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The need to ramp up wind capacity installation became even more
dire over the past 12 months if the world is to avert catastrophic
global warming, the Global Wind Energy Council (GWEC) said 4
April.
A four-fold increase in the pace of the global wind fleet
buildout is now necessary to avoid a temperature increase of more
than 1.5 degrees Celsius compared with pre-industrial levels, as
the Paris Agreement seeks, GWEC said, rather than the three-fold
hike in the pace of construction called for a year earlier.
Over the same period of time, business conditions for wind
energy companies have deteriorated, and the trade group is seeking
a reset on how the industry operates that takes into account impact
of rising costs as well as the need for market designs that include
the cost of carbon. Wind turbine prices have rocketed in recent months as a
result of the rise in costs.
In its 17th annual flagship report, Global Wind Report 2022, GWEC forecasts
that by 2030 less than two-thirds of the wind energy capacity
required for a 1.5 degrees Celsius and net-zero pathway will be in
place, "effectively condemning us to miss our climate goals."
Market redesign needed
As a result, GWEC called for the removal of direct and hidden
subsidies or advantages for fossil fuels generation; governments to
prioritize renewable generation when it comes to land/seabed
allocation, procurement, construction, grid connection and
dispatch; an accounting of the socioeconomic and environmental
costs of carbon; and a realignment of electricity markets to
consider the long-term value to the system of wind power more
widely.
The wind industry is continuing to manage disruptions from
COVID-19, the trade association said, but higher freight costs and
commodity prices further squeezed margins for turbine and component
suppliers and developers in 2021. Margins were already under price
pressure as the result of a global market design that has created
"race to bottom" conditions, it added.
Energy market designs based on short-term marginal costs that do
not account for long-term benefits have created a distorted set of
signals, GWEC said. Instead of incentivizing renewables, the market
has ensured wind and solar are now developed at prices that lead to
wafer-thin profit margins, including through pricey lease auctions
in Europe and the US, while fossil fuel supply
shortages are bolstering the continued investment case for fossil
fuels, it added.
"Governments and regulators must untangle the Gordian knot
around energy market design to shore up security of supply, support
sustainable pricing and prepare for the clean energy transition,"
it said. "If policymakers and system planners are serious about
these priorities, then energy market design must shift to reflect
the systems of the future: flexible, responsive to demand, reliable
and dependent on a majority share of renewable energy."
Power generation that pollutes the atmosphere and earth should
also be penalized, it said. "Fossil fuels-based generation should
be more accurately priced for the costly social, economic, and
environmental burdens attached to them," the trade group argued,
adding that: "Market signals should provide a clear pathway to a
rapid replacement of fossil generation by renewables, as well as
electrification of key non-power sectors."
Lawmakers must cut away the red tape the sector faces, it said,
arguing that without streamlining the procedures to grant permits,
including for land allocation and grid connection, projects will
remain "stuck in the pipeline."
Politicians and regulators must also send signals to the market
that they will invest in products that reward renewables'
flexibility, and at the same time an "unprecedented" tripling of
grid investment through 2030 is needed to keep pace with renewable
buildout.
"The message is clear: the wind industry must grow very fast
this decade to comply with the decarbonization targets around the
world," Iberdrola Renewables Managing Director Xabier Viteri Solaun
said in a foreword for the report, adding: "To do that,
policymakers must guarantee regulatory stability as well as
overcome permitting bottlenecks and further develop grids. The wind
industry stands ready for a massive deployment of renewable
capacity; national and regional policy must clear the path for
this."
Capacity CAGR through 2026 seen at 6.6%
Still, GWEC expects the compound annual growth rate (CAGR) for
wind installations over the next five years to be 6.6%, which
equates to 557 GW forecast installations from 2022-2026.
The CAGR for onshore wind in the next five years will be 6.1%,
GWEC said. The expected average annual installation is set to be
93.3 GW. In total, 466 GW is likely to be built in 2022-2026, it
added.
