Global Wind Energy Insight: Mid-year Stocktake

The Global Wind Energy Council published some incredible numbers for the global wind market in February this year, the global cumulative installed capacity reaching 433 GW at the end of 2015.

Last year marked an unprecedented year for the wind industry with annual installations crossing the 60 GW mark for the first time in history. More than 63 GW of new wind power capacity was brought on line.

Last week the International Energy Agency published their latest data update, showing world production of renewable energy growing 2.6 percent between 2013 and 2014, reaching 1,894 Mtoe by the end of 2014. This represents around 13.8 percent of the total Primary Energy Supply (TPES) of 13,700 Mtoe. Renewables are now the second largest source of global electricity production, accounting for 22.3 percent of world generation in 2014.

Despite rapid growth, several challenges have persisted for a large part of this year. This change includes economic incentives and weak electricity demand in most parts of Europe, the uncertainty brought by the UK’s Referendum vote and the final outcome of the European Commission’s work under its 2030 Climate and Energy Framework. The broader economic concerns in non-OECD markets make it complex to make projections for 2016.

Our annual market projection for 2016 stands at 64 GW. However, our previous projections have been proven to be conservative, given China’s ability to surpass all expectations with exceptional wind power development numbers. Further, by the end of this year there will be more wind capacity under construction in the U.S. than at any time in history. Already by the end of last month there was more than 12.4 GW of new wind capacity under construction across the U.S.

GWEC Five-year Market Forecast 2016-2020

Last year the top 10 markets accounted for almost 90 percent of all new installed capacity worldwide. We expect a similar trend this year as well and the strong growth especially in Brazil, Canada, China, Germany, India and the U.S. to continue this year.

Market Trends, Policy and Political Developments

An increasing number of corporates are buying renewable energy or want to get in the market for it. Not just the new-age tech firms like Amazon, Apple, Facebook, Google and Microsoft want to make their operations greener.  Also household names like Disney, General Motors, Honda, IKEA, Nike, Starbucks and Walmart are also keen renewable energy buyers and users. The community of corporate buyers, service providers, developers, financiers, and utilities who are coming together to efficiently source renewables-based power in regulated markets is growing steadily.

As a largely positive corrigendum to the Paris Agreement, this year in late May, the leaders of the G7 countries met in Japan and released an important statement. The G7 declaration for the first time set a clear deadline for the ending of most fossil fuel subsidies, by saying that government support for coal, oil and gas should end by 2025.

The G7 leaders also called on all nations to ratify the Paris climate agreement at the earliest and committed to “formulate and communicate ambitions mid-century long-term low greenhouse gas (GHG) emission development strategies well ahead of the 2020 deadline.” This mandate further enables the enactment of a long-term clean energy action plan within the G7 countries.

As a follow-up step, in July leaders of Canada, Mexico and the U.S. signed a pact to produce 50 percent of their electricity from clean energy sources by 2025. The energy ministers from each country via the North American Climate, Clean Energy and Environment Partnership Action Plan will support the effort.

In June, REN21 launched their Renewables 2016 Global Status Report. Wind and solar PV had record additions for the second consecutive year, accounting for about 77 percent of new installations, and hydropower represented most of the remainder. Global new investment in renewable power and fuels climbed to a new record level despite the plunge in fossil fuel prices, reaching US $286 billion worldwide. As of early 2016, 173 countries had renewable energy targets in place and 146 countries had support policies. Cities, communities and companies are leading the rapidly expanding “100 percent renewable” movement, playing a vital role in advancing the global energy transition.

On the employment front, IRENA launched its Annual Renewable and Energy Jobs review in June this year. Strong installation rates helped the wind sector reach a total of over 1.1 million jobs. This total is indicative of a strong positive sentiment in the wind sector globally.

Europe’s offshore wind industry attracted a record €14 billion in new investments during the first six months of 2016. Seven projects reached final investment decision this year, financing a total of 3.7 GW of new capacity. Further, in June this year, Energy Ministers from nine countries signed a MoU and Work Program to enhance their cooperation on renewable energy, particularly offshore wind. The Ministers of Germany, Netherlands, Luxembourg, Norway, Sweden, France, Denmark, Ireland and Belgium signed the agreement, which aims to reduce the costs and accelerate the deployment of wind power at sea.

The European wind industry reinforced the Governments’ commitments by making its own new commitment on cost reduction for offshore wind. Eleven leading energy companies sign a declaration saying offshore wind can reduce costs to €80/MWh by 2025 with a strong pipeline of projects.

In line with this commitment, the Danish energy company DONG Energy recently won a historical bid to build two offshore wind farms off the Dutch coast in July. The projects will be built for €72.70/MWh, well below the €103 MWh record set last year by Sweden’s Vattenfall for a scheme off the coast of Denmark. The offshore wind technology has grown over the past decade, with generating capacity more than doubling in the past four years alone.

Strong Year Expected for 2016

Led by wind, renewables have come of age and are transforming the power sector. There are a lot of positive signals: decadal low fossil fuel prices have had no appreciable effect on the growth of wind and solar; the Financial Stability Board’s pronouncements on the climate related risks to the global financial system; the growing divestment from fossil fuels by institutional investors; and of course, the rapidly growing installation levels and record low prices of both wind power and solar PV.

2015 was a big year for the big markets — China, the U.S., Germany and Brazil, all of which set new records. But there is a lot of activity in new markets around the world, and in 2016 the installations are likely to see a broader distribution.

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Shruti Shukla is a Director - Policy and Global Projects at the Global Wind Energy Council. She joined GWEC at the end of 2010. She has over 10 years of experience working in the field of energy policy and climate change. At GWEC she is responsible for the organisation's market research and report writing and statistical analysis. She also is the team lead for the EU funded FOWIND project in India. She holds an MS in Environmental Policy and Regulation from the London School of Economics and a Master’s in Business Economics from the University of Delhi.

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