How Global Wind Power Capacity is Set to Boom in 2015

wind-power-generation-405158_1280The global wind energy industry has been seeing robust growth, increasing capacity by 16.2% in 2014 from 318,644 MW in 2013 to 369,597 MW.

Much of the increase is accounted for by China, Germany, the US, Brazil and India, although there have been a number of new installations in the rest of the world.

Global wind capacity is expected to grow further, albeit at a slower pace.  The GWEC has prepared three different scenarios, the new policies scenario (which is conservative), the moderate scenario and the advanced scenario (the most optimistic).  Under all scenarios, wind is set to comprise a significant part of the energy mix, comprising around 6-9% of global electricity demand by the year 2020 and at least 8% to a high of 19% by the year 2030.

The increasing role of wind in the energy mix in the future is due to pressure on the power sector to reduce carbon emissions.  Among the options in making huge reductions in emissions are energy efficiency, switching fuel in thermal plants from coal to gas and adopting renewables.  Among the options available, wind is the “most cost-effective and timely option on the supply side” up until 2020 according to GWEC Secretary General Steve Sawyer.  That is why the GWEC expects another good year in 2015.

One of the growing opportunities is in offshore wind development that saw an increase of 1.7 GW last year.  Offshore wind is expected to grow significantly with a projected increase of 11-15 GW this year and 58-65 GW in the year 2020.  But that depends a lot on what will happen in the next few years.  “Costs need to come down,” says Sawyer, not in the turbine costs but in “everything else”, such as the costs of foundations, electrical connections, maintenance, and the like.

The big news for wind power development is on the financing side, with the emergence of YieldCos.  They reduce the risk for investors in wind power projects and assure them of a steady stream of income through regular dividend payouts.  Since the risk is lower, the cost of capital for developers is reduced, which has a humungous impact for capital intensive projects like wind power.  Because of YieldCos, wind farm developers are offering “low power prices in competitive tender rounds” according to Martin Billhardt of PNE Wind Group.  In any case, it helps that YieldCos open up ownership of wind farms to the general public rather than private equity and pension funds that dominated the early days of wind power development finance.  Hopefully, they will be able to help the industry avoid the funding gap predicted for 2020, but the industry must make quick moves now.  Otherwise, there is still a risk of a funding gap according to Billhardt.

In addition, wind turbines are becoming cheaper and more reliable.  Not that wind turbines are unreliable as shown by the continued operation of wind turbines in Germany that have been in service for over two decades now.  As is the case with other power sources, some of the existing wind farms are now being repowered.

These developments are pushing down the cost of wind generated electricity, even in countries where there are no feed in tariffs and other incentives.  In fact, wind power costs are generally lower in developing countries at 4 to 7 US cents per kilowatt hour.  This is much cheaper than newly built coal, newly built gas, and pretty much everything else said Sawyer.  There are even new wind farms coming online in Australia, despite their government’s effort to shut down wind power.  In fact, the question is not if wind can compete without subsidies but rather how long coal, gas and nuclear can continue to compete without their subsidies, Sawyer added.

This is crucial given the prospects in the upcoming climate change talks in Paris.  Based on the draft texts, there is not much for wind and other renewable energy sources.  Hence, GWEC is doing its advocacy by country, locally.  In any case, they are still hopeful about the Paris talks, says Sawyer.

If bold steps are taken there, wind power can only soar higher.  Despite Paris, things are still looking bright for wind power.

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  • Jeremy

    “In fact, the question is not if wind can compete without subsidies but rather how long coal, gas and nuclear can continue to compete without their subsidies, Sawyer added.”

    This guy is completely misguided because wind power will always need a backup power plant to provide electricity in no-wind conditions and energy storage (and the grid requirement that comes with it) will just add cost to these already expensive structures, especially offshore.

    So even if gas or nuclear are more expensive than wind, they will always be needed to provide backup or baseload power for the night and days without wind.

    Peak capacity values are always cited to make their contribution bigger than they are when dealing with wind turbines and solar panels.

    The truth is actually that no power plants (even nuclear or gas) operate at this threshold all the time.

    The relation between peak and real capacity is named the capacity factor and bear in mind that it is only 23% for inland turbines (in the US, European average is around 16%) and around 47% for the few offshore turbines installed at this moment (in Denmark, mostly).

    This means that global wind farms are producing around 85 GW of power not 370 GW.

    Also, offshore is limited to shallow water because it is too expensive to build turbines in deep sea and I forgot to speak about seawater corrosiveness because at the big Danish wind farm, Horns Reef, all 80 turbines had to be dismantled and repaired after only 18 months’ exposure to the sea air.

    • Aku Ankka

      Lots of inaccuracies. Start with backup power: the main backup power is often hydro-power which is fully dispatchable; second natural gas. Nuclear power is NEVER used for backup power, since its output is constant, invariable, except for maintenance breaks during which output is 0. So while nuclear power can be cheap, it is problematic in its own right and can only be used as invariable baseload.
      So with countries that do have significant hydropower capacity, very little backup capacity is needed. For countries that do not have, but are connected by inter-grid (like all of western Europe, with exception of Ireland, maybe UK), they effectively use their neighbors capacity: this is how Denmark does it.
      And Denmark has very little storage (although slowly increasing to improve grid stability), and has not built significant amount of peaker plans (natural gas) either.
      In fact, using Denmark’s example, where wind power produces ~40% of total electricity, one can see that needs of backup/storage capacity have been vastly overstated.

      Load factor is relevant, but it is inaccurate to say “85GW”. The unit to use would be terawatt hours (TWh).
      Load factors cited are also unreasonable low for onshore: more typical load factor estimates with new turbines are 30%. For offshore, 47% is quite typical, although varies from 35 all the way to 55% or so.

      Offshore wind farm limitations are only economical, and UK example shows that that is not a significant limitation in general, with possible exception of Japan (where floating platforms are being developed; depth around islands is indeed problematic).
      Still, there is so much room for onshore capacity, for most countries, that offshore may well remain a minority solution, unless costs can be lowered.

      And in the end the thing that makes wind power the winner is cost: by now there are very few modes of electricity production that are cheaper than on-shore wind. Very, very few; only hydropower can really compete, and most of hydro-capacity has already been harnesses in industrial countries.
      Nuclear power is the only other alternative, but given political climate, mammoth-size of projects, its cost efficiency is theoretical and not practical (alas).