The global economic crisis led to a lack of capital in the wind industry and heightened scrutiny from lenders, causing a slowdown of the industry in 2009, spilling over into 2010. The crisis lowered investor confidence and decreased corporate and project value.
However, an analysis from Frost & Sullivan (www.energy.frost.com), Investment Opportunities in the Wind Energy Sector in Europe, details developing opportunities available to participants and investors from three perspectives – new geographies, value-chain and peripheral markets.
Many countries in Western Europe, such as Germany, Spain, Italy, France, the UK, Denmark and Portugal, are numbered among the top ten countries for installed capacity in the world. The EU 2020 Renewable Energy targets, and other incentive mechanisms, have pushed many countries to improve their renewable energy markets and investors are already aware of the opportunities present there, both in the onshore and offshore wind energy markets.
Three countries in Western Europe that present greatest potential growth are Sweden, Greece and Ireland. "The countries that have been chosen are attractive because of the wind energy potential, the contribution that wind energy can make to the RE targets, as well as government incentives," notes Frost & Sullivan Industry Analyst Gouri Kumar. Similarly, countries in Central and Eastern Europe such as Poland, Turkey, Bulgaria, the Czech Republic and Romania are likely to present opportunities and are moving towards opening attractive markets in the future.
Following the onslaught of the crisis, several important trends emerged in the European industry. The offshore wind industry, supported by a number of countries such as the UK and Germany, is rapidly developing. Offshore wind energy installations offer higher productivity than onshore projects due, primarily, to the lack of intrusions. While average wind speed on land is 7m/sec, offshore speed is higher, touching 9 or 10m/sec. "Load factors are also double those of onshore wind," says Kumar. "Moreover, project economics and economies of scale encourage developers and owners to build large-scale projects (greater than 100 MW), thereby making a bigger contribution to the renewable energy target."
Likewise, the trend of re-powering, for the refurbishment of wind turbines in order to produce better performance and greater capacity, is being strengthened, particularly in Denmark, Germany and the Netherlands.
Complexity of some of the wind industry value-chain components, particularly bearings and gearboxes, has led to expanded production facilities, motivating further research and development. Remarkably, before the economic crisis, the general shortage of supply presented a substantial hindrance to market growth. However, the decrease in demand during the crisis allowed time for the supply chain to "catch up", thus providing growth opportunities as production managers look to avoid this pre-crisis imbalance in the future. Investment in blade design and production facilities by most wind turbine manufacturers has expanded and is expected to grow further.
Interest in construction and O&M (Operation and Management) markets in both onshore and offshore wind energy divisions has escalated steadily. Factors such as the general growth of the wind energy sector, an increase of financial investors outside the private sector, and falling cost of wind energy, are encouraging external awareness. Opportunities in the much-needed development of ports and installation vehicles are particularly substantial. "Ports, most of which are around the North and Baltic Sea, are ill-equipped at the moment to handle offshore wind activities," says Kumar. She continues to explain that the supply of installation vessels likewise requires attention and funding. "With the growth of the offshore wind energy sector in Europe, installation vessels are going to be in short supply … Seeing the opportunity in the market, a lot of investment has gone into building them."
Services in the O&M sector are vital to the furtherance of the wind energy market. With an increasing interest in the establishment of offshore and onshore wind farms, O&M providers are needed for the day-to-day running of wind turbines, 24/7 service teams and predictive and corrective maintenance. An escalating number of ISPs (independent service providers) are answering the need for external providers in the fast growing market.
Focus on improving the grid network and developing more adequate power storage technologies has intensified. Grid networks in Europe are outdated, as most were built 40-50 years ago without consideration of the impact of electricity generated from renewable energy projects – especially wind, as it is the fastest growing. Similarly, the necessity of stabilizing energy supply by regulation through improved and available storage has brought power storage technologies to light. Frost & Sullivan believes that as interest buds, the sector will receive more attention in the future.
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Investment Opportunities in the Wind Energy Sector in Europe is part of the Energy & Power Growth Partnership Services programme, which also includes research in the following markets: large hydropower, biomass energy and offshore wind energy. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.