Every year at about this time we at the Global Wind Energy Council release our ‘Global Wind Report: Annual Market Update,’ updating our preliminary annual market statistics, surveying the global market, giving snapshots of the most important markets, delving into some key issues facing the wind sector and laying out our projections for the next five years. The report is a combination of statistics, analysis and educated speculation about what the next five years will bring.
As Yogi Berra (or Niels Bohr, or Mark Twain) is alleged to have said, “It’s tough to make predictions, especially about the future.” It is indeed. Let’s examine what we know, what we know we don’t know, and what we can’t know.
Former U.S. Secretary of Defense Donald Rumsfeld’s epistemological maunderings provided some grim amusement while recounting the ups and downs of the invasion of Iraq in 2003. He divided the world into knowns, i.e., facts; known unknowns, i.e., those factors which we know will affect the future in as yet unknown ways; and unknown unknowns, i.e., the inevitable surprises the future will throw at us.
For the wind industry, the knowns are the remarkable rise of a new industry over the last 30 years or so, which now attracts on the order of $100 billion/year and employs more than a million people around the world. In 2017, wind power provided 44 percent of Denmark’s electricity, 30 percent in Uruguay, 24 percent in Portugal and Ireland, nearly 20 percent in Spain and Germany; more than 30 percent of the power in four U.S. states and close to 5 percent of total global power supplies. This is well-documented in our reports over the years, as well as elsewhere.
Looking ahead, we are at the early stages of ‘the electrification of just about everything,’ because of the dramatic rise of cheap wind and solar power. But how fast and how far will that go, and in what sectors when? Now we get into the known unknowns.
The list of known unknowns could be very long indeed, but I’ll focus on the ones I wrestle with when making our five-year forecasts:
1. How much lower can prices go, how will that compare with solar, and at what point does it cease to matter?
2. What will happen to the post 2020 market in the U.S.? In Europe?
3. Will the Chinese juggernaut continue to roll?
4. Will either the Russian or Saudi markets take off in reality this time? Both?
5. Will the Mexican, Argentinian, Indian and South African markets be helped or hurt by upcoming elections, not to mention the U.S. mid-terms later this year?
6. When will the stranglehold of Japan’s vertically integrated utility monopolies be broken so renewables development can happen in earnest?
7. Will the new South Korea government’s renewables commitments end up meaning anything in practice?
8. At what point will international climate policy begin to affect renewable energy markets?
9. How much will the choking smog in emerging economies’ megacities continue to drive renewables policy in those key markets?
For the slightly longer term:
1. What will zero-emissions system optimization mean in terms of direct electrification vs. the conversion of cheap wind and solar to hydrogen or hydrogen-derived fuels?
2. Electrification: of wheeled transport, certainly, as well as cooking, and a significant portion of industrial process heat, both low and high temperature. But how about space heating/cooling? Will we be looking at direct electric heat, or centralized systems based on a combination of geothermal, electric and potentially power-to-fuel or biomass?
3. How will the digitalization of the power sector affect the balance between utility scale power production and pro-sumers?
4. What about shipping? Aviation? We have electric ferries and barges, but how much further can it go? Norway plans to have all short-haul flights electric by 2040, and there are many other electric aviation projects out there…
The lists could go on, but that’s a fair sampling of the known unknowns affecting the wind market in the short to medium-term future. The answers to those questions will have a dramatic impact on the long-term role of wind power, but at this stage it’s virtually impossible to quantify.
Then of course there are the unknown unknowns, the inevitable technological, economic, social, and political upheavals we humans tend to specialize in, which will change the picture completely in ways we can only begin to imagine. Wonderful grist for the science fiction writer’s mill, but not much help in making long-term projections. As Mr. Wittgenstein said, ‘That which we cannot speak about, we must pass over in silence.”