MAKE forecasts the annual wind-power capacity additions to average more than 67 GW from 2018 to 2027, resulting in a compounded annual growth rate that exceeds 8% over the period.
Even as incentive mechanisms in several markets expire, country-level policy developments in Q2 have a significant impact on the global wind-power outlook. Significant multi-gigawatt upgrades spurred by policy indicators in India and Japan, for example, more than off-set policy-driven downgrades in other markets such as Iran. Overall, the global upgrade this quarter is concentrated in the medium-term, increasing capacity by nearly 14 GW from 2020 to 2024.
Momentum continues to build in the U.S. offshore sector, as three states announced 1.4 GW of offtake capacity in Q2, both solidifying and boosting growth expectations next decade. Adjustments to assumptions on state-level compliance deficits in the US and revised LCOE calculations, contribute to an upgrade of more than 6 GW from 2021 to 2027. Increasingly dubious export opportunities in Eastern Canada results in a downgrade QoQ, and puts pressure on near-term execution of capacity in Ontario and Alberta. Overall, the outlook for North America increases 10% compared to the analysis in Q1.
More modest load-growth expectations in Mexico over the next 10 years combined with an anticipated change in presidential leadership in Mexico results in a 24% downgrade in the country compared to the Q1 analysis. This overwhelms more modest, project-level adjustments elsewhere in Latin America, and results in a 7% downgrade in the sub-region over the next 10 years.
The outlook in Europe including Russia increased by 1.7 GW quarter-over-quarter. In Northern Europe, a 500-MW+ upgrade in the UK (supported by a more extensive pipeline of RO-qualified projects identified than in Q1) and a nearly 500-MW upgrade in Norway (FID announced for two projects) more than off-set offshore capacity in Denmark and Sweden that has shifted beyond 2027.
The results from the second SDE+ auction in the Netherlands contributed to a nearly 600-MW upgrade to the outlook for Western Europe in Q2, the largest quarter-over-quarter adjustment in Europe compared to the analysis in Q1. Combined with increased repowering activity, the auction results in the Netherlands helped overcome downgrades in most of the rest of the sub-region.
The downward adjustment to the outlook in Germany accounted for the largest downgrade in Western Europe, as the second onshore wind auction awarded in May went undersubscribed and repowering interest in general has waned under the auction mechanism. Downward adjustments in France and Belgium contributed to lessening the impact of the upgrade in the Netherlands.
The announcement of a wind auction in Greece yields a 31% upgrade in the country and represents the only meaningful change in Southern Europe compared to the analysis in Q1. Economic weakness in Turkey influences a downgrade in Q2 that erases more than half of the boost in the sub-region’s outlook from an upgrade in Greece, with project-level adjustments in other markets further cutting into the balance.
A few emerging markets in the Eastern Europe, Russia and Caspian sub-region are showing positive signs of development, which provides a welcome spark to the outlook (nearly 600 MW quarter-over-quarter). Kazakhstan has initiated an auction program to ultimately award 620 MW of wind capacity and early development activity in Armenia and Romania provide improved confidence in market growth next decade.
A 47% downgrade in Iran due to the negative impact of U.S. withdrawal from the nuclear deal overshadows otherwise positive development in Saudi Arabia and Lebanon. The change in the outlook for Iran drives a 9% net downgrade for the Middle East sub-region from the analysis in Q1.
The signing of wind PPAs in Egypt and South Africa spurs growth in markets where market development had become somewhat inert. The more than 1 GW added to each country’s outlook boosts the outlook for Africa by 9%. The outlook in China remains largely unchanged quarter-over-quarter despite the announcement of an auction regime in key wind power bases as the policy development was already assumed in the Q1 analysis.
India’s aggressive wind target in 2022, however, has resulted in an auction schedule that has prompted a more than 8GW upgrade to the 10-year outlook. A 3-GW upgrade in Japan due to an expected decrease in EIA review time and a larger commitment to offshore build out contributes to a 13% quarter-over-quarter upgrade for Asia Pacific excluding China.
Global firm turbine order intake increased 27% YoY in Q1/2018 to nearly 13 GW for the quarter. The increase can be attributed to demand in India as auction winners race to execute projects before required deadlines. Chinese turbine OEMs registered a record quarter for firm offshore orders, with multiple 300MW+ orders announced, as that sector of the China market continues to develop rapidly.