Under an advanced policy scenario — the manifestation of the iron political will required in order to address climate change — wind power could reach a total installed global capacity of 2,000 GW by 2030, supplying up to 19 percent of global electricity. This is the key conclusion of the latest Global Wind Energy Outlook (GWEO) from the Global Wind Energy Council (GWEC) and Greenpeace.
In presenting three scenarios for future wind power developments, the 2014 edition further concludes that by 2050, wind power could provide 25-30 percent of global electricity supply. For perspective, wind energy installations totaled 318 GW globally by the end of 2013 while, worldwide, the industry installed an additional 45 GW or so in 2014.
Taking the International Energy Agency’s (IEA’s) central scenario as a baseline and developing “moderate” and “advanced” development pathways, the report presents 2020, 2030 and 2050 forecasts, which paint two different futures.
Under the “moderate” scenario wind power gains ground but, without an effective carbon market, continues to struggle against heavily subsidized incumbents. According to the report, the “moderate” scenario starts with about 14 percent growth in 2014, tapering off gradually to 10 percent by 2020 and then down to 6 percent by 2030.
The more realistic, business as usual, “moderate” forecast sees an annual market size topping 65 GW by 2020 for a total installed capacity of 712 GW by then. Robust growth is anticipated in the period after 2020, with annual markets exceeding 85 GW by 2030 and bringing total installed capacity up to nearly 1500 GW by the end of that decade.
In terms of the volume of electricity produced by wind power, the GWEO “moderate” scenario envisages a large contribution from wind, some 1750 TWh in 2020, rising to almost 3900 TWh in 2030. In this case wind power would meet between 7.2 percent and 7.8 percent of global electrical demand in 2020, and between 12.9 percent and 14.5 percent by 2030. The report notes that while this is quite a substantial contribution, it is nonetheless “probably not in line with what would be required to meet agreed climate protection goals.”
Recently released IEA Wind 2013 Annual Report figures show world wind capacity now generates enough to meet about 4 percent of global electricity demand. In 2013, five countries installed more than 1 GW, including China with 16.09 GW, Germany at 3.36 GW, the United Kingdom at 2.42 GW, Canada with 1.60 GW, and the United States at 1.09 GW. Furthermore, nine countries increased capacity by more than 20 percent, including Finland with a 67 percent increase, México at 35 percent, and the UK at 29 percent.
Nonetheless, under the “advanced” GWEO scenario there is a much stronger international political commitment towards meeting climate goals and as a result national energy policy is driven by renewables and clean energy development.
The Global Wind Energy Council (GWEC) predicts two possible scenarios for the growth of the global wind market over the next 5 to 15 years. In the advanced scenario, total installed wind capacity approached 2,000 GW by 2030. Credit: Global Wind Energy Outlook produced by the GWEC and Greenpeace.
In this scenario, cumulative growth rates start off well below the historical average at 15 percent, remain steady in the middle of this decade and then taper off to 13 percent by the end of the decade, dropping to 6 percent by 2030. Here, annual market size would top 90 GW by the end of the decade, bringing total installed capacity to just over 800 GW by 2020 and nearly 2000 GW by 2030. Furthermore, the “advanced” scenario shows wind power generating over 1950 TWh by 2020, meeting between 8.1 percent and 8.8 percent of global electricity demand, and wind power contributes more than 5000 TWh in 2030, supplying between 16.7-18.8 percent of global electricity.
The authors do, however, concede that such an outcome could only occur with a robust climate regime in place, assuming that current market difficulties are overcome in the near future and that “a broad, clear commitment to the decarbonization of the electricity sector emerges rather quicker than seems likely at present.”
Wind Turbine Supply Chain Reports Reveal Challenging Road Ahead
A new report by TechNavio on the wind turbine supply chain reveals that the global wind turbine rotor blade market is expected to grow at an average annual rate of 14.5 percent over the period 2013-2018. Similarly, new analysis from FTI Intelligence on the global wind supply chain for 2015 reveals that competition is now taking place not only on product quality and price, but also on the value-added products and services that suppliers are now required to provide to assist turbine OEMs and end users to bring down the LCOE in order to compete with conventional energy sources.
Reflecting the challenges facing the wind sector, FTI’s report also notes that more than 120 suppliers have collapsed or stayed out of the wind business in the past two years, including 88 from Asia, 23 from Europe and 18 from North America while a prolonged market contraction has forced major turbine OEMs to divest in-house non-core production assets and opt for extensive outsourcing in order to insulate themselves from market fluctuations.
Feng Zhao, Director at FTI Consulting, explains: “The wind industry has been in the process of transformation since 2011 and the global wind supply chain is not matured yet. The exit/non-participation of so many suppliers delivers a dangerous signal to governments. To bring wind towards a position where it can compete head-to-head with conventional energy sources, it is imperative to find a balance between maintaining attractive and certain policy and reducing the burden on governments and consumers caused by paying renewable energy subsidy.”
Looking into the year ahead, FTI suggests most key components and materials are still facing overcapacity, though the regional distribution for key materials such as rare earth elements and forgings is extremely uneven and bottlenecks are expected. For example, the supply of ultra-large tapered roller bearings, which have gained popularity in China with almost all direct drive designs, can expect to see bottlenecks.
