IN DEPTH: GWEC wind market view

The worldwide wind market will pull back sharply to less than 40GW this year, predicts the Global Wind Energy Council (GWEC), having surged to a record high 44.8GW in 2012 on extraordinary demand in rich countries.

However, the pullback – due to weakness in both developed nations like the US and growing economies like China and India – will be temporary, with the global market recovering to 45.3GW in 2014, and then increasing to 61.2GW of annual capacity by 2017.

Last spring, GWEC predicted a 46GW global market in 2012 – just 1.2GW higher than the true figure reported today in its Annual Market Update.

In some cases, most notably with the US, deep uncertainty remains about how the market will evolve beyond the next few years. After a stellar 13.1GW performance in 2012, GWEC believes the US market will shrink by more than two-thirds this year.

As a result – and in spite of growing demand in Mexico and Canada – GWEC sees the North American market shrinking from 14.9GW last year to just 6.5GW in 2013, before crawling gradually back to 13.5GW by 2017.

China added 13GW last year – ceding the number one position to the US, albeit temporarily – and the government has called for an 18GW market in 2013.

It seems “unlikely” that it will meet that target, GWEC says, as the country grapples with grid and quality-control issues resulting from its head-spinning wind surge over the past eight years.

Nevertheless, the market potential in China remains “astronomical”, and Asia will continue to dominate the global wind market – adding 25.5GW annually by 2017.

Aside from China and India, the latter of which saw new additions shrink from more than 3GW in 2011 to 2.3GW last year due to two lapsed  incentives (one of them since reinstated), many other Asian markets are set for strong growth.

Among the most pleasant surprises is Pakistan, which commissioned its first commercial scale wind farm last year (a 50MW project in the province of Sindh), has another 150MW under construction, and more than 2.5GW more under development.

South Korea will “no doubt” build at least 1GW of offshore capacity by the end of 2017, while significant markets will begin opening up in countries like Mongolia, Thailand and the Philippines.

Meanwhile, Europe – which is predicted to see steady if unexplosive growth over the next half decade thanks in large part to the offshore sector – will add 15GW in 2017, GWEC predicts.

The Latin America story will continue to be dominated by Brazil, which added more than 1GW last year, and may put on 2GW annually for the next two years – although grid problems loom large.

“It’s not clear there are going to be other major markets in Latin America” over the next few years, GWEC says. “From where we sit now, it looks more like a proliferation of smaller markets.”

South Africa and, further down the road, Saudi Arabia, both look highly promising, with the former on track to be adding at least 400MW a year by 2017, and potentially a lot more. But for the most part, emerging markets in Africa, non-Brazil Latin America, and Asia outside of China and India aren’t expected to make a major contribution to global installation figures over the next half decade.

GWEC’s report also takes a close look at the rise of local-content requirements in wind markets in recent years, a trend driven by the need for politicians to sell clean-energy policies via the promise of green jobs.

On balance, such local-content rules “tend to distort the market, raise prices and delay clean-energy investment”, GWEC says, adding that they also “may contravene international trade laws”.

However, GWEC’s conclusion on the rules is more ambivalent, suggesting that a “middle-ground approach” might be possible, perhaps by using manufacturing tax credits to spur local-content creation, or by adding a feed-in tariff bonus for projects using local components.