Wind Power Barometer

The North American wind farm market has taken a knock and the European market has slowed down. On the other hand Asian wind power market growth has crept up steadily and now has a grip on more than half the global market.

New wind turbines installations across the world in 2010 will fall short of the 200 GW landmark figure, as first estimates quantify the market at 35.7 GW, bringing global capacity to 194.5 GW, up 22.4% on the 2009 installation level. The Asian market is casting an increasingly long shadow over the world’s other regional markets. In 2010, it was responsible for over half the newly installed capacity in the world (53.3%), ahead of Europe, which still accounts for more than a quarter of the global market (27.4%), and North America (16.3%) which almost went into free fall.

Yet Europe will have the highest total wind farm installed capacity for some time to come as it is home to 44.3% of the global wind turbines base ahead of Asia (30.1%) and North America (22.7%).

China alone installed almost half the global market (16.5 GW) bringing its accumulated wind power capacity up to 42.3 GW, outstripping the United States (40.2 GW) and taking it to the top of the world rankings. The US wind turbines market which was comparable with Europe’s in 2009, saw its installation level halved, dropping from 9 849 MW in 2009 to 5 115 MW in 2010. The AWEA (American Wind Energy Association) blames this market slump on the absence of any long-term federal policy and the prevailing tight economic conditions that limited funding abilities over the twelve-month period.

Wind power is also beginning to move in on developing countries, which demonstrates that the sector is becoming increasingly competitive. According to GWEC, India installed 2 139MW, Brazil 326 MW and Mexico 316 MW.

First estimates calculate the EU market at around 9.3 GW in 2010, as against 10 GW in 2009, which raises total installed wind power capacity in the EU excluding non-working installations to over 84.3 GW. The European market is picking up momentum as new offshore projects materialise and a number of Eastern European markets build up capacity. These developments partly offset the sluggish performance of its long-established markets (Spain, Germany, France, Italy and the United Kingdom) whose operators are struggling to find the new sources of funding required for continual market growth. Nonetheless European-scale investments should hold up (to the tune of 13 billion euros) thanks to offshore wind farm projects which are grasping an increasing market share.

European wind power’s financing difficulties also need to be gauged against the buoyancy of the other major electricity-generating sectors. EWEA (European Wind Energy Association) states that for the first time since 2007, wind power capacity installation in the Union did not exceed that of any other electricity-producing technology.

The association admits that wind power was easily outstripped by gas-fired power plants (about 28GW of capacity installed in 2010) and was even overtaken by the photovoltaic solar sector (with about 12GW). It also comments on the comeback of coalfired power plants as installations overtook “coal” capacity decommissioning by about 4GW.

It should be pointed out that the unit capacities of these various sectors do not produce the same amount of electricity (MWh). One megawatt of “gas-fired power plant” capacity yields more than 1MW of wind turbine capacity, which in turn yields more than 1MW of solar power capacity.

The European Union consolidated its top global offshore wind power status. Over the twelve months of 2010, five EU countries brought a total of 1139.3 MW of new offshore production capacity on stream. The offshore share of the total wind power market rose to 12.2% in 2010. The United Kingdom was the most active country, connecting an additional 653 MW, according to British wind power association Renewable UK, bringing the wind farm installed total to 1 341.2MW.

This additional capacity includes the Thanet (300MW), Gunfleet Sands I and II (108 and 64.8 MW) and Robin Rigg (180MW) wind farms. In so doing, the UK increased its lead over Denmark which, according to the grid operator, added 211MW in 2010 with Rodsand II (207MW) and the latest (3.6-MW) wind turbine to the Avedore farm, taking its offshore capacity to 872MW. The third most active country was Belgium, which commissioned 55 wind turbines (165MW in total) 46 kilometres off the Zeebrugge coast at the Belwind wind farm. Belgian offshore wind power capacity now stands at 195MW. For its part Germany, connected some of the Baltic 1 and Bard 1 project wind turbines, adding 108.3MW of capacity to bring accumulated capacity up to 180.3MW.

To finish this European round-up, Finland connected the only wind turbine (2.3MW) of the Pori 1 wind farm, raising the country’s offshore wind power capacity to 26MW.

It comes as no surprise that Germany is still the leading European country in terms of installed wind farm capacity, followed by Spain, Italy, France and the UK. In fact the only change is that Portugal robbed Denmark of its sixth place, pushing it back to number seven.

Yet if population numbers are considered, Denmark is still in front (686.6kW per 1000 inhabitants) (YrVpZ3) ahead of Spain (449.6kW per 1000 inhab.), Portugal (366.4kW per 1000 inhab.) and Germany (332.7kW per 1 000 inhab.). France and the UK are low in the country rankings at number thirteen (87.5kW per 1 000 inhab.) and fifteen (83.9kW per 1 000 inhab.) respectively.

