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Windicator: Steady but unspectacular progress

WORLDWIDE: The Global Wind Energy Council (GWEC) has forecast that just under 40GW of wind power will be installed this year -- slightly less than in 2012.

One possible reason for the cautious outlook is that developments had come to a near halt in the US in the second quarter of the year, and very little wind power was installed during the first half of the year. On the other hand, at least two manufacturers, Vestas and Nordex, report a substantial jump (60-70%) in the volume of orders placed during the first half of the year, compared with 2012. Progress continues to be steady but unspectacular in Europe. The UK, Denmark and Sweden are forging ahead, but movement in Italy and Romania has slowed. Latin America has continued steadily adding capacity, particularly in Brazil. China, as usual, is rocketing ahead and has added more capacity than any other country.

The pages of Windpower Monthly regularly report on new developments from the manufacturers, bringing out larger and more sophisticated machines, indicating that they see the long-term future as bright. This is partly due to continuing improvements in the economics of wind energy, with turbine prices down by approximately 25% from their 2009 peak. A report from the Lawrence Berkeley National Laboratory suggests that the fall in total installed costs in the US is slightly less than this, but power purchase agreements show a larger decline. Even when the impact of the production tax credit is stripped out, the reduction in generation prices is still around 30%.

Main rival

Any assessment of the long-term prospects for wind energy must take into account developments with its principal low-carbon competitor: nuclear. A deafening silence from the negotiations in the UK around the nuclear strike price suggests these are proving very difficult to resolve, possibly centring on the sharing of risk between the developer and the government. The cost impact of this is tricky to judge and it can simply be noted that taxpayers rarely, if ever, have to shoulder any risk associated with wind-energy developments. The nuclear strike price is still expected to be around $150/MWh - significantly higher than the average price for wind, worldwide, which is probably around $100/MWh.

Thanks to the extension of the production tax credit (PTC) in the US, developments are likely to pick up in the second half of the year and, according to Windpower Intelligence, nearly 2.6GW is under construction.

Of that, there are turbine purchase agreements for 1.2GW — overwhelmingly placed with domestic supplier GE. Even so, the amount of capacity added this year is likely to be significantly less than last.

On the other hand, the International Energy Agency (IEA) expects renewables growth in Asia to continue rapidly, possibly outstripping growth in Europe. Chinese wind energy is likely to continue to grow and photovoltaics will also blossom, according to the IEA. It also cites Thailand, Morocco and South Africa as places where wind will likely flourish.

Although wind energy capacity in India has registered a 25% growth rate over the past decade, a decline in the value of the rupee is widely feared to threaten growth this year. This may, however, be offset by new incentives, and some experts expect capacity to increase by about 2GW this year.

Hence the average 14% growth rate projected by GWEC for the next four years is likely to be realised. Although this is lower than seen in recent years, a percentage figure is misleading and 14% by 2017 corresponds to an additional 60GW of capacity.

Offshore

The UK continues to lead the world in offshore wind, with 3.65GW now operational and a further 4.26GW is either under construction or has been consented, according to our market research unit Windpower Offshore Intelligence. UK industry body RenewableUK cites a further 7.8GW in the permitting system that will bring the total beyond the 13GW projected for 2020 in the National Renewable Energy Plan.

Further offshore growth is expected in Germany and the long-awaited US offshore wind farm is progressing. The developer, Cape Wind, reports that it has signed a $15 million contract to provide the upland construction work required to bury the project's electric cables. The contractor will also be responsible for providing a conduit for connecting the buried electric cables on land to the submerged ocean submarine cables. Work will begin in 2014.

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