Wind energy market environment

Key Events

Fukushima prompts a rethink of Nuclear power

In March 2011 a massive earthquake and tsunami hit Japan, provoking the worst nuclear catastrophe since Chernobyl.

The accident prompted a renewed debate on the role of nuclear plants all around the world and sparked a wide-spread anti-nuclear sentiment, with many countries reconsidering their stance. In particular, European governments raised concerns about increasing their share of nuclear power in order to comply with their carbon emission targets.

Following the Fukushima accident at least 8 countries abandoned their plans to install new reactors.
The most significant reaction came from Germany who in the immediate aftermath of the catastrophe shut down its seven oldest plants and announced two months later its decision to phase out their entire nuclear fleet by 2022. This decision reversed the previous policy presented in November 2010 that announced a life extension of all nuclear plants.

Other countries reacted in a similar fashion. Italy rejected nuclear power in a referendum, Switzerland declared a gradual phase out of nuclear power at the end of its operational lifespan, and Belgium increased its nuclear tax and is seemingly edging away from this type of energy.

In any case, many experts agree on the fact that the shifts in the European nuclear position will provoke a capacity gap in the short and medium term that will very likely drive a faster build-out of renewables, provided that adequate policies are implemented.

Durban summit: new hopes for climate change?

The 2011 United Nations Climate Change Conference was held in Durban, South Africa, from November 28th to December 11th.

After repeatedly reaching the brink of collapse, the summit produced agreements on several counts. The main outcome was that, for the first time, both developed and developing countries have now agreed to move towards a single global agreement by 2015. In fact, it is the first time ever that China, India and US agree to a potential legally binding deal. Another major achievement has been the agreement to extend the Kyoto Protocol (which was due to expire in 2012), until 2017 or 2020, to be decided next year. This will enable the continuation of the Clean Development Mechanism.

What lies ahead are years of negotiations to eventually reach a “protocol, legal instrument or an agreed outcome with legal force”, which raises some concerns about its legal force and timetable. For this reason, although international agreements provide a longer-term perspective, it’s likely that domestic frameworks will continue driving investments.

Analysis of global wind energy capacity

In 2011 over 41 GW of new wind capacity came on line all around the world, bringing total installed capacity to more than 238 GW, Global Wind Energy Council (GWEC) data. Despite the ongoing economic crisis and financing difficulties, the wind industry grew by 21% during 2011.

For the second year running, emerging markets have led this growth, adding approximately 55% of new wind facilities and offsetting somehow, the stagnation is some mature markets.

China experienced the biggest growth adding 18 GW of new wind capacity – nearly half of total installations – and consolidated its position as worldwide market leader with nearly 63 GW.

2011 was a record-breaking year for India that displayed outstanding figures adding over 3 GW of new wind capacity and surpassing the 16 GW mark. Today India is the fifth wind market in the world, narrowing the gap with Spain.

During 2011 the European Union delivered 9,616 MW, almost the same than in 2010. Currently Europe hosts approximately 94 GW of wind energy according to the “EWEA” (European Wind Energy Association) and is the largest overall wind market. Amongst the individual countries, Germany remains the EU country with the largest installed capacity (29,060 MW and 3rd wind market worldwide), trailed by Spain (21,674 MW and fourth), France
(6,800 MW and sixth), Italy (6,747 MW and seventh) and the UK (6,540 MW and eight). Germany has witnessed the largest increase in new wind capacity (2,086 MW), followed by the UK (1,293 MW) and Spain (1,050 MW).

Important additions in Eastern European markets, coupled with the ongoing growth of offshore wind in the UK, contribute altogether, to a positive outlook in the European side.

The US installed 6,810 MW of new wind facilities according to the “AWEA” (American Wind Energy Association), improving on last year’s figure (5,212 MW). The US continues in the runner-up position, behind China, with 46.9 GW of total installed capacity.

Canada enjoyed a record year in 2011 adding 1,267 MW and surpassing the 5.000 MW milestone. Ontario is at the forefront of wind additions in Canada and is growing as a very enticing region for further wind investments.

South America is witnessing a push into wind energy, led by Brazil (583 MW installed in 2011) and Mexico (354 MW). Brazil is the most promising wind market in the region as it reached the 1 GW milestone in 2011 and has a pipeline of more than 7 GW to be completed before the end of 2016, according to the Wind Association (Abeeolica).

Europe

In 2011, wind represented 21% of new power facilities, the third biggest share after solar PV (47%) and gas (22%). Overall, 9,616 MW were connected in Europe (EU-27) bringing total capacity to 94 GW.

Although Western European countries showed some signs of stagnation as they become mature markets, they still provided the lion’s share of new installations. Germany topped the list for MW installed in 2011 with 2,086 MW, followed by the UK (1,293 MW), Spain (1,050 MW), Italy (950 MW) and France (830 MW).

Spain showed a slump in annual installations, nearly 500 MW less than in 2010, due to the lack of clarity in the incentive scheme against the backdrop of an economic recession. Portugal however, added 377 MW of wind, close to last year’s figures.

Emerging markets in Eastern Europe grew by a rapid pace as Romania installed 520 MW, Turkey 470 MW and Poland 377 MW. These countries are expected to be at the forefront of wind investments in the coming years. Other countries that displayed high additions were Sweden
(763 MW), Greece (311 MW) and Ireland (239 MW).

Growth in Europe was also driven by offshore wind contribution. In 2011, 866 MW of offshore wind were connected, bringing total cumulative capacity to 3,813 MW. The majority of newly installed capacity is located in British Waters (87%) and practically all of the remaining increase coming from Germany.
All the EU-27 countries have renewable binding targets following the approval of the Renewable Energy Directive 2009/28/EC. In 2010 European countries had to submit their “NREAP” (National Renewable Energy Action Plan) in which they explain how they intend to comply with their overall 2020 renewable.

Despite recent increases in installed capacity, there I still much room to grow before the 2020 target are achieved, as shown in the graph below.

US

New wind installations ramped up in 2011, with the “AWEA” (American Wind Energy Association) reporting about 6,810 MW, bringing the total installed capacity to 46,919 MW. After a disappointing performance in 2010, the wind industry seemed to have bounced back with a 31% increase from 2010 additions (5,212 MW).

California was the main contributor to 2011 growth with 921 MW of new installed capacity followed by Illinois (693 MW), Iowa (647 MW) and Minnesota (542 MW). Texas only installed 292 MW but continues to be the most important State in terms of cumulative capacity with more than 10 GW on line.

Overall, 30 States brought new wind farms on line in 2011 and, at the end of the year, 14 States surpassed the 1 GW landmark in terms of total capacity.