Greater Consolidation for the Wind Energy Market with Fewer but Stronger Participants

Dual-Track Approach Needed to Maximise Growth in Mature Western Europe and Emerging CEE Wind Power Market. The European wind energy market is just starting to recover from the economic downturn in 2009. As demand stabilises, steady growth is forecast. At the same time, the market is poised for greater consolidation that will result in the emergence of fewer but stronger participants.

New analysis from Frost & Sullivan, European Wind Energy Markets, finds that the market earned revenue of $19.18 billion in 2010 and estimates this to reach $42.48 billion in 2017. The application sectors covered in this research service are offshore and onshore wind farm.

“Europe’s wind energy market is primarily driven by the European Union’s renewable energy agenda to meet 20 per cent of its energy needs through renewable sources by 2020,” notes Frost & Sullivan Research Analyst Neelam Patil. “The high growth potential of offshore wind power, coupled with the emerging markets of Central and Eastern Europe (CEE) are attracting investments in the European market.”

Wind energy will remain a significant contributor to the European Union (EU) member states’ energy portfolio, as they attempt to achieve the EU 2020 target. Germany, Spain and France continue to install more wind turbines and are planning to exceed their targets and provide the surplus energy to the other EU member states. The United Kingdom is relying heavily on offshore wind farm development to achieve the 2020 target.

The scenario was not so promising a year ago. Lowered demand for wind energy, due to the economic slowdown and overcapacity in the market, drove wind turbines prices to their lowest levels in 2010.

Additionally, escalating price wars between new entrants from Asia and European wind turbines manufacturers forced inefficient players to exit the market. Offshore wind technology remains a grey area, with practical aspects like operating, maintaining and servicing offshore wind turbines in winter yet to be proven.

The CEE region is set to emerge as a low-cost, low-technology market. This will make it an attractive market for Asian manufacturers.

“While the western European market is difficult to enter, the emerging markets of CEE will be driven more by price than by technology, thus posing low barriers to entry,” adds Patil. “For offshore technology, the timing is important; although having a track record is critical. Companies that wait too long for others to lead and prove the technology, run the risk of missing out on growth opportunities.”

In the mature western European market, companies need to deliver not only the best technology, but also outstanding service packages to maintain or acquire market share. In the emerging CEE markets, wind turbine manufacturers will need to be extremely efficient and cost-competitive to be able to sustain price wars.

Early movers in the offshore wind segment will benefit from capturing a significant market share and building their track records. In addition, they will gain vital experience in seeking financing for offshore wind farms.

“European manufacturers will have to continue producing technologically superior wind turbines at competitive prices,” advises Patil. “They can exploit their technology leadership position to develop advanced offshore wind turbines with higher capacities, which will allow them to reap benefits through market share leadership and economies of scale.”

European Wind Energy Markets is part of the Energy & Power Growth Partnership Service programme, which also includes research in the following markets: Annual Global Power & Energy Outlook, Global Wind Power Markets and Western European Gas and Steam Turbines Market. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.