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Major Markets Continue To Determine Wind's Path

Although its forecast for 2013 involves a "much more significant drop" in the global wind market than last year's prediction, downgrading from its advanced to its moderate scenario, the Global Wind Energy Council (GWEC) is ultimately bullish on wind, predicting that worldwide installed capacity will pass 500 GW by 2017.

Wind continues to grow worldwide, with significant new activity in Latin America, Africa and Asia outside China and India. But, says GWEC, developments in the major markets of Europe, China and the US are still the main determinants of global growth.

In its annual market outlook, GWEC cited a major drop in US installations, slower than expected recoveries in China and India, and a slowdown in Europe as contributors to its reduced forecast. The trade body predicts that annual installations will drop this year by more than 11 percent, to just under 40 GW, but will recover sharply in 2014 to slightly exceed 2012's market, averaging just over 11 percent annual growth from 2014 to 2017. Average for the five years to 2017 is expected to be almost 7 percent, with an annual total of 61 GW in 2017.

In cumulative terms, GWEC predicts a total global capacity of around 536 GW in 2017, with an average annual growth rate of about 13.7 percent.

The Issues

Continued uncertainty over the global economy's short-term development hangs over this forecast, and GWEC expects the downward pressure on turbine prices, caused by sluggish markets and manufacturing overcapacity, to continue. In addition, the trade body reports that increasing use of local content requirements and trade restrictions adds a significant burden for investors.

Policy at the national level is the most significant factor driving the global market, the report finds. In the U.S., although the Production Tax Credit (PTC) has been extended for another year (and will now cover projects breaking ground in 2013 as well as grid-connected projects), a downturn for 2013 may be followed by an upswing the following year. In Europe, recent policy swings will affect many markets in 2013 and perhaps into 2014 - but the long-term effects are unknown, as are the EU's post-2020 targets, currently under discussion. GWEC expects the Chinese market to take longer than its government predicts to return to significant growth after its consolidation phase. And India will probably not see the effects of renewed policy support until 2014.

By Region

While new markets in Africa, Latin America and Asia are evolving rapidly, the report predicts that their numbers will not have a significant impact on the global picture for the next five years, with the exception of Brazil's burgeoning market which GWEC expects to install impressive capacity. The trade body points to South Africa and Pakistan as surprisingly productive, while it says the new push for a renewable energy industry in Saudi Arabia could show substantial results toward 2017 – although it cautioned that "that is very much a wild card at this stage." Major impact from new markets in East and North Africa and East and Southeast Asia will only begin to impact the global picture toward the end of the decade, GWEC says. In Latin America it predicts a proliferation of smaller rather than major markets in the near term.

Asia will continue to be the world's largest market, expected to install about 112 GW in the next five years and ending 2017 with more than 200 GW. China will recover significantly, but reaching the government's target of 18 GW by 2017 is unlikely. The report predicts a low installation level for Japan to 2017. South Korea is expected to build at least 1 GW offshore, but GWEC says this focus is at the expense of onshore. Markets in Mongolia, Thailand the the Philippines will build slowly to 2017, the report says, and Pakistan with 2.7 GW from more than 40 projects is the star of the region.

While the report found Europe exceeding all expectations by installing 12.7 GW in 2012, it is expected that 2013-2014 will see installation levels below 2012's. But emerging Eastern European markets and strong second-tier markets will take up the slack. GWEC predicts that Europe will be back on track by 2015.

Offshore installations in Europe passed the 1 GW mark in 2012, the report found, accounting for about 10 percent of total installations in the EU. GWEC expects this trend to intensify over the next five years, with offshore installations accounting for 3 GW or more per year by 2017. Total European installed capacity is predicted to be about 63 GW, for a cumulative total of more than 170 GW by end 2017.

In North America the "13th hour" reauthorisation of the U.S. Production Tax Credit (PTC) in January has brightened GWEC's view of the market, although the report cautions that installations are expected to drop in 2013 to less than one third of 2012 levels. GWEC did not predict US growth after 2014, calling it "anyone's guess". Mexico's wind industry had a record year in 2012 and GWEC believes it will become a third significant North American market with 1 GW-1.5 GW per year and robust growth expected to 2017. GWEC predicts a 1.5 GW market for Canada in 2013 and total installations of over 52 GW in North America to 2017, with an end figure of about 120 GW.

GWEC expects Brazil's dramatic market growth to continue to dominate Latin America's wind sector to 2017, although installations will be seen in smaller Central American and Caribbean markets and in Chile, Peru, Venezuela, Uruguay and Argentina. Brazil installed more than 1 GW in 2012 and is expected to install more than 2 GW in both 2013 and 2014, accounting for the bulk of the region's total projected 16.5 GW in 2017.

Just over 100 MW was found to be installed in the MENA region although there is much activity, especially in South Africa which is predicted to install around 400 MW annually to 2017 and beyond. In Ethiopia, Kenya, Morocco and Jordan new projects are also getting underway, and GWEC expressed its hope that Egypt's situation will stabilise in order for its 7 GW plan to be realised. The Saudi government also has ambitious plans which may come to fruition before 2017. Overall, GWEC expects more than 8 GW of new capacity to be installed in the region by 2017, for a total capacity of 10 GW.

In the Pacific region, GWEC predicts that Australia's new carbon legislation and its 20 percent by 2020 renewable energy target will help the market grow from its 2012 number of 358 MW in new installed capacity and total capacity of almost 2.6 GW.

The nation has a 19 GW pipeline of which roughly one fourth should become operational by 2017, the report said. Overall installations in the Pacific region are predicted to be slightly under 5 GW, and its total installations will be just over 8 GW in 2017.

Lead image courtesy GWEC

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