50.2GW of new wind power was added globally in 2018, a 4% increase year over year and the third highest annual total on record, according to the Wood Mackenzie Power & Renewables “Global Wind Power Market Outlook Update: Q1 2019” report.
Commenting on the research, Luke Lewandowski, Wood Mackenzie Power & Renewables Research Director, said: “This significant level of investment seen last year was largely driven by a resurgence in China. The lifting of red warnings in key Northern provinces in China unlocked development, contributing to a 37% uptick YoY in the country (+5.6GW), that influenced nearly 2GW of net capacity additions globally last year.
“The expiration of legacy subsidy programs in Europe tempered YoY gains in China, with countries in Northern Europe (-26% YoY) and Western Europe (-36% YoY) hit the hardest as the RO (UK) and FiTs (Finland and Germany) phased out.”
U.S. and Latin America
As noted in the report, the U.S. wind industry is expected to shift fully into execution mode from 2019 to 2021 in order to fulfil PTC ambitions. During this timeframe, Wood Mackenzie Power & Renewables expects 48% of the U.S. 10-year outlook to come online. “Mitigation strategies to be employed against execution risk and robust C&I demand both support near-term expectations, while the strengthening of state-level targets and innovation will drive long-term development,” added Lewandowski.
2019 saw a challenging start for Latin America, as unfavorable dynamics unfolded in Mexico and no awards were given in Colombia’s inaugural auction. Discussing the wind market in Latin America, Lewandowski said: “The cancellation of Mexico’s long-term auction and a critical HVDC line stymie growth potential puts a greater emphasis on the maturation of developing markets, several of which lack a schedule for the next round of auctions. Despite these challenges, the region boasts a 10-year compound annual growth rate (CAGR) of more than 10%.”
APAC’s offshore sector
According to the report, aggressive renewables targets in India and explosive growth in the offshore sector are expected to drive a 10-year CAGR of 12.2% in Asia Pacific, excluding China. Target compliance in India is likely to bifurcate the next decade’s outlook, with near-term challenges posing issues for the 2020 target. Cumulative offshore capacity in the region will reach almost 19GW from just 111MW at the end of 2018, led by growth in Japan, Taiwan and South Korea.
“China’s market recovery will continue, as additional provinces in the north work to lift red warnings, supporting 250GW of capacity through to 2028. The annual share of offshore wind in China will average 18% of annual capacity from 2022 to 2028, as a result of onshore grid constraints and saturation,” added Lewandowski.
Just this month, the World Bank Group announced a new program to fast-track the adoption of offshore wind energy in developing countries. The World Bank and IFC will help emerging markets assess their offshore wind potential and provide technical assistance to develop a growing pipeline of projects that are ready for investment by renewable energy developers.
According to the World Bank, the offshore wind industry has grown nearly five-fold since 2011, with 23 gigawatts installed at the end of 2018 and a large volume of planned projects in Europe, China and the United States. Offshore wind now represents about $26 billion in annual investments — or 8% of new global investments in clean energy — and this proportion is set to increase dramatically, with about $500 billion expected to be invested in offshore wind projects by 2030.
Europe’s growth outlook
The transition to auctions in Europe will support a new level of annual capacity additions, with the region expected to average 20GW annually.
Proliferation of C&I demand across Europe offers an increasingly important buyer segment for onshore and offshore wind. “Offshore remains central to Europe’s outlook, comprising more than 25% of new capacity over the outlook (CAGR of 14%) and penetrating new markets in Southern and Eastern Europe,” said Lewandowski.
As noted in the Wood Mackenzie Power & Renewables report, pioneering development in the Middle East and Africa will spur consistent YoY growth and 10-year CAGRs of 35% and 21%, respectively.
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