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Market: Energy agencies disagree on global wind potential

WORLDWIDE: The International Energy Agency (IEA) has again increased projections for wind in its annual World Energy Outlook report. But its most optimistic scenario foresees only around half the capacity projected by the Global Wind Energy Council (GWEC).

The IEA report, published in November, estimates that global wind capacity will equal 1.14TW by 2035 if countries co-operate to stabilise emissions at 450 parts per million of carbon dioxide equivalent. This is up from 1.07TW in last year's report and 1TW in the 2008 report.

Onshore and offshore wind is projected to supply 8% of global electricity in 2035, up from 1% in 2008, according to the IEA. Installed capacity will increase from 120GW to 1,138GW over the same period. China, the EU and the US are expected to increase the most, accounting for 70% of global installed wind capacity in 2035. Offshore wind is said to grow from the 2008 figure of 1.5GW to almost 180GW in 2035.

These figures are significantly lower than GWEC's projections published in October. Its most optimistic scenario sees wind growing to 2.42TW by the earlier date of 2030.

The disparity in the outlooks is caused by the organisations' different assumptions about competition from energy sources. The IEA believes that renewable energy sources will grow significantly until 2020, then slow as new nuclear plants and coal-power stations with carbon capture and storage (CCS) add to the supply. GWEC, however, believes that will not be the case as greater knowledge about the true costs of these supplies will erode confidence in their economic competitiveness.

By 2020, the world will be looking for the most dramatic carbon emissions reduction for the least amount of money, says GWEC secretary general Steve Sawyer. Wind is very competitive with coal, CCS and nuclear power - even now and even without the external costs borne by society for more conventional energy being taken into account, he says.

"No one really knows what nuclear costs. All we know is that it's an awful lot more than they say. Every place where nuclear power has been exposed to the market in any meaningful way, it has died a quick and uncelebrated commercial death," he says.

But Sawyer adds that the IEA has come a long way in its attitude towards renewables. "In 2004, they were projecting a total global installed capacity for wind in 2010 that had already been achieved in 2003," he says.

The IEA has beefed up its renewable energy division since the creation of the International Renewable Energy Agency (Irena). The agency was created in 2009 following criticisms that the IEA did not take renewables seriously enough.

IEA chief economist Fatih Birol says that, while emphasising the high costs of renewables, the IEA has always thought they have great potential to address the problems of energy security and climate change in a world where 1.4 billion people have no access to electricity.

Expanding gas

The IEA warns that a cheap and plentiful supply of gas will now make life difficult for renewables, especially offshore wind. The report says natural gas will play a central role in meeting the world's energy needs for at least the next two and a half decades. Global natural gas demand fell in 2009 because of the economic slowdown. However, the IEA predicts that it is set to resume its long-term upward trajectory from 2010, with demand increasing by 44% between 2008 and 2035, far surpassing growth of any other fossil fuels.

Gas is replacing coal in countries such as the US and China. This will help reduce carbon dioxide emissions, as gas emits 40-60% less CO2 than coal. However, Birol says: "In some cases gas is also pushing back renewables and this is not good news for climate change. Renewables are a zero-emission technology, whereas gas is not as innocent a fuel (as renewables) because it does emit CO2."

The IEA is preparing a separate report on the trend for a stronger penetration of gas in energy markets, and the net effect it will have on climate change and other fuel types. This will be published next summer.

Birol does not believe gas will have such an impact on onshore wind, which is more economically viable and less dependent on government subsidies than offshore projects.

John Westwood of energy research firm Douglas Westwood plays down the effect of natural gas. He believes that, while capital expenditure for wind projects is higher than for gas, renewable energy is driven by politics rather than the price of natural gas.

Given the phenomenal population and economic growth in the developing world, he expects a huge rise in all types of energy generation. "I don't think it's a case of one pushing the other one out. It's more of a case of 'and' not 'or'," he says.

World subsidies

The IEA for the first time measured the subsidies that renewable energy receives. Government support for renewables worldwide in 2009 amounted to $57 billion - $37 billion of that for electricity. This compares with $312 billion for fossil fuels.

The IEA believes subsidies for renewables will rise to $205 billion by 2035 and those for fossil fuels to $600 billion. Subsidies per unit of renewable power generation, however, drop as wholesale electricity prices increase and their production costs fall through technology improvements, it believes.

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