Global Wind Turbine Market – An Outlook
One of the notable achievements of the energy and power industry is paving the path for renewable power generation capacity to grow from its niche beginnings two decades ago to a more cost-competitive (in comparison to newly built coal or gas power plants) means of facilitating the stabilization of energy-related CO2 emissions through the means of renewable energy sources. Further, buttressed with an increasing global commitment to combat climate change, the choice of wind energy is not only the most sustainable but also the most economical means of addressing the issue of global warming.
Besides, the Levelized Cost of Electricity (LCOE) of wind power has considerably reduced over the last decade which has been instrumental towards enabling in increasing its competitive position and expedite energy transitioning. The cots of both offshore and onshore wind power have plunged by more than 50 % on average during the preceding 5 years with prices for newly constructed offshore wind falling by 1/3rd from 2018 to 2019. These cost reductions have been primarily driven by CAPEX/OPEX efficiencies, competitive procurement mechanisms, global supply chain efficiencies, and relatively larger turbines which enables comparatively superior energy capture. Further, the critical threshold of competing on cost with fossil fuel generation across most of the places have been successfully overcome by the wind power generation industry. Additionally, from power producers to OEMs to service providers – the entire value chain is experiencing increasing cost pressures due to low prices captured at auction which is reflected in rapid supply-side consolidation.
For instance, in India, which is a promising market for wind turbines, from 2017 to 2019 intense competition in onshore wind auctions resulted in the reduction of prices to ?2.4/kWh. Further, India with 37.5 GW of wind capacity as of 2019 it is the world’s 4th largest onshore wind market based on installations. The growing demand for energy and political ambition are instrumental to the growth of the wind power market which in turn makes it favorable for the global wind turbine market. In a nation of about 1.38 billion people, the electricity demand is poised to double during the next 10 years. In line with the aforesaid, the Indian government has set a goal of 175 GW of renewable energy generation capacity by 2022. Out of this goal, 60GW will be derived from wind energy. Further, by 2030 the national targets are 450 GW of renewable energy capacity out of which 140 GW is expected to be contributed by wind power. Such ambitious goals have attracted a variety of stakeholders to India’s wind market and fostered a variety of market developments. One such recent development was announced in December 2020 i.e., a fund based out of the Dubai International Financial Centre called GREDHCL (Global Renewable Energy Development Holding Company Limited) has entered into an agreement with German wind turbine maker Senvion Gmbh on the 100% acquisition of the latter’s Indian operations (Senvion India).
Regionally, Asia Pacific maintains the leading position in global wind power development followed by Europe, North America, Latin America, and Africa & Middle East. The world’s top five markets in 2019 for new installations were China, India, Spain, the UK, and the USA. Further, being the largest wind market across the world 23.8 GW of onshore wind power generation was connected to the China grid augmenting the total onshore installations to 230 GW. After passing through the critical period of regulatory reforms 2017 onward, which was marked by the introduction of an auction scheme in 2018, followed by the announcement of a new policy on a definite plan towards subsidy-free onshore wind by NDRC ( National Development and Reform Commission) in 2019 China presents an extremely conducive market for wind power thus facilitating global wind turbine market growth. Besides, the 2nd largest market of 2019 which is the USA, registered the addition of 9.1 GW of new onshore installations in 2019 bringing the total onshore wind power generation capacity to 100GW. The current surge in onshore wind installation is largely attributable to the phasing out of the planned Production Tax Credit (PTC) which necessitates the project developers to pursue the 2020 deadline that qualifies them for full PTC value. In December 2019, the Senate passed a tax extender deal that extended PTC for another year, thereby making PTC qualification one of the prime determinants for new onshore installations in the US up to 2024 which is supplemented by state Renewable Portfolio Standard (RPS) and the corporate PPAs market.
That being a brief overview of the onshore wind market as far as offshore wind market is considered 2019 reportedly registered more than 6 GW new installations. 2019 marked a new milestone for China which registered the installation of more than 2.3 GW offshore wind. Concerning the UK which is the world’s largest offshore wind market based on total capacity, registered record d installations of 1.8 GW and Germany registered addition of 1.1 GW of new installations. Further, in the Netherlands, the 2nd Dutch zero-subsidy offshore wind tender was won by Vattenfall AB in March 2018 which aggregates the total capacity to about 760 MW as of July 2019. This is also a reflection on how the offshore costs have been reduced. The offshore segment of the USA also increased from 9.1 GW in 2018 to 25.4 GW in 2019 post offshore wind generation target upgrading by New Jersey and New York and the announcement of offshore wind generation targets by a greater number of states. With regards to the APAC's first utility-scale offshore project was connected to the grid in Taiwan. Japan too initiated steps that were conducive towards facilitating the acceleration of offshore wind development, Viz. in November 2020 it was announced that The Ministry of Economy, Trade, and Industry (METI), and the Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) of the government of Japan launched the maiden auction for fixed bottom offshore wind projects within the country’s General Common Sea Area. This marks the nation’s 2nd offshore wind auction since the Renewable Sea Area Utilization Law was passed in April 2019.
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