The Global Wind Energy Council released its annual market statistics last week in Brussels. The 2017 market remained above 50 GW, with Europe, India and the offshore sector having record years. Chinese installations were down slightly—‘only’ 19.5 GW—but the rest of the world made up for most of that. Total installations in 2017 were 52,573 MW, bringing the global total to 539,581 MW.
Beyond the statistics, however, is the fact that wind power is in a rapid transition to becoming a fully commercialized, unsubsidized technology; successfully competing against heavily subsidized fossil and nuclear incumbents. The transition to fully commercial market-based operation has left policy gaps in some countries, and the global 2017 numbers reflect that, as will installations in 2018.
Cratering prices for both onshore and offshore wind continue to surprise. Markets in such diverse locations as Morocco, India, Mexico and Canada range in the area of US$0.03/kwh, with a recent Mexican tender coming in with prices below US$0.02. Meanwhile, offshore wind had its first ‘subsidy-free’ tender in Germany this year, with tenders for more than 1 GW of new offshore capacity receiving no more than the wholesale price of electricity.
Wind is the most competitively priced technology in many if not most markets; and the emergence of wind/solar hybrids, more sophisticated grid management and increasingly affordable storage begin to paint a picture show/demonstrate what a fully commercial fossil-free power sector will look like.
Europe was the big story this year, with record installations both on and offshore, and records set in Germany, the UK, France, Belgium, Ireland and Croatia. However, 2018 totals in Germany and UK will inevitably be down, and unless the Spanish, Italian and and/or Eastern European markets show some signs of life, it will be hard to repeat 2017’s numbers.
In Asia, China continues to lead. Although the market was down by 3.5 GW, curtailment was also down a bit, showing that the authorities are getting to grips with the grid problem, setting the stage for future growth. Also, the offshore sector has now taken off, and will become an increasingly important part of the future Chinese market.
India had a record year, installing over 4 GW, but will be the ‘victim’ of a policy gap in 2018. Pakistan, Thailand and Vietnam all continue to show promise, and there are stirrings in the laggard markets in Japan, and particularly in South Korea as a result of policies being enacted by the new government.
The U.S. had another strong year with 7.1 GW, and a very strong pipeline for the next few years. Despite the political turmoil, the U.S. industry seems to be in a solid position, having narrowly survived a scrape with Congress, and looks to be stable going forward through 2020, although there is still some uncertainty about what happens after that. Canada saw a substantial dip, but new developments in Alberta will help in the coming years, and Mexico is still poised to become a major market.
In Latin America, Brazil chalked up more than 2 GW, despite political and economic crises which are not yet fully resolved. Uruguay completed its build-out and is nearing the 100% renewable energy target in the power sector. The results of 2016 and 2017’s auctions in Argentina will start to result in strong installation numbers in 2018 and beyond.
There was a lot of activity in Africa and the Middle East, but the only completed projects were in South Africa, where 621 MW of new capacity was added to the grid. Australia, the only active market in the Pacific region, put up a modest 245 MW.
The dramatic price drops for wind technology has put a big squeeze on profits up and down the whole supply chain, but the industry is seeking to make good on its promise to provide the largest quantity of carbon-free electricity at the lowest price. Smaller profit margins are a small price to pay for leading the energy revolution.
As New Energy Finance founder Michael Liebreich puts it, we’re well on our way past the first tipping point (where wind is cheaper than incumbent for new-build), and we’re on the edge of the second, where new-build wind (and soon solar) will be cheaper than operating existing incumbent generation. We’re winning the war, although not yet fast enough to play our part in meeting the climate targets in the Paris Agreement. But we’ve laid the foundations, and now with decent frameworks and a little bit of policy support (price on carbon, anyone?) we’ll get there; hopefully in time.