In addition, FTI analysts argue that there is a delicate balance in the offshore wind supply chain at present, but challenges remain in the medium-term. One third of the cost reduction of offshore wind energy partially relies on supply chain industrialization for disruptive technologies and key elements including the offshore wind balance of plant. This ambitious target is, however, unlikely to be achieved without long-term market stability, the report adds.
These findings are echoed by a new analysis from Navigant Consulting, which finds that global turbine manufacturing capacity now far surpasses demand, as a result of which innovation and lean manufacturing are becoming more significant.
During the past two years, the report says, more flexible sourcing strategies across the wind power supply chain have resulted in cost reductions, enabling greater geographic market access while reducing risk and ensuring profitability for wind turbine vendors and their partners in the component value chain. Overcapacity, however, persists in most, though not all areas of the supply chain, providing purchasers with more choice, flexibility, and cost control. This is a trend that is anticipated to extend well into 2015 and beyond.
Sidebar: Asia Dominates Wind Market Growth, Other Regions Stumble
The vast majority of wind growth will be seen beyond the OECD countries, as Steve Sawyer, the CEO of the Global Wind Energy Council observed: “As has been the case for four of the last five years, the majority of the market and almost all of the growth in the wind sector will be outside the OECD. China leads the way, with reports of 20 GW or more installed in 2014, and projections of 22-25 GW in 2015, spurred on by changes to its feed in tariff which come into effect at the end of this year.”
Leading markets such as the UK are expected to tail countries such as France, Sweden and Turkey in new onshore installations for 2015, according to IHS, which is predicting 650-850 MW to be installed in these countries over the coming year.
However Jacopo Moccia, head of political affairs at the European Wind Energy Association (EWEA) reportedly cautions: “Markets in Southern and Eastern Europe are likely to come to a standstill as retroactive changes to support mechanisms and a lack of forward guidance on the regulatory side make investments in these regions risky business.”
FTI analysts point out that the uncertainty around the Production Tax Credit in the U.S. is likely to see development muted in the coming year in this market.
Sidebar: Germany Surpasses 1 GW of Offshore Wind Installed Capacity
Germany is projected to lead Europe in terms of onshore installations this year, with IHS projecting some 2.3 GW. Similarly, Germany broke through the 1 GW mark for offshore wind in 2014. “In 2015 we are expecting up to 2 GW of offshore wind capacity to be newly connected to the grid. By the end of 2015, we will see a total of some 3 GW installed capacity online, which corresponds to an investment of 10 billion euros in the domestic market of the German offshore wind industry,” said Norbert Giese, chairman of the VDMA steering committee for the offshore wind industry and board member of the German Offshore Wind Energy Foundation.
“We are convinced that 2015 will be the year of the Energiewende, the energy transition. The sector and the whole industry, as well as the federal states are ready to go,” added Hermann Albers, president of the German Wind Energy Association BWE.
Sidebar: Wind in a Turbulent World
Various manifestations of the economic crisis, such as low or negative demand growth in the OECD economies and policy instability in key markets, have seen wind development growth remain essentially flat for the last four years, the report says. The document notes that the last significant jump in annual market size was back in 2009, when the market grew by over 40 percent to just over 38 GW. Since then it has hovered around the 40 GW mark, with US market volatility, an end to China’s exponential growth and European stagnation.
However, the authors argue that the Chinese market now shows signs of recovery and posted strong growth in 2013 at 25 percent, meanwhile the U.S. market seems to be back on track for 2014 and 2015, and the Indian market may be ready to start growing again. In addition, Brazil is expected to have installed nearly 4 GW in 2014 alone, energy reform in Mexico has set that country on course for an annual market of around 2 GW for the next decade and South Africa is racking up impressive numbers.
Certainly, wind power has now firmly established itself as a mainstream option for new electrical generation, as Steve Sawyer, CEO of GWEC observed: “Wind power has become the least-cost option when adding new capacity to the grid in an increasing number of markets, and prices continue to fall.”
Sven Teske, Greenpeace senior energy expert and one of the principal authors of the report, contends that the forecasts are robust even in the face of wider energy market volatility, such as the dramatic drop in oil prices that has seen oil fall to below $50 a barrel. “I do not think the current low oil price will have an effect on the global wind market,” he said, explaining: “as oil is for transport, approximately 80 percent [of global demand] and wind generates power.
“The economics of the power supply for islands [where renewables often compete with diesel gensets] might be affected negatively for renewable energy, but this is, firstly, more a problem for PV and, secondly, the market share of off-grid wind and actually also PV is currently quite low — thus the effect will be minor.”
“In regions where the oil and gas price is connected — wind might get under pressure slightly,” he added, concluding, however, that his expectation is that the current low oil price is just a short term effect: “I am sure the oil price will come up again — but don´t ask me when,” he said.
Indeed, Teske even sees a potential opportunity in the rock bottom oil price for policymakers to take a concrete step in addressing the climate change challenge: “To cut a long story short — I do not expect an immediate impact on the wind market for 2015 and 2016 due to the low oil price, but it would be a good chance to introduce a CO2 price for oil.”
Lead image: Wind turbine via Shutterstock