Despite its recent success story, the immediate future of global wind power faces uncertainty as Covid-19 challenges abound - but what about in the long term?
Recent years have seen the global wind power industry go from strength to strength, cutting costs and becoming a key asset in the clean energy transition – but as the coronavirus crisis continues to wreak havoc across industries its future is suddenly looking much less certain.
According to the Global Wind Energy Council (GWEC), last year was the second-best on record for new wind capacity installations, with 60.4 gigawatts (GW) added to the international fleet – a 19% year-on-year increase.
Building on this success, the organisation anticipates more than 355GW of additional capacity being brought online during the next five years – although notably cautioned that its outlook would “undoubtedly” be impacted by disruptions caused by the pandemic.
Analysts say near-term future of global wind power faces ‘unprecedented uncertainty’
New research from BloombergNEF suggests the effect of Covid-19 on wind power’s steady rise to prominence could be significant, as supply chain disruptions, labour shortages and delays to tight construction schedules combine to plunge the industry into “unprecedented uncertainty”.
The organisation’s latest report states: “Informal letters warning of the potential need to trigger force majeure contract clauses are becoming commonplace, passing along the value chain from component suppliers to financiers.
“The extent to which construction has already been disrupted differs greatly between markets. Work has reportedly stopped on many projects in France, but is ongoing in other locked-down countries like Spain.
“Delays to certain construction tasks are causing chain reactions in project timelines, challenging conventional construction logistics. For example, scheduling a turbine foundation concrete pour is impossible amid uncertainty over both the supply of raw materials and labour.”
It also warns of an emergent “timing crisis” in markets – particularly China and the US – where stalled projects risk missing out on government subsidy deadlines.
Maintenance scheduling is also proving a stumbling block, as a shortage of technicians resulting from social distancing guidelines is making it more difficult for turbine operators to assess the health of their infrastructure.
Despite challenges, the next decade could prove a big one for wind capacity additions
Despite all these issues, analysts at Wood Mackenzie have offered an upbeat long-term forecast for the industry over the next 10 years.
While acknowledging that inevitable short-term “constraints and delays” induced by Covid-19 will hinder progress this year, research director Luke Lewandowski expects capacity additions through to 2029 to average 77GW annually — a 112% increase in global installed capacity over the 10-year outlook period.
China alone is expected to add 250GW of new capacity by 2029, while Europe will increase its fleet by 225GW, a quarter of which will be offshore, as EU member states chase compliance with the region’s emissions targets.
The Middle East and Africa region is expected to achieve an “astonishing” 23% compound annual growth rate (CAGR) over the 10-year cycle, with Saudi Arabia, Egypt and South Africa leading the pack.
Across the rest of Asia excluding China, a total of 107GW is expected to come online between 2020 and 2029, where “additions in India will account for 51% of new capacity, as the country works to comply with aggressive targets,” according to Lewandowski.
He adds: “Offshore demand in the rest of the sub-region will add 18GW — or approximately 35% of new capacity — over the outlook period.
“Annual additions in Latin America will average more than 4GW. Development of the free market in Brazil, the execution of inaugural auction awards in Colombia, the opportunity presented by coal retirements in Chile and increasing demand from the C&I segment in Mexico will all contribute to a CAGR of 9% in the region from 2020 to 2029.
“As the production tax credit (PTC) fades, US offshore annual capacity additions will depend increasingly on state leadership. We expect this to yield 23.3GW over the 10-year outlook period.”