When discussing the outlook for the 2017 wind market, it’s very clear that the wind industry has arrived. Yes, problems remain in many markets across the globe but the fact that wind exists in many markets across the globe means that it will steadily march on in 2017. According to the latest statics from the Global Wind Energy Council (GWEC), 28 countries around the world have more than 1 GW of installed wind capacity and more than 1,100,000 people are employed by the sector.
Most analysts predict the year will be a solid one with either modest growth or slight contraction. In 2015, 63 GW of wind capacity was installed worldwide and that number is expected to remain about the same in 2016 and 2017.
Analysts interviewed by Renewable Energy World favored Mexico and Turkey as two important markets to watch in 2017, with the U.S., China, Canada and parts of Latin America also looking to stay the course. Europe may experience a slightly down year.
“Globally, China is the primary wildcard,” said Eric Lantz an Energy Analyst with the National Renewable Energy Laboratory (NREL). Lantz said that the market in China will “probably determine whether there is an increase globally or a decrease and some of the chatter in China suggests that there may be lower levels of installed capacity on the horizon,” he added.
Steve Sawyer, CEO of GWEC agrees that China is one of two very large variables in terms of global wind capacity growth. He said that he has “been hearing rumors of a Chinese slowdown,” but added that he had heard that last year as well “so I’ll withhold judgement.”
On the other hand, a cut to the Feed in Tariff in China is expected to take effect on January 1, 2018, something that could add urgency to developers getting projects up and running before the end of 2017, said Sawyer.
The other variable for wind market growth is the U.S. said Sawyer indicating that the uncertainty that entered the market as a result of Trump being elected could light some fires under developers who had become a little lax. Sawyer is hopeful that once President Trump learns that the fastest growing job in the U.S. is wind turbine technician he will change his outlook on clean energy and wind in particular.
Another notable market, according to Sawyer is CARICOM – the Caribbean community. The islands have a goal of using 28 percent renewable energy by 2022 and 47 percent by 2027, and up to 2 GW of that energy could come from wind.
“Those economies which should be growing are actually bleeding money because they spend somewhere between 8 and 40 percent GDP on buying diesel, which is crazy giving the amount of wind and sun they have,” said Sawyer.
All analysts predict that offshore wind markets will steadily grow, particularly in light of the record-low prices that were bid for offshore wind energy in Dutch auctions in late 2016. For 2017, offshore wind projects are expected to go online in the UK and Germany. Plus, there will be quite a lot of construction activity in Dutch waters as the large offshore wind farms slated for that market begin construction. Because offshore wind farms take up to 5 years from announcement to completion, it’s fairly easy to predict how that market will grow, said Sawyer.
Better Technology, Lower Costs, Better Analytics
On the technology front, NREL’s Lantz believes in 2017 the 3-MW turbine will become standard outside of Europe.
“EU has had larger turbines for a number of years but in North America and other parts of the world the 2-MW class has been more prominent,” he said.
NREL has been studying the cost trends of the 3-MW turbine and sees reductions in costs in the near future.
“We have some evidence to suggest that some manufacturers have been able to scale turbines while reducing the material intensity of the turbines and so that should suggest lower costs,” he said. “We’ll see if that converts to lower prices or if OEMs will try to capture some additional margin,” he added.
Larger turbines with lower costs means better wind economics for developers and the same is true in the offshore market, in which Sawyer expects the 8-MW machine to become standard.
“I think we are going to see virtually exclusive deployment of the 8-MW series for offshore which is much sooner than everyone expected,” he said. Vestas, Siemens, GE and Adwen (a joint venture between AREVA and Gamesa) all have 8-MW machines either on the market or close to being commercially available.
Another technological advance that we’ll see more of in 2017 according to most analysts is better wind farm analytics. Brian Carey, US Cleantech Advisory Leader at PwC believes more developers will leverage data to optimize positioning of the wind turbines. Sawyer agrees.
“The technology that is very cool is the ability to model the airflow over the entire wind farm offshore using Doppler radar,” he explained. Up till now developers had been able to model the wind flow over one particular turbine to maximize its output but with new technology they can now look at the wind farm as a whole. DONG Energy is reportedly using this new approach, said Sawyer.
Another innovation to keep an eye on for the onshore wind market will be a move to make wind turbines more grid friendly. Some turbines now have the ability to provide reactive power even when they are not spinning, said Sawyer.
“I would imagine other than the continued trend toward taller towers, longer blades and down rated generators to increase capacity factors and lower cut-in speeds, making turbine more grid friendly would be the main technology evolution,” he said.
NREL’s Lantz said there is quite a lot of innovation in the wind turbine market mostly driven by the fierce competition from the low cost of natural gas and solar PV. This competition is forcing manufacturers to focus on price reductions and how to meet their five-year goals ahead of time, said Lantz.
“So there is reason for optimism even as we take a ‘wait and see’ position on the policy realm,” he said.
GWEC keeps a close eye on policies that promote wind power growth across the world. According to Sawyer market reform in China is needed in order to address the problem of curtailment, which can occur due to transmission inadequacy, minimum generation limits and other problems with the grid. He said GWEC is watching the battle between renewable energy and ESCOM in South Africa and hopes that will come to a resolution soon. Further, GWEC is hoping for a FIT change in Vietnam and for the macro-economic change in Argentina to slowly start to reform.
The Adwen AD 8-180 gearbox is the largest WTG gearbox ever built according to the company. Credit: Adwen and Winergy.
As for a global carbon price, Sawyer is not holding his breath but said if something like that were to arise as a result of the Paris Agreement it would come from the bottom up and not be a top down approach. He doesn’t expect to see anything like that before 2020.
Policy in the U.S. market is expected to remain the same in 2017 but the new administration could make changes in the years ahead. As Lantz pointed out, it’s ‘wait and see’ at this time.
PwC’s Carey noted one interesting development related to tax credits in the U.S. market. With the 5-year extension of the PTC last year, owners of existing wind farms that are nearing the end of their 10-year life are considering re-powering.
“There are a fair number of wind farms coming out of their 10-year PTC period and given that it’s going to drop, there is quite a bit of a mad rush to at least get some level of investment in repowering,” he explained.
Carey said that owners of older wind farms can use their existing interconnection and foundations and drop in a new turbine and, if they pass the litmus test for new investment, they will re-qualify for the 10-year PTC.
Overall, wind energy should move forward in 2017 as it has in the past few years. It’s looking out beyond 2018 that is a bit worrying for some analysts.
“There is a lot more uncertainly around as a result of the events of November 8 and the knock on effects,” said Sawyer.