In GWEC's year-ago market outlook, it predicted global onshore
wind growth would slow in 2021 followed by flat growth in 2022 and
2023. However, GWEC upgraded its near-term forecast in this latest
outlook due to the Chinese government's plans to reach
peak emissions in 2030 and carbon neutrality in 2060, the
"30-60" goals, together with the renewable development plans
released in 2021.
Source: GWEC
GWEC Market Intelligence upgraded its Chinese onshore wind
installation forecast for the 14th five year period (2021-2025) by
16% year on year.
The CAGR for global offshore wind in the next five years is now
8.3%, GWEC said. Following an "outstanding" 2021, new offshore
development in 2022 is likely to return to the 2019/2020 level,
primarily due to reduced Chinese newbuild, it said. However, annual
market growth is expected to regain momentum from 2023, eventually
passing the 30 GW mark in 2026, it added.
Global offshore wind installed capacity is expected to grow from
21.1 GW in 2021 to 31.4 GW in 2026, bringing its share of new
global installations from today's 22.5% to 24.4% by 2026. In Asia,
China will remain the largest contributor with 39 GW to be added in
the next five years, followed by Taiwan (6.6 GW), Vietnam (2.2 GW),
South Korea (1.7 GW) and Japan (1 GW).
In Europe, more than 28 GW of offshore wind capacity is expected
to be built in 2022-2026, of which 41% is likely to be installed in
the UK, with 15% in the Netherlands, 12% in France, 11% in Germany,
and 6% in Poland.
Meanwhile, 2022 is likely to be another record year for European
onshore wind, driven by the economic recovery following the
COVID-19 pandemic as well as market growth in Germany, Sweden,
Finland, France, and Spain plus non-EU 27 markets such as Turkey.
After this peak, the average annual installations in 2023-2026 will
drop to the level of 17.4 GW but will remain stable, the trade
group said.
Onshore Chinese growth decline trims overall 2021
global total
Last year was the second-best year ever for the wind industry,
with some 93.6 GW of new onshore and offshore capacity brought
online, although the total was 1.8% below 2020's record. That 12%
growth total took cumulative installations to 837 GW.
The onshore wind market added 72.5 GW worldwide, a 18%
year-on-year decrease from 88.4 GW a year earlier, GWEC said. The
offshore wind market enjoyed its best-ever year in 2021, with 21.1
GW commissioned, or three times the previous year's total, GWEC
data show. China's "mammoth" year of 16.9 GW of offshore
installations accounted for 80% of that growth, it said, as China
replaced the UK at the top of the table for cumulative
installations. The UK had held top spot since 2009.
While the world's two biggest onshore markets, China and the US,
installed less new capacity last year—30.7 GW and 12.7 GW,
respectively—other regions enjoyed record years. Europe, Latin
America, Africa, and, the Middle East, increased new onshore
installations by 19%, 27%, and 120%, respectively.
Source: GWEC.
The world's top five overall markets in 2021 for new
installations were China, the US, Brazil, Vietnam, and the UK.
These five made up 75.1% of global installations last year, 5.5%
lower collectively than 2020.
The top five markets in terms of cumulative installations as of
the end of 2021 remained unchanged, GWEC said—China, the US,
Germany, India, and Spain. Those five nations accounted for 72% of
the world's total wind power installations at the end of last
year.
GWEC Head of Strategy and Market Intelligence Feng Zhao said the
termination of China's Feed-in-Tariff (FiT) led to a 39% drop in
installations to 30.7 GW as "the market caught its breath"
following a rush to install capacity before the incentive
expired.
China's wind industry is entering a "new era" after a decade of
rapid growth, GWEC said. Support for renewables has shifted from a
FiT model to a "grid parity" model, where renewable-generated
electricity will receive the same remuneration as coal-fired power
plants.
From 1 January 2021, all onshore wind projects shifted to the
latter model, and from 2022, the central government will cease
subsidies for offshore wind, although some support will be offered
by provinces like Guangdong and Zhejiang for the next three to four
years to support the journey to grid parity by 2025. In certain sea
areas, the government is confident that grid parity can be achieved
even before 2025, GWEC said.
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