Energize Weekly, May 9, 2018
Annual global wind power capacity additions are projected to average more than 65 gigawatts (GW) between 2018 and 2027, according to renewable energy consultant MAKE.
That is equal to a 4 percent compounded growth rate, Aarhus, Denmark-based MAKE said in its first quarter market report.
Tax supports in the U.S., a resurgent auction market in Latin America and the growth in emerging markets are spurring wind power installations, according to the market report.
The growth in offshore wind development, particularly in Europe, is also bolstering the market, MAKE said.
In the U.S., there had been concerns that the Production Tax Credit (PTC), which provided about $22 per megawatt-hour generated by a project for 10 years, would expire. The PTC is a key financing tool for wind projects.
A stepped-down version of the tax credit was extended. In the tax reform bill passed by the U.S. Congress in 2017, key elements for wind farms were also preserved.
“The US wind power industry avoided complete disaster through tax reform negotiations at the end of 2017, but the new policy has impacted project timelines and pushed some capacity into the 2019 to 2020 growth bubble,” the MAKE analysis said. “Safe harbor wind turbine deals signed at the end of the year support projects in 2021, but annual new capacity drops off considerably after 2021, as the value of the production tax credit drops below 80 percent.”
In Latin America, a “densely packed” schedule of wind auctions is projected to lead to annual compounded growth rates of 14 percent in wind deployment, MAKE said. Auctions are scheduled for Brazil, Mexico Argentina, Colombia and Peru.
Latin American wind has grown swiftly in recent years to almost 20 GW by August 2017, with 80 percent of installed capacity in Brazil and Mexico.
Auctions globally, with looming deadlines for government incentives and new auction mechanisms, are expected to lead to a 30 percent increase in annual capacity from 2017 to 2020.
In Northern Europe, offshore wind projects will be the driver as their share grows to 50 percent of new capacity, with the United Kingdom accounting for the majority of offshore projects. Denmark, Sweden and Ireland will also contribute to the share of offshore capacity.
Emerging markets, such as the Middle East and Asia, will gradually develop over the next 10 years. “The expected signing of power contracts in South Africa and the award of 1.2 GW of wind contracts in Saudi Arabia provide the foundation, but growth in Iran and Egypt also contribute significantly,” MAKE said.
Asia will become the second-largest region behind China in terms of new capacity with an aggregate addition over 10 years of more than 9 GW.
“China’s offshore sector will mature quickly, free from the transmission constraints plaguing traditional onshore wind bases, with annual capacity additions exceeding 3 GW in 2022 through 2027,” the MAKE forecast said.
