Global wind capacity to grow
The outlook for the global wind market is on the upswing. According to Wood Mackenzie’s latest global wind power market update, global wind power capacity is expected to grow by 60 percent over the next five years.
The latest forecast shows a 5-gigawatt upgrade in the global offshore sector alone, yielding 129 gigawatts of new capacity and a compound annual growth rate of 26 percent for the burgeoning segment.
In the report Wood Mackenzie provides a comprehensive analysis of the global wind market and dive into key upgrades and downgrades by region, for both offshore and onshore segments. Below are a few highlights from this quarter’s edition.
Life beyond the U.S. PTC
Eligible offtakers are rallying to capitalize on the Production Tax Credit for wind before the full-value incentive expires in 2020 and then phases down. Developers qualifying wind facilities in 2017 are eligible for 80 percent of the full credit amount, incentivizing U.S. wind market growth.
New state-level targets in the U.S. and the strengthening of renewable portfolio standard mechanisms across the country are expected to support post-PTC demand.
As a result, Wood Mackenzie has upgraded its outlook for the U.S. market by 16 percent quarter-over-quarter, highlighted by a 3.8-gigawatt upgrade in 2021 alone.
A modest upgrade of 1 percent from last quarter in Latin America is driven by near-term upgrades in Brazil and Mexico. Demand in Brazil’s free market should positively impact expectations from 2020 to 2022, while an uptick in commercial and industrial demand in Mexico will support a record year in 2019.
European outlook dismal as subregions downgraded
The outlook in Northern Europe has been upgraded in the forecast by 6 percent. This should offset an otherwise dismal outlook update in Europe, as the other subregions combine for a 2.2-gigawatt downgrade.
Permitting challenges and undersubscription of onshore tenders in Germany and France have impeded growth. However, an increasing appetite for unsubsidized projects and a proliferation of demand from the C&I segment across Northern Europe both support a modest 0.6 percent upgrade for Europe over last quarter.
A challenge to Africa’s wind market
Slow project development due to political instability, immature support mechanisms and increasing competition from solar results has led to a slight downgrade in our forecasts for wind in Africa.
Clean energy ambitions in Africa are more prevalent than ever before, however. Renewable energy is attractive within the region, as wind and solar projects can be built much more quickly than other sources of energy. But as solar is becoming increasingly economical, Africa’s wind market faces stiff competition.
Policy deadlines boost near-term outlook in China
Onshore and offshore policy deadlines in China underpin a 2.9-gigawatt boost in the country from last quarter’s projections.
Onshore developers are rushing to comply with a new policy that requires projects to be commissioned by the end of 2020 in order to capitalize on feed-in tariffs (FIT) before a subsidy-free era begins. Offshore developers must commission projects before the close of 2021 if they are to utilize the current level of offshore FIT.
The story is not entirely positive in the Asia-Pacific region, however. Current market conditions in India have bruised the region’s near-term outlook, resulting in a 4 percent downgrade since last quarter’s report. The government-imposed auction ceiling prices and delays in commissioning awarded projects have slowed near-term growth expectations in India considerably — a decrease of 24 percent from 2019 to 2022.
Additionally, reliability concerns in Thailand have led to a 37 percent downgrade over the 10-year outlook, as the government’s focus has turned to other technologies.
Offshore wind farms may ultimately help Europe achieve its climate goals
According to an association of European grid operators, using a network of artificial energy islands as wind power hubs in the North Sea is a technically and economically feasible concept. The consortium, which includes TenneT, Energinet, Gasunie, and the Port of Rotterdam, proposed the project to meet the climate targets established by the Paris Agreement.
The North Sea Wind Power Hub (NSWPH) could play a major role in transitioning the UK, Denmark, the Netherlands, and Germany to a low-carbon energy system.
The NSWPH partners have been studying technical, environmental, and market perspectives to investigate the potential for the large wind collection hub. Last week, the consortium announced that their project assessment results showed that the concept is achievable.
“The North Sea holds a large potential for offshore wind power,” said the grid operators. Their research suggests that a series of smaller islands would be better than the initial vision of one large island.
Kees van der Leun is a sustainable energy expert and the director of Navigant, an international energy and climate consultancy that contributed to the research.
“It would be very transformative,” said Van der Leun. He explained that the proposed scale of wind farms is “completely beyond” what is operating off the coast of the UK and Germany today.
The first island hub could be developed by the early 2030s. For each individual hub, the goal is to have a network of wind farms with up to 15 gigawatts of capacity, which is enough energy to power more than 12 million homes across the UK. The biggest wind farms that are operating in the region today have a capacity of just over one gigawatt.
Van der Leun told New Scientist that the project’s success will primarily depend on whether it gets enough support from governments.
“Whether the project will happen depends largely on policy makers. If they set the right targets, appoint sufficient clustered offshore wind areas, set the right boundary conditions from a market and regulatory perspective the project is likely to go through.”