Preliminary estimates suggest worldwide wind energy installations were 34-35 GW in 2013, "a substantial dropoff" from a record-setting 2012, according to Steve Sawyer, Secretary General of the Global Wind Energy Council (GWEC). In fact 2013 will have been the first time in nearly a decade where global demand contracted, almost entirely because of softness in demand in the U.S. and China, added Steen Broust Nielsen, partner with Make Consulting.
This year promises to be significantly better (though perhaps not quite so good as 2012), with expectations of stabilization and growth in both the U.S. and China, and continued strength building in some emerging markets. GWEC's initial expectations for 2014 are for 45-48 GW, and with some upside. The largest variable, as has been the case for several years now, is the extent of the U.S. recovery. In Europe, Germany and the U.K. continue to drive the market, with emerging growth in countries like Sweden, Denmark, and Finland, and some eastern European countries like Poland and Turkey. And China, like the U.S., is showing signs of reawakening as one of the bigger influences on the global industry.
Here's a look at what industry participants and analysts see happening over the next 12 months, and how this year's activity will shape the longer-term future of the marketplace.
Europe: Two Major Markets and Offshore Emphasis
In Europe, "expect it to be a bumpy ride" in 2014 with stalled demand in some markets and countries revisiting policies and subsidies, explained Jacopo Moccia, head of political affairs at EWEA. GWEC's Sawyer projects "maybe 2 GW" of offshore wind installations in 2014, mainly centered in Germany and Europe. This shift to northern climates also requires developers and suppliers to alter their strategies in markets with different types of wind regimes that require different technologies such as higher towers, pointed out Maredsous.
The European wind energy market continues to march away from stagnant southern European markets such as Spain and Italy and reestablish to the north in Germany and the U.K. Smaller emerging markets such as Norway, Finland, Turkey, and France are likely to keep growing and stay promising. Another aspect of Europe's wind energy market is its shift in focus to offshore, and "everyone wants a bit of" that swelling pipeline, said Moccia.
In both cases, though, there is some uncertainty and a need to stabilize policies. Germany's offshore wind market should have a good year in 2014 to balance a decreasing onshore sector, even though ambitions for 2020 have been scaled back from ~8 GW to 6.5 GW because of delays and grid connections, added Sawyer. The U.K. had a strong 2013 for offshore wind but energy market reform (essentially establishing a feed-in tariff) has caused some offshore wind developers to reanalyze their budgets: in recent weeks RWE (1.2-GW Atlantic Array), Scottish Power (1.8-GW Argyll Array), and Centrica (selling its 580-MW Race Bank stake to Dong Energy) have backed out of U.K. offshore wind projects, though they have others in their pipelines. With the U.K. licensing up to 40 GW of potential offshore wind areas against a 2020 target of just 10 GW capacity, attrition is to be expected. Even so, there are new concerns that financing risks and uncertainty might stall development short of that 10 GW target, already revised down from originally 18 GW in the government’s renewables roadmap issued in 2011. And along with it, Moccia notes, would be a more muted buildout of the infrastructure that was supposed to come with it.
Perhaps most importantly for the longer-term picture, 2014 marks the beginning of a review period for the cooperative mechanisms put in place to hit Europe-wide 2020 targets, Moccia pointed out. How can companies collaborate to reach their individual goals, through development or co-investment; and are Europe's pledged commitments to renewable energy deployments and consumption -- both for individual nations and for the EU as whole -- progressing on track, and if not what can and should be done about it? And what should the EU be targeting beyond 2020? Initial discussions will begin in March but little is expected to be resolved until 2015 at least.
US: Life After the PTC... For Now
Wind energy development in the U.S. literally ground to a halt for most of the first half of 2013, fallout from 2012's last-minute extension of the production tax credit (PTC), but activity picked up later in the year thanks largely to a revision that softened the language to allow projects to meet "under construction" criteria. That caused a year-end flurry of supply-chain orders for hundreds of megawatts of procurements in the U.S. -- and ultimately contributed to the PTC being allowed to expire at the end of the year.
And so the U.S. market enters this new year with a lot more optimism than the previous one. "2014 will definitely see growth in the US market," though not quite to the boom levels of 13 GW in 2012, proclaimed Feng Zhao of Navigant Consulting. Mark Albenze, CEO of Siemens Energy Wind Power Americas, sees "a tremendous increase" for new orders in the U.S. in 2014-2015, (Siemens' fiscal 2014 began in October, so that includes the year-end surge). "There are a lot of things in the pipeline we're hoping to come to fruition in the next 3-6 months." MidAmerican aims to bring on 500 MW of wind farms in Iowa this year.