (NEXS.PA), Prysmian SpA (PRY.MI)

  The report's preferred cable suppliers, which are expected to benefit from increased German grid investment aimed at resolving congestion and system stability issues.

  Strengths

  Their businesses are linked to grid expansion, renewable energy integration and system reinforcement demand.

  Comparison

  Compared with wind turbine manufacturers, the report believes cable suppliers will benefit more directly from the shift in investment priorities toward grid infrastructure.

• Nordex SE (NDXG.DE/NDX1 GY)

  High-margin German orders support near-term earnings, but there is a risk of order and earnings normalization after German construction activity peaks.

  Strengths

  The German market has little competition from Chinese manufacturers and a relatively high proportion of small customers, so order margins may exceed the company average; the report substantially raises its 2026-2027 EPS forecasts.

  Weaknesses

  German orders account for an excessively high share, European orders have declined slightly year on year for three consecutive quarters, and long-term demand visibility is constrained by reduced policy support and construction bottlenecks.

  Comparison

  The Equal Weight rating is above Vestas' Underweight rating, but the report still prefers cable suppliers overall.

  Risks

  Weakening German orders, installation delays, transmission of low auction prices to wind turbine prices, and earnings normalization later this decade.

• Vestas (vWS.CO/VWS DC)

  It has benefited significantly from recent German onshore wind orders but faces the risk that German demand and margins will revert from unusually high levels.

  Strengths

  Germany was one of its largest onshore wind order markets in 2025, and the local competitive structure is favorable for margins on new equipment.

  Weaknesses

  Germany may have accounted for approximately 30% of its 2025 onshore wind orders, indicating high market concentration.

  Comparison

  The report assigns an Underweight rating and a €110 target price and prefers Nordex and cable suppliers on a relative basis.

  Risks

  Declining German policy support, lower project completion rates, an order decline after the peak, and pressure on wind turbine prices.

Key data

• Share of German Electricity Generation from Renewables>60%Current share of total electricity generation
• Share of Electricity Generation from Wind and SolarApproximately 50%Combined current share in Germany's electricity mix
• Share of Dispatchable and Baseload GenerationNearly 70% in 2015, <40% in 2025Structural change following the nuclear phase-out and renewable energy expansion
• Negative-Price Hours in 2026Nearly 650 hoursExpected to continue achieving double-digit growth
• German Electricity Consumption in 20258% below 2019 and 12% below 2015The lowest level in decades
• Renewable Energy Share in 2030Government target 80%; Barclays model >70%The report believes the government target will be difficult to achieve
• Additional EEG 2027 Auction Volume12GWAn additional 5GW in each of 2027 and 2028 and 2GW in 2029
• Capacity-Constrained Area ThresholdWind curtailment rate >5%New projects may face lower wind curtailment compensation, with uncompensated curtailment capped at 20%
• Wind Projects Affected by Policy50%+The report's estimated share of potential future projects
• Change in 2026 Auction PricesDown approximately 30% from the 2024 peakAwarded prices per kilowatt-hour fell to their lowest level since 2018
• Onshore Wind Commissioned in the First Half of 2026Approximately 2.4GWMaStR data, with year-on-year growth of approximately 10%
• Full-Year 2026 Installation ForecastApproximately 6.3GWAssumes second-half installations increase approximately 60% from the first half
• German Wind Turbine Orders and Installation Rate in 2025Orders >10GW; annualized installations approximately 6GWReflects transportation, construction and project execution bottlenecks
• Concentration of German Orders30%+ of Vestas' and Nordex's 2025 onshore wind ordersGermany accounts for less than 2% of global electricity generation
• Nordex Target Price RevisionRaised from €15.80 to €35, +122%Based on DCF valuation, with the Equal Weight rating maintained
• Nordex 2026 Adjusted EPS€1.84Previous forecast €0.99, raised 86%
• Nordex 2027 Adjusted EPS€2.37Previous forecast €1.12, raised 112%

Impact & implications

The report believes Germany's energy transition will shift from simply pursuing additional wind and solar capacity toward simultaneously developing grids, storage, dispatchable gas-fired generation and a more effective regulatory framework. This shift will benefit demand for cables and grid infrastructure, but it will reduce revenue certainty for wind developers and expose wind turbine manufacturers to normalization pressure on sales, pricing and margins after the 2025-2026 order peak.

Risks

• EEG 2027's reduction of wind curtailment compensation in congested regions and elimination of upside from market prices could raise financing costs for wind developers.
• Transportation constraints, construction capacity and project delays may prevent auctioned projects from converting into actual installations as planned.
• Projects awarded at low prices may depend more heavily on future power price upside, and their completion rate could fall below the historical level of approximately 90%.
• Continued concentration of new projects in grid-congested regions could increase the risk of uncompensated wind curtailment.
• Lower auction prices may ultimately feed through to wind turbine prices and compress manufacturer margins.
• Vestas' and Nordex's heavy dependence on German orders could lead to significant order and earnings normalization later this decade.
• Continued growth in renewable energy capacity amid stagnant German electricity demand could further increase negative power prices, wind curtailment and system imbalances.

What to watch

• Monitor the final provisions of the draft EEG 2027 and their impact from 2027 onward on wind curtailment compensation and developers' market power price revenues.
• Monitor whether the additional 12GW of auction volume from 2027 to 2029 can translate into projects that are actually commissioned.
• Monitor installation progress registered in MaStR and whether full-year 2026 installations can reach approximately 6.3GW.
• Monitor whether transportation and construction bottlenecks can ease and whether German onshore turbine installations peak in 2027.
• Monitor whether negative-price hours, wind curtailment compensation and net import requirements continue to rise.
• Monitor when low auction prices begin to affect Nordex's and Vestas' wind turbine selling prices and margins.
• Monitor whether investment in grids, storage and dispatchable gas-fired generation can alleviate imbalances in Germany's electricity system.