Germany at a low point

The German market is clearly on a downslide. According to DEWI (the German Wind Energy Institute), 1 551MW of capacity was installed during 2010, as against 1 917MW in 2009, which is a drop of 19.1%. The country now has a total of 21 607 wind turbines in service with a total capacity of 27215 MW, which has driven down the German market to its 1999 installation level. VDMA Power Systems (the electricity production system section of the federation of German engineering companies) claims that the sharp drop in the onshore wind power market can be ascribed to both the recession’s impact on funding major projects and uncertainties surrounding grid requirements applied to wind turbines.

The BWE reckons that another reason for this contraction is the dearth of land being released for new installations, despite the decision of a number of German regions to designate new sites. Development is being stifled by administrative restrictions on land availability for wind power and height limitations.

Repowering (the replacement of obsolete wind turbines by more recent units) will become a major development driver of this market, as almost 9 500 wind turbines will be potentially affected by 2015, calling for investment that could rise to 40 billion euros. The offshore market should also start building up, and the VDMA reckons that an additional 300 MW will be connected in 2011.

Germany’s feed-in tariff system remains unchanged since the 2009 renewable energy law was enacted on January 1, 2010. However, a 1% annual sliding price reduction is applied to onshore wind power and a 5% annual sliding price reduction for offshore plants from 2015 onwards.

The run of bad news continues as Germany is set to post particularly low wind power output results in 2010. Despite the increase in production capacities and the connection of new offshore wind turbines, preliminary data from BDEW (Federal Association of the Gas and Water Industries) puts output at 36.5 TWh in 2010 (compared to 38.6TWh in 2009 and 40.6TWh in 2008). The BDEW stresses that the final data will only be available in March, so this figure may be revised upwards in the coming weeks.

The Spanish market is back under control According to AEE (the Spanish Wind Energy Association), Spain installed 1 515.9MW in 2010, which is similar to Germany’s installation level. However, the Spanish market contracted more as the country had installed 2 470.7MW in 2009. The cumulative wind power capacity rose to 20 676MW by the end of 2010, which is slightly above the 2005-2010 Renewable Energies Plan target.

AEE explains that the new administrative procedures required for installing wind turbines is responsible for this reduction. The main culprit is the introduction of a new pre-allocation register that has been in place since mid-2009. The authorisation procedure gives the Spanish government stronger control over the siting of new wind farms and with it, stricter management of the growth of its domestic market.

The association also blames the recession’s fallout on the Spanish wind power industry which has resulted in the suspension of several orders. This is compounded by the uncertainties surrounding the implementation of a new legislative framework planned for 2013. In the meantime, Royal Decree 1614/2010 introduced a number of changes that aim to reduce the payments made to those wind farms that opted for the premium plus market price system.

Between 1 January 2011 and 31 December 2012, the premium will be reduced by 35%. Yet another limiting factor has been introduced. The number of equivalent hours of operation (corresponding to the load factor) eligible for the premium has been capped to 2 359 hours per annum.

Growth prospects are further limited by the pre-allocation register which is designed for less than 3 000MW in total for 2011 and 2012. Furthermore, the pay-out rate and payment system for these projects are still unknown. This situation is stifling new project developments. According to the national renewable energies action plan (which stems from European Directive 2009/28/CE), Spain plans to install 35 000MW of onshore and 3 000MW of offshore capacity by 2020.

There is good news about the country’s wind power-friendly climate. According to Red Eléctrica de España (the Spanish grid operator) wind power energy covered a record 16% of Spain’s annual electricity demand (13.8% in 2009), at almost 43 TWh.

France invites bids for offshore projects

The French market was stable in 2010 as yet again it managed 1 GW of newly installed capacity (adding 1 034MW in 2010, as against 1094MW in 2009). The months of suspense from the beginning of the year waiting for the enactment of the Grenelle II Law which was finally adopted on 12 July did nothing to boost growth.

The new law sets up a more binding administrative regime for wind farm operators. Wind turbines now have to comply with the Classified Installations for the Protection of the Environment (ICPE) regulations. Furthermore, wind farms must have a minimum of five constituent turbines. The payment plan, defined by the decree dated 17 November 2008, is unchanged at € 0.082/kWh for the first ten years and € 0.028 to € 0.082/kWh for the following five years of operation indexed to the productivity of the plant.

The current feed-in tariff for offshore makes construction of wind farms unviable. The government has opted for issuing tenders, and on 25 January, President Sarkozy announced the call for the first round of bidding for French offshore wind turbines.

This segment accounts for 3 000MW of capacity, which is 2% of the country’s electricity consumption. The national wind energy target set for 2020 is 25 000MW including 6 000MW of maritime wind power.

