New Global Wind Energy Rankings Reveal a Reshuffle in the Wind Deck

A new forecast for the global wind market suggests that while some sobering times lie ahead, overall the outlook for the wind sector is positive. That said, with major upsets in the supplier rankings and the ebb and flow of global markets already challenging widely held perceptions, the future is an open book.

With the addition of 44,951 MW in new installations in 2012, world wind power capacity grew to around 285,700 MW, an increase in the total wind power installation base of 18.6 percent, the latest World Market Update from Navigant Research’s BTM Consult ApS division reports. All in, around 23,350 new wind turbines were erected in 60 countries and although overall market growth year-to-year was a relatively modest 7.8 percent the figure still represents around 3 GW more wind capacity installed in 2012 than was seen in 2011.

Scoring yet another annual record for construction, this marks the seventh year running in which more capacity was installed than in the previous year and follows record-breaking results from 2008 and 2009, when the growth in annual installations was 42 percent and 35 percent respectively. However, the overall global market’s growth rate in terms of cumulative installations slipped by more than two percentage points between 2011 and 2012, BTM says.

The slowing of wind market growth is a direct consequence of the global financial and economic crisis, which started in September 2008, the authors note, adding that even China, which had demonstrated a strong rate of expansion since 2008, experienced a major decline in its annual installations in 2012. Even so, China narrowly missed scoring a hat trick as the world’s largest market for the third year running, losing out to the US by just 164 MW.

Across the American continent wind installation grew by 12.3 percent compared with 2011 and represented 35.2 percent of the global wind market in 2012, the BTM figures state, adding that the United States recaptured its title as the world’s largest market with 13,124 MW of new wind power installed in 2012, 32 percent more than achieved in 2009, the previous record year.

The combined North American and Latin American market registered a 65 percent increase in new wind power in 2012, higher than the 44 percent increase in 2011.

Maintaining steady growth, Europe installed an additional 12,824 MW of wind capacity, 25 percent higher than the volume installed in 2011 and representing 28.5 percent of the world market in 2012. The recession is nonetheless having an impact, as Europe lost its position as the region installing most wind power globally, with a 4 percent increase on 2011, but 12.5 percent less than five years ago.

Europe does still host by far the largest volume of wind generating capacity of any world region though, at 110,196 MW it has around 15.5 GW more than installed in South & East Asia and some 38.6 percent of the world’s wind power generating capacity at the end of 2012. In the two leading European markets, Spain, against all the odds, marginally increased its installations in 2012 by 6 percent compared to 2011, while Germany produced another year of solid growth, installing 20 percent more than in 2011.

The report goes on to say that, overall, Europe was buoyed by remarkable growth in its emerging markets, with significant volumes installed in Romania, Poland, Sweden and Turkey, but its position is nonetheless being steadily eroded as China and the American continent grow their overall capacity.

However, contrary to trends in recent years, the Asian market saw a drop in installations for the first time in over a decade. China’s annual market growth dropped 26.7 percent, taking it back to below 2009 levels of installation at close to 13 GW. This decline was compounded by a 29 percent drop in India compared with the previous year. In the OECD-Pacific region, which has demonstrated somewhat erratic wind market growth, the report notes, annual installations of wind capacity declined in 2012 by 25 percent on 2011, with all markets except South Korea contracting. The Asian and OECD-Pacific regions combined accounted for 35.4 percent of the world’s new wind installations in 2012, a significant decline of almost 17 percent from 2011.

Including OECD-Pacific, annual installations of new wind decreased from 21,699 MW in 2011 to 15,921 MW in 2012, a drop of 26.6 percent. China and India remained the region’s leading countries.

In terms of overall installation rankings, with the US at number one, China saw 12,960 MW installed for second place, followed by Germany and India. Emerging wind power markets Brazil and Romania, in eighth and 10th place respectively, entered the top 10 for the first time while the exit of France and Sweden from the top 10 ranking in 2012 is also notable, the authors remark.

Global wind power additions in 2012 provide evidence of an increasingly geographically diverse market, with the top 10 markets accounting for 84.8 percent of capacity installed last year compared with 86.2 percent in 2011.

The compound annual growth rate (CAGR) for the past five years has fallen to 17.8 percent, from 22.7 percent in the previous report, reflecting the modest growth rate in 2012, the analysis finds.

Wind’s stake in global electricity supply has reached 2.62 percent, which is the proportion of electricity forecast to come from wind energy in 2013.

