By 2030, 479,000 people are expected to be employed in wind energy, 296,000 of whom in the offshore wind farm sector (almost 62 of the total).
Since 1997, the European Union has had a successful renewable energy policy which has enabled significant progress to be made towards the EU’s objectives of reducing greenhouse gas emissions, ensuring security of supply and improving EU competitiveness.
Ambitious targets are at the core of the EU’s policies to promote energy from renewable sources. Due to the early adoption of ambitious national and EU targets, European companies are world leaders in wind power technology, and have a leading share of the world market.
As a result, Europe today gets approximately 20% of its electricity from renewable energy sources, including 5.3% from wind energy. In order to continue the development and deployment of renewable energy technologies, the EU adopted the 2009 Renewable Energy Directive, which included a 20% renewable energy target by 2020 for the EU. In 2020, according to the Renewable Energy Directive’s 27 National Renewable Energy Action Plans, 34% of the EU’s total electricity consumption will come from renewable energy sources, including 495 TWh from wind energy meeting 14% of consumption.
Importantly, expectations for wind energy and other renewables in 2020 are converging – as can be seen by comparing scenarios by EWEA, the European Commission’s ‘Trends to 2030’, the European Commission’s Joint Research Centre, ENTSO-E, and the National Renewable Energy Action Plans – with renewables meeting between 32.6% and 36% of electricity consumption.
The EU has provided the power sector with a very clear trajectory over the next ten years. What is yet to be done is for the EU to provide the power sector with an equally clear trajectory for the period after 2020. Currently, the agreed framework for post-2020 consists of the following elements:
the Heads of States’ commitment to reduce greenhouse gas emissions by 80-95% by 2050;
the directive on the EU Emissions Trading System, which will continue to reduce the emissions cap for the ETS sectors by 1.74% each year beyond 2020;
a post-202O EU framework for renewable energy, consisting of a Renewable Energy Roadmap for the post-2020 period expected to be published in 2018.
Given the proven success of the EU regulatory framework for renewables since 1997, EWEA considers the most effective post-2020 regulatory framework to be a binding 2030 renewable energy target. This would give the power sector a vital stepping stone, taking it from 19% renewable electricity in 2010, to an expected 34% in 2020, and to 100% renewable electricity by 2050, with wind energy contributing 50%.
The EU’s renewable energy policy – the 2001 Renewable Electricity Directive and the 2009 Renewable Energy Directive – is successfully transforming Europe’s power sector. Therefore, the most effective post-2020 framework would be to replicate the successful approach and set an ambitious, binding 2030 target for renewable energy that is compatible with the necessary carbon reductions in the power sector.
Generating wind power requires no fuel. Therefore, the total cost of producing wind energy during the 20 (onshore) to 25 years (offshore) of a wind turbine’s design lifetime is highly predictable. The future price of coal, oil and gas as well as the future price of carbon do not affect the cost of wind energy production to any signifi cant extent.
In order to calculate the wind power investments needed to reach EWEA’s scenario up to 2030, it is necessary to make assumptions on the future cost of installed wind power capacity. For some years it was assumed that the cost of wind was about €1,000/kW of installed capacity. However, since 2000 there have been large variations in the price (not necessarily the cost) of installing wind power.
From 2001 to 2004 there was a surplus of wind turbines due to the slower than expected development of the global market for wind power. As an impact, the price of wind power capacity went down, reaching €700-800/kW for some projects. In the past six years, the global market for wind farm increased annually and the demand for wind turbines surged, resulting in price increases. Remaining stable since 2008, from 2010 and onwards, wind turbine prices seem to follow their long-term decreasing trend.
The European Commission, in its Renewable Energy Roadmap in 2007 assumed that onshore wind power would cost €807/kW (in €2010) in 2010. In 2020 the price will drop to €735/kW and in 2030 it will reach €700/kW. The long term cost curve could still apply when balance between demand and supply of wind turbines stabilises.
EWEA provides two curves that represent the relation of demand and supply on wind turbine prices in recent years. EWEA assumes onshore wind power prices of €1,200/kW in 2010 (€2010 prices) and offshore prices of €3,000/kW. The increase in offshore costs up to now reflected the current absence of economies of scale as well as the low wind farm market development, bottlenecks in the supply chain and few offshore wind turbine suppliers. In the near future, prices are expected to decrease as a result of technology learning, economies of scale and a rapidly growing number of offshore wind turbine manufacturers and models.
Generating energy from wind requires no fuel. During the production of wind energy, a significant amount is saved on fuel costs – that is, on the coal, gas and oil that would otherwise have been used in energy production. At the same time, generating energy with wind power reduces the demand for imported fuel, bringing down the cost of fuel and reducing the rate of depletion of Europe’s remaining fossil fuel reserves.
The estimates on avoided fuel cost of wind energy depend on the assumptions on the future fuel prices. Oil prices infl uence signifi cantly gas prices as well as coal prices, albeit to a lesser extent. Both the IEA and the European Commission have for many years made predictions on future coal gas and oil prices, and most governments base their energy policies on the IEA’s price scenarios. The European Commission’s price predictions are lower than the IEA’s.
In their most recent scenarios, both the European Commission and the IEA have lowered their oil price assumptions in comparison to their 2008 forecasts. On 11 July 2008, the oil price reached a historic high of $145/bbl31. Due to the financial crisis in 2008 and 2009, the price of a barrel of oil dropped signifi cantly. However, on 4 March 2011, oil was trading at $115.7/bbl. Both the European Commission’s and the IEA oil price forecasts for 2030 are below this current level.
According to the European Commission’s fuel price assumptions, the production of wind energy avoided €5.92 billion of fuel costs in total in 2010: €2.94 billion worth of gas, €1.81 billion worth of coal, €0.62 worth of biomass/waste and €0.55 billion worth of oil. According to EWEA’s targets, wind energy is expected to avoid €25.3 billion of fuel costs in 2020 and almost €58 billion in 2030 based on the European Commission’s future fuel price assumptions.
Following the IEA’s future fuel price assumptions, wind energy will avoid €51 billion in 2030 and, if fuel prices reach the historic $145/bbl, in 2030 wind energy will avoid €80 billion of fuel costs. The calculation is based on an exchange rate of $1.40/€1. Figures show that both the European Commission and the IEA underestimated the oil price for 2010 and consequently underestimated
the avoided fuel costs from wind energy.