Wind energy forecast for 2011-2015

Every year in the spring, GWEC undertakes the difficult task of forecasting global wind power market developments for the coming five years, and this exercise has become a fixture in the annual report. There is, of course, always a level of uncertainty in prognostication, and never more so than in times of economic upheaval.

While the financial and economic crises seem to have been overcome in most wind farm markets, the full consequences of the credit crisis in 2008/2009 are only now becoming fully apparent in the wind power industry, as the low levels of orders for wind turbines at the end of 2008 and the beginning of 2009 have worked their way through the project development cycle.

For the past five years, GWEC’s forecast, which has always erred on the conservative side, was exceeded by actual wind energy market developments. Not so for 2010, where GWEC had anticipated a global market of 40 GW, while only 35.8 GW were in fact installed. This was mainly due to a depressed US wind farm market with new wind power installations reaching a mere 50% of those in 2009.

However, there is reason for cautious optimism for 2011 and the following years. Overall investment in wind power was up by 31% in 2010, reaching a record level of USD 96 billion (EUR 70.4 billion), according to Bloomberg New Energy Finance. This investment will translate into actual wind farm projects in the coming years.

The growth in the Chinese wind power sector has continuously outperformed the most optimistic expectations, and 2010 was no exception, with 16.5 GW of new wind farm added, accounting for nearly half of the total annual market of wind turbines.

Ambitious government plans, supportive policies and staggering investment in the wind energy sector in 2010 all lead to the conclusion that growth is set to continue for the years to come, and China will remain one of the main engines driving the global wind power sector.

As for the USA, the other major wind energy market driving global growth in the past, the future is less certain. The US manufacturing industry is reporting a healthy 5,600 MW under construction at the beginning of 2011, which is considerably more than at the same time in 2010. Given such indicators, we will probably see an upturn for wind energy in the USA, and the wind turbines market might recover to its record 2009 level by 2015, or even before.

Overall, GWEC predicts that at the end of 2015, five years from now, global wind farm capacity will stand at 449 GW, up from 194 GW at the end of 2010. During 2015, 60.5 GW of new wind farm capacity will be added to the global total, compared to 35.8 GW in 2010.

The annual growth rates during this period will average 18.2% in terms of total installed wind farm capacity, and 11.1% for annual market growth. These rates are considerably lower than in GWEC’s last forecast published in 2010, and they are very modest compared to the past developments. This is mainly due to the continuing uncertainty about the North American market.

Three regions will continue to drive the expansion of wind energy capacity: Asia, North America and Europe. Asia will remain the fastest growing wind energy market in the world, driven primarily by China, which is set to continue the rapid upscaling of its wind farm capacity and hold its position as the world’s largest annual and cumulative market.

Annual additions are expected to be well over 20 GW in China by 2015. This development is underpinned by very aggressive government policies supporting the diversification of electricity supply, supporting the growth of the domestic industry, and making significant investments in the transmission needed to get the electricity to market.

Sustained growth is also expected in India, which will increase its capacity steadily by 2 GW every year, and be complemented by growth in other Asian markets, including Japan, Taiwan, South Korea and the Philippines, among others.

For Asia as a whole, the annual wind power market is expected to increase from 19 GW in 2010 to 26 GW in 2015, which would translate into a total of 116 GW of new capacity to be added over this period – far more than in any other region. In 2013, Asia is expected to overtake Europe as the region with the largest total installed capacity, and it will reach a cumulative wind power generation capacity of 174.6 GW by 2015.

GWEC expect the North American wind energy market to remain subdued for the next two years, as legislative uncertainty at the federal level in both the US and Canada continues to be a concern, although the outlook is brighter in several US states and Canadian provinces. We expect the 2011 market to recover to 8 GW of new wind farm capacity (up from 5.8 GW in 2010), and by 2014, the annual North American wind turbines market will have recovered to its 2009 size of 11 GW, growing to 12 GW in 2015. This would translate into an addition of 50 GW in the US and Canada over the next five years, and take cumulative capacity up to 94.2 GW.

Europe will continue to host the largest wind farm capacity globally until 2013, when it will be overtaken by Asia. GWEC expects that by the end of 2015, Europe’s installed capacity will stand at 146.1 GW, compared to Asia’s 174.6 GW. By 2015, the annual market will reach 14.0 GW, and a total of 60 GW will be installed in Europe over this five year period.

Large scale offshore wind farm developments in the coming years will account for an increasing share of the new wind turbines capacity added in Europe, and by 2015, 3.1 GW (about 21%) of the annual wind energy market is expected to come from offshore wind turbines installations. This share is forecast to grow rapidly and will lend new momentum to developments in the following years.

While Germany and Spain are expected to remain the leading European wind energy markets, a larger number of strong markets will become the trend as Italy, France, the UK and Portugal continue expanding their wind farm capacity. There are also encouraging signs from growing markets in the new EU member states, especially in Romania and Poland, and some non-EU markets, such as Turkey. All of these countries are expected to contribute a larger share to the European total in the future.

Wind energy installations in Latin America will start to contribute a growing share to the global wind power market. Encouraging developments in markets such as Brazil, Mexico and Chile lead GWEC to expect that at the end of 2015, a total of 19 GW will be installed in the region, an increase of 17 GW from 2010. However, this is still far from where many Latin American countries could be, given the region’s excellent wind resource.

In many cases, the lack of favourable policy frameworks for wind power development and a lack of political commitment continue to hamper market development. Developments in the past year have shown that the region could still hold some surprises, and there are
chances that the expansion of the wind markets could be much larger than what we can see from where we are today.

In the Pacific region, both Australia and New Zealand are expected to start growing at a stronger pace in the coming years to reach annual additions of 1.5 GW by 2015, up from just 176 MW in 2010. This would bring the region’s total installed wind farm capacity up to 7.4 GW by the end of 2015. Both countries have spectacular wind resources and a great untapped potential, which is only slowly being developed. However, especially in Australia, the political signals are encouraging, and the healthy wind farm development pipelines across the region suggest that even more than this could be achieved.

GWEC’s outlook for Africa and the Middle East is least certain. In the medium-term, the regions could develop into small but not insignificant players in the world’s wind market with annual installations reaching 2 GW by 2015, taking the total wind farm capacity up to 7.5 GW. However, substantial wind resources in some areas, developments in Kenya, Tanzania and Ethiopia, and a very large potential market in South Africa on the verge of taking off suggest that we could see much stronger growth rates in Africa in the long term.