According to RTE (the French grid operator) wind power output rose to 9.6TWh in 2010, which is 22% or 1.7TWh up on the previous year. On 12 November 2010, a new wind power production record was set, with instant capacity (demand capacity used at a given time) of 4 200MW, which corresponds to a 77% load factor. The mean figure of the year was 22% and is stable in relation to 2009.

Italy up in the air

The Italian market, which had stood up well to the crisis in 2009, had a tougher year in 2010 and dropped below the 1 GW of newly installed capacity. ANEV (The Italian Wind Energy Association) says that the country grossed 5 797MW of capacity in 2010. If this figure is compared with that of the Italian grid operator Terna, for 2009, this rises to 899.1 MW of capacity.

The 40% drop in value of green certificates is responsible for this setback. Investors and their bankers got cold feet about committing to a sector that no longer guarantees earnings on investments. The situation is even more nebulous, because the main renewable electricity support mechanism, the green certificate combined with quotas, could disappear from 2012 onwards. The system is due to be overhauled as part of Italy’s application of European Directive 2009/28/CE.

The United Kingdom – the offshore wind power supremo

According to Renewable UK, British wind power capacity rose to 5203.8MW, over a quarter of which (25.8%), 1341.2MW, is offshore. If these figures are compared with the Department of Energy Climate Change (DECC) figures for 2009, about 779.8 MW of capacity has been added. DECC will revise this figure upwards in the next few weeks as the British association has yet to take into account the partial connections of wind farms under construction. The real installation level should be close to one gigawatt.

The UK will build on its global leadership of the offshore segment in years to come with, according to Renewable UK, 1154.4 MW under construction and 2 591.7MW of approved projects. The pace of onshore installations is also bound to pick up, with projects for 1363.9MW under construction and 3604.3 MW already approved.

British aid policy continues to be based on a system of certificates (Renewable Obligation Certificate System). For the 2011-2012 period, the number of ROCs needed for suppliers (in England, Scotland and Wales) to reach their objectives will be 0.124 ROCs per MWh supplied in England (a little over 12% of all renewable electricity). It will be 0.055ROCs per MWh in Northern Ireland. The value of one MWh varies by technology – one MWh of onshore wind power earns only 1 ROC, whereas one MWh of offshore wind power earns two (for accredited wind farms until 2014).

Increasingly promising easterlies

Some countries in the East of the European Union have confirmed their determination to develop their wind power sectors, in line with their National Renewable Energy Action Plans (NREAP). Poland sailed past the one gigawatt mark (1 185MW) in 2010 by connecting an additional 460.3 MW. The Polish wind turbine base has increased by 63.5% in the space of twelve months and the country plans to have 3 350 MW of onshore capacity under the terms of its National Renewable Energy Action Plan by 2015, and 5 600 MW of onshore and 500 MW of offshore capacity by 2020. In Poland wind power energy promotion is based on a certificate system.

The total amount of aid includes the market price plus the certificate price (about PLN276/MWh) and stands at around PLN 476/MWh (€122/MWh). The price varies in line with market price fluctuations. Romania is also an up-and-coming market. According to Romania’s Center for the Promotion of Clean and Efficient Energy (ENERO), the wind turbine base made a 400-MW leap in 2010 (from 18MW in 2009 to 418 MW in 2010). The country’s installation conditions are very favourable (rapid processing of applications, low connection cost, low administrative cost) and its growth should accelerate as 2624MW of capacity is already covered by connection contracts.

Once again the incentive system is backed by green certificates, based on a compulsory percentage of renewable electricity supply. Producers benefit from the electricity market price and the certificate price that are traded on the certificate market organised by OPCOM, the Romanian regulator. The value of a certificate cannot exceed 55 euros and cannot fall below 22 euros. The market exchange value is currently around its maximum value. An amendment to law 220/2008 dated 2010 introduced technology-based differentiation in the number of certificates obtained per MWh. Henceforth wind power will benefit from two certificates per MWh produced until 2017, and from one certificate per MWh produced from 2018 onwards.

First available estimates indicate that the European Union’s wind energy electricity output should reach 147 TWh, which is an 11.2% rise on 2009 (tVb]e 4). This production can only be described as low given the installed capacities and is largely explained by the very low winds in Germany (the country that accounts for almost one third of Europe’s installed capacity) – the lowest observed for seventeen years according to the BWE (the German Wind Energy Association).

These abnormal conditions led to a new drop in German output compounding the drop recorded in 2009. Other countries, such as the Netherlands have also suffered major wind deficits. Southern Europe has generally been dealt a better hand by the climate.

Another factor that comes into play is that some wind turbines have to be disconnected during temporary grid overload events. Thus part of the output is lost and bypasses the grid operators’ statistics. Questions are now being raised about the grid absorption capacities in the coastal areas of Northern Germany and a number of Italian regions. The strengthening of the lines in these production areas would make for better use of wind power energy.