Windicator: Capacity Analysis

Although 3GW of new capacity has been added since our last report, there are now signs of a slowdown in the rate of worldwide growth.

Current capacity, at around 166GW, is only 20% higher than at the same time last year - the first time the growth rate has fallen below 25% for some time. However, it is probably unrealistic to expect a 25% growth rate to be maintained indefinitely - As the size of the fleet increases, so too does the absolute megawattage needed to reach that 25% increment.

Yet even measuring the additions in absolute terms paints an unpleasant picture of an industry for which the race to build appears to be fizzling out. The amount of capacity added so far this year is 6.5GW, which is significantly lower than 18GW installed in the same period last year. It should be noted, however, that it has not been possible to acquire the latest estimates for India and China, and this omission could cause the picture to look unduly bleak.

Table: capacity per person. Click to download excel version.

Yet, outside the powerhouses of Asia, there is proof of a clear slowdown. In the US, the slump has been caused by the looming expiry of the production tax credit at the end of the year. Only 1.3GW has been installed so far this year and the rate of growth for 2010 is expected to be significantly lower than the figure recorded for last year. The American Wind Energy Association (AWEA) is very concerned about this slowdown and, together with other renewable energy interests, has issued an appeal to Congress to put more robust long-term legislation in place. AWEA is concerned that US industry will lose out to China and the Far East if its manufacturing capability does not have a strong domestic market.

The relative attractions of China and the US to wind energy investors is reflected in their positions in Ernst & Young's latest Renewable Energy Country Attractiveness Indices, with China occupying the number one position and US states, with renewables portfolio standard and favourable renewable energy regimes, occupying the number two position.

The UK occupies the number three position and has added 558MW since the start of the year - a 14% increase, and the highest of any of the countries with more than 1GW wind energy capacity. Poland and Turkey have entered the 1GW-plus category since the beginning of the year and both are developing strongly.

Strong competition from new manufacturers, plus the downturn in demand, have most likely been responsible for the reductions in wind turbine prices, although it is possible that this may eventually lead to upwards pressure on pricing if some manufacturers are eventually forced out of business.

Offshore wind continues to move forward slowly but surely, with Denmark, Germany and the United Kingdom leading the way. In Denmark, the 200MW Rodsand II project was completed two months ahead of schedule in August, bringing Denmark's total offshore capacity to 861MW. The contract has recently been signed for another wind farm - at Anholt - and this provides an up-to-date benchmark for the generation cost from offshore wind - EUR140/MWh.

In the UK, 350MW of offshore wind has come onstream so far this year, bringing the country's total capacity to more than 1GW. In Germany, six wind turbines in its Alpha Ventus project have now been commissioned, while another 18 foundations have been installed for the EnBW Baltic 1 wind farm.

China is also moving ahead with its plans for offshore wind, with the first turbine expected to be installed by the end of the year. Meanwhile, in the US a power purchase agreement is in place for the first offshore wind farm there.

The quarterly Windicator is an indicator of the state of play. Changes in the table can be corrections received rather than additions or subtractions. We welcome corrections. The US total is based on AWEA data and the German total based on Betreiber-Datenbasis data.

Table: operating total wind power capacity (click to download Excel spreadsheet)

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