More than 680 GW of new wind power capacity will come online globally over the 10-year outlook, according to new research by Wood Mackenzie Power & Renewables. Wood Mackenzie recently upgraded its Global Wind Power Market Outlook Update: Q4 2018 by 2% compared to the outlook published in the third quarter. Most upgrades occur in the medium-term, boosting annual capacity additions from 2020 to 2023 by an average of 2.7GW.
European offshore matures
The maturation of the European offshore sector continues to be a strong driver of wind in the region.
“With 16 GW of offshore wind power capacity installed in Europe by the end of 2018 and more than 47 GW expected to come online in the region from 2018 to 2027, the European offshore sector continues to be a focal point of growth for the wind power industry,” said lead author Luke Lewandowski, director of Americas power & renewables research.
Several of the key upgrades analyzed in the fourth quarter outlook update highlight an indirect consequence of the European offshore experience: announced and expected offshore commitments from emerging offshore wind power markets.
Lewandowski added: “The European offshore wind power experience has encouraged governments in other regions to support offshore wind to comply with carbon reduction strategies and renewable energy targets as well as more firmly secure domestic power supply.”
Recent announcements from the governments of Japan and South Korea resulted in a more than 1.5-GW upgrade quarter on quarter (QoQ). By the end of the 10-year outlook, this support will yield an installed offshore base of more than 2 GW in each country. A significant rate of growth, considering that neither country has more than 100 MW of offshore wind power capacity installed today.
Elections a mixed bag for America’s wind markets
The fledgling U.S. offshore market also received an upgraded QoQ.
“Attractive price signals are expected to motivate an increase in state-level procurement activity from both pioneering states, such as Massachusetts and New York, as well as new entrants over the long-term, such as California and Delaware.” said Lewandowski.
The upgrade will increase installed offshore capacity in the US to approximately 10 GW by the end of 2027, representing 15% of all new capacity over the 10-year outlook.
Policy commitments in California and industry confidence in exploiting lower value levels of the production tax credit, justify a modest upgrade in the U.S. onshore sector. Cost-out gains and higher production expectations from new turbine technology boost prospects for workable project economics under the phased down incentive.
In the Americas, election results in Brazil, Mexico, and Quebec, Canada, have or may impact the wind power outlook in these markets. Conservative wins in Brazil and Canada threaten the prospects for wind power development in the long-term. The impact of a more liberal administration in Mexico is unclear, but the new government will need to address a balance between development and indigenous interests for the outlook to be fulfilled.
Demand in Australia’s onshore sector headlines adjustments in Asia Pacific, as auction awards and financing commitments have flourished ahead of the market’s renewable energy target deadline. Recent announcements result in a nearly 2GW upgrade to the outlook QoQ and increase project capacity under construction to 5 GW.
Scandinavian countries cause most significant changes
Countries in Scandinavia, namely Sweden, Norway, and Finland, represent the most significant changes to Wood Mackenzie’s onshore wind power outlook this quarter. Increasingly competitive cost levels and an expectation for higher power prices across Europe have triggered a flurry of project investment announcements and power offtake commitments in the sub-region, specifically from the increasingly important corporate and industrial sector. With a more than 5GW upgrade QoQ, these three countries will account for 15% of new onshore capacity installed in Europe over the next 10 years.
The Polish government awakened its recently dormant onshore market with the award of about 1GW of capacity and the expectation of additional auction rounds. Downgrades in Ukraine and Russia QoQ, however, dampen the boost from Eastern Europe’s largest wind power market.
Global wind-turbine order intake on the rise
Firm offshore turbine order intake in China through three quarters comprised about 25% of order intake in the market, indicating the increasing importance of the offshore sector to the local industry. Although the 10-year outlook for China’s offshore sector remains unchanged QoQ, the strong turbine order activity in 2018 confirms China’s rising position as the leading global market in the offshore sector, as it will account for nearly a third of new offshore capacity added globally from 2018 to 2027.
Global order intake capacity increased 28% YoY in Q3/2018 and is up nearly 40% through the first three quarters of the year. Although the China market continues to drive firm turbine order volume there are plenty of encouraging signs from other regions, particularly in Africa. The share of order intake capacity from the offshore sector grows as demand proliferates globally.
Although not all order announcements include a specific project location, the assumption is that a large share of this segment is destined to fulfill safe harbor orders in the U.S. market ahead of incentive expiration.