Shake-up in Supplier Rankings

A major shake-up in the rankings of the world’s top ten wind turbine suppliers was seen for the first time in several years in 2012 as Vestas was displaced from the number one position for the first time since claiming the top spot in 2000, despite increasing its global market share by 1.1 percent in 2012. GE Wind is the new number one, have jumped from third place in the previous update. BTM points to a boost by a rush to capitalise on the US Production Tax Credit, BTM gives GE a global market share of more than 15 percent in 2012. But there are other big movers too. Siemens rapidly ascended to the third largest global supplier in 2012 from ninth the previous year thanks to strong performance both in the US and the offshore market.

Elsewhere among the major manufacturers, Enercon dominated the German market and maintained its position in the top five by rising to fourth place overall and Suzlon rose one position to fifth place by relying on the strong performance of its subsidiary REpower and its leadership in India, BTM says.

With a moratorium in its domestic Spanish market, Gamesa dropped out of the top five to sixth place.

The four leading Chinese turbine OEM’s Goldwind, United Power, Sinovel, and Mingyang are still ranked in the top 10, though none are in the top five in this year’s rankings. BTM ascribed the positions to transmission bottlenecks and manufacturing overcapacity in the home market for China’s two market leaders, Goldwind and Sinovel, Goldwind saw a big fall, dropping to seventh place from second in 2011, while Sinovel continues to drop in the rankings, narrowly maintaining its position in the top 10, the report says.

The analysis adds that the five companies just outside the top 10 ranking are Germany’s Nordex, China’s XEMC and Sewind, Wind World India and Alstom Wind of France.

Strong Growth, But Downward Forecast for Now

For the second year running, BTM predicts a reduction in market for the next five years. The previous World Market Update forecast was for a 5 percent reduction in the annual growth rate. The new 2012 forecast has revised that figure downward and BTM now predicts the addition of 241,620 MW to 2017, 10 percent less than the 2011 forecast. The lowering of the forecast growth rate is mainly accounted for by a projected slow down in wind turbine sales in 2013 and 2015, the analysis adds. The average growth rate for new installations for the forecast period 2013-2017 drops to 5.1 percent. A drop of over 10 percent is anticipated in 2013 compared with 2012.

The analysis attributes the revised forecast to a number of significant factors, including an expected weak U.S. market in 2013, the result of a last minute extension of wind’s federal Production Tax Credit, which had been due to expire at the end of the year. The extension on 1 January, 2013 came too late to rescue 2013 entirely, the report says. Furthermore, the extension is for one year only and means the U.S. market faces more political uncertainty after 2013.

Meanwhile, the world’s largest wind market, China, is still in transition from a period of breakneck growth to a period of more stable development as more transmission capacity is built, but the authors note that the lack of sufficient grid capacity is a problem that cannot be solved overnight.

On a more positive note, there are a number of emerging European countries which are performing well alongside strong markets like the UK and Germany, the report says, even though markets in long-established wind power growth engines like Spain and Italy are expected to contract. Growth in emerging countries in Latin America, eastern Europe and Africa, and a growing offshore market is expected to address this decline. Furthermore, the EU countries are still required to meet their 2020 targets and the EU directive for renewable energy. Growth in the two leading markets of China and India will also probably take off again in the middle of the forecast period, the report adds, summarising that the global wind power market will continue to grow after a short period of slower growth and that the outlook after 2015 is optimistic.

Assessing the likely regional outcomes, BTM forecasts that Europe will lose its position as the region with the most wind power capacity by 2015, but will account for 30 percent of total demand over the forecast period. The Americas will contribute 19 percent of total demand to 2017, the smaller proportion mainly due to the expected slowdown of the US. Canada will, however, continue to grow and stabilise while Brazil is expected to maintain its leading position in Latin America.

South & East Asia will form the biggest market over the next five years, led by China and India, accounting for 43 percent of all demand. OECD-Pacific will see stable growth, firstly led by Australia and followed by Japan and South Korea at the end of the forecast period.

Distribution of newly installed capacity in the next five years is estimated by BTM to see the Americas on 19.4 percent; Asia (including OECD-Pacific) at 46.5 percent; Europe 30.1 percent; and rest of the world 4 percent.

By the end of the forecast period in 2017, cumulative global wind power capacity will have reached 527 GW, of which 183 GW will be in Europe, nearly 200 GW in South & East Asia and 120 GW in the American continent.

Concerns about security of electricity supply and man-made climate change continue to be the main drivers for increased use of wind energy, and the longer-term market prediction for the 2018-2022 period indicates an improved average growth rate of 8.9 percent. By the end of the market prediction period in 2022, BTM believes that aggregate global wind power capacity will pass the 900 GW mark and will supply around 7.4 percent of the world’s electricity demand.

The authors note that overall geopolitical indicators point to both a need and a desire for more renewable energy, even though clean energy issues slipped down the political agenda during the financial crisis. Nonetheless, political action to implement new decisions to deal with climate change seems likely.

Lead image courtesy David Appleyard

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