The global economy may be growing but, when it comes to wind, we are increasingly operating in a two-speed economy.
Need proof? Take a moment to contrast two Spanish-speaking markets that have more than just distance between them.
When it comes to wind energy, the difference between Mexico and Spain provides a perfect illustration of the sharp contrast that now exists between the wind markets in different countries.
Mexico is a stellar example of the sheer speed and pace of growth that can be achieved through the right level of political support, when coupled with a power-hungry, expanding economy.
In Mexico, electricity demand is on the increase. The population is rising and energy intensive industry is booming — bringing new jobs, fresh capital and a seemingly untapped desire for more.
Add to this a transmission and infrastructure network that isn’t saddled with ageing, legacy architecture, typically built around a single power source that utilises a radial grid, and the benefits really start to bloom.
In short, new technology and new ideas are attractive — and in turn, they are able to compete on a far more even playing field with the fossil-fueled cousins.
And here’s the thing. When they do, they increasingly find that they simply don’t need the support systems, which traditionally exist elsewhere, to help spell out the benefits and put the long-term developer economics into sharp relief.
Indeed, as The Power Transformation Report by the International Energy Agency outlined a couple of weeks back, developers and investors are increasingly faced with a stark choice.
While established economies such as the EU continue to offer room for further development, a threshold will soon be reached.
A number of senior executives outlined at EWEA’s conference in Barcelona last week that this threshold doesn’t represent a ceiling. However, it does require many manufacturers, developers and support services firms to make a major strategic decision.
Should they invest in the old markets or invest in the new?
European electricity prices still perilously low and the utilities have made it clear that removing the existing energy generating kit comes at a cost. Tackling the grid issue while at the same time phasing in new kit is not for the faint of heart. Or light of pocket.
However, for those that commit, there are still margins to be made. Recent results from the likes of Nordex — which showed strong Northern European growth — makes this abundantly clear.
There are opportunities in both the old markets and the new; and it’s clear that new market entrants are being forced to choose.
Not everyone will want to make that choice and, for them, the message is clear. Think carefully before trying to invest in both.
This article was originally published on A Word About Wind and was republished with permission.
Lead image: Wind turbine via Shutterstock