Global wind market rebounds amid calls for policy certainty

Hot on the heels of a report predicting policy-curtailed growth in the Australian wind market, the Global Wind Energy Council has issued a similar warning: that without a strong climate policy, growth in the global wind energy market is unlikely to return to levels seen over the last two decades.

The warning struck a dull note an otherwise upbeat Global Wind Report, which predicted installations of at least 47GW in 2014, a dramatic increase over 2013 levels.

The annual GWEC update, released on Thursday, predicted China would lead this growth, backed by strong recovery in the US market, record installations in Canada and Brazil, and “hundreds of MW in South Africa.”

“The global market is back on track for 2014”, said Steve Sawyer, GWEC Secretary General. “A strong Chinese market, recovery in the US and an increasing role for emerging economies in the global market means that after 2014 the market will resume its steady if unspectacular growth, and end up just about doubling total global installations during the five year period to 2018.”

However, the GWEC cautioned that without a strong global climate policy, market growth was unlikely to return to the 20-25 per cent or more average growth which had characterised most of the past two decades.

Just last year the industry witnessed an example of the dramatic effect policy uncertainty could have on global wind market growth, when it shrank for the first time in more than 20 years – to a total of 35GW of new capacity brought online, down from global installations in excess of 45GW in 2012.

“We knew that this was likely to be the case when we did our forecast for 2013 one year ago,” said the GWEC in its 2014 update, “but we didn’t expect the drop in the United States to be as dramatic as it was – going from 13GW in 2012 to just 1 GW in 2013.”

Uncertainty over America’s wind energy Production Tex Credit – which was slated to be scrapped in 2013 – both helped set a new mark for capacity additions in 2012, and led to reduced investment in 2013, effectively turning the “end-of-2013 PC construction deadline into an end-of-2014 commercial operations deadline,” according to the DOE.

But by the end of 2013 there was more US wind power under construction than ever in history: over 12,000MW, with a record-breaking 10,900 MW starting construction activity during the fourth quarter. At least 60 PPAs for nearly 8,000 MW were signed by utilities and corporate purchasers, of which 5,200MW had not yet started construction.

In Australia, similar dramatic fluctuations are being predicted, with a RepuTex report released on Wednesday predicting that the removal of the carbon pricing mechanism and a reduction of the RET would send large-scale renewable generation 40 per cent lower in 2020 and skew the market in favour of fossil fuel generators.

But, as the latest GWEC update notes, where there is policy uncertainty, there is also the pressing need for the world to shift to a low-carbon economy – pressure that is keenly felt by booming economies like China.

Thus, says the GWEC, “in the absence of a global price for carbon, or anything close to it, wind energy’s other attributes come to the fore.”

Of course, wind’s most compelling attribute is its cost-competitiveness. In many markets – not least of all Australia’s – wind energy is already competing successfully on price against heavily subsidised fossil fuel incumbents.

“Wind is now a mainstream technology, and a central part of electricity market development in an increasing number of countries,” said the GWEC’s Sawyer. “But for the industry to reach its full potential, it is essential that governments get serious about climate change, and soon.”

GWEC’s annual Global Wind Report gives a comprehensive snapshot of the global industry, now present in over 80 countries with 24 countries having more than 1,000MW installed.