Energy policy shifts in China and the rush by developers in the US to capitalise on fading wind power production tax credits (PTCs) are driving an upswing in worldwide additions now expected to climb to over 75GW/year by 2028, according to latest calculations from Wood Mackenzie Power & Renewables.
The analyst group’s second quarter market outlook forecasts an annual build-out of 71GW from 2019-2023 and 76GW from 2024-2028 – an upgrade of 11GW over the next decade compared to its figures from the previous quarter.
“A 5GW upgrade in the global offshore sector will yield 129GW of new capacity and a compounded annual growth rate (CAGR) of 26%,” said Wood Mackenzie Power & Renewables director Luke Lewandowski. “Overall, the outlook is positive and global wind power sector continues to prosper due to both economic and social benefits.”
Onshore and offshore policy deadlines in China underpin a 2.9GW quarter-on-quarter (QoQ) boost in the Asian renewable energy powerhouse’s outlook, while in the US the market forecast has been revised upward16% QoQ, highlighted by a 3.8GW upgrade in 2021 alone.
“Onshore developers [in China] are rushing to comply with a new policy that requires projects to be commissioned by the end of 2020 in order to capitalise on feed-in tariffs (FIT) before a subsidy-free era begins,” said Lewandowski. “Offshore developers must commission projects before the close of 2021 if they are to utilise the current level of offshore FIT.
“In the US,” he added, “eligible offtakers are rallying to capitalise on the renewable electricity PTC before the full value incentive expires in 2020 and then phases down. Developers qualifying wind facilities in 2017 are eligible for 80% of the full credit amount, incentivising market growth … [while] new state-level targets and the strengthening of renewable portfolio standard mechanisms across the country is expected to support post-PTC demand.”
The global picture for wind power is not uniformly rosy, however, with the analyst calling the outlook for Europe “dismal” due to fall-away of growth in markets including Germany and France.
“Permitting challenges and undersubscription of onshore tenders in Germany and France have impeded growth,” said Lewandowski. “However, an increasing appetite for unsubsidised projects and a proliferation of demand from the C&I [commercial and industrial] segment across Northern Europe both support a modest 0.6% upgrade for Europe QoQ.”
In Africa, meanwhile, political instability, embryonic support mechanisms and rising competition from solar have combined to slow wind power project development and so a 2% downgrade QoQ by WoodMac.
“Green ambitions in Africa are more prevalent than ever before. Renewable energy is attractive within the region, as wind and solar projects can be built much more quickly than other sources of energy. However, as solar is becoming increasingly economical, Africa’s wind market faces stiff competition,” said Lewandowski.
He also noted that despite China’s high-speed wind market growth that “the story is not entirely positive in the APAC [Asia Pacfic] region, with India, where the government has imposed an auction ceiling prices and there have been delays in the commissioning of awarded projects, having “bruised” the region’s near-term outlook, resulting in a 4% downgrade QoQ.
