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Changing trends but more growth

Global wind power capacity is set to increase seven fold in the next ten years reaching 180,000 MW, according to the latest World Market Update on international wind energy development from Denmark's BTM Consult. The report looks at new markets emerging, which markets are moving toward saturation and the pattern of development. It also covers the industry's top ten players, countries' market share and forecasts for the next ten years.

Strong new markets are emerging and some traditional markets are moving towards saturation, while the pattern of development is for more centralised and less dispersed wind power in a business expanding at record speed, reports BTM Consult in its latest World Market Update on wind energy development

Global wind power capacity is set to increase seven fold in the next ten years reaching 180,000 MW, according to the latest World Market Update on international wind energy development from Denmark's BTM Consult. The figure lies in stark contrast to far more "conservative" predictions from two major energy authorities, states the report. For 2020, nine years ahead of the BTM horizon, the International Energy Agency is predicting just 67,000 MW of installed wind and the World Energy Council 185,000 MW, points out BTM.

Even though the BTM outlook is more optimistic than that of the IEA and WEC, the wind industry has consistently outperformed BTM's growth projections of the past seven years. But, despite a compound growth rate of nearly 40% over the past five years, wind power still only represents just 0.32% of the total world consumption of electricity and will provide just 2% by the year 2011, predicts BTM. In dollar terms, cumulative sales of wind power technology are forecast to reach $38 billion by the end of 2006, compared to $1.25 billion today.

The seventh annual World Market Update, published last month for 2001, says the annual rate of installations over the next five years will increase from 7500 MW a year in 2002 to around 14,500 MW of new capacity a year in 2006. At this rate, the European Wind Energy Association's target for 60,000 MW by 2010 in Europe will be reached by 2007. BTM forecasts that cumulative installed capacity will reach nearly 80,000 MW by the end of 2006, compared with today's total of 24,927 MW from 55,960 wind turbine generators globally.

INCREASE

In the next five years, the report predicts the US will maintain its 18.4% share of the market and that Europe's share will decrease from today's 71.5% to 68.1%. Asia will increase its share from 9% to 9.8%. The rest of the world market is expected to increase significantly to some 3.7%, mainly caused by expected market growth in Australia and Russia. Today the three most active markets represent 77.8% of the global total: Germany accounts for 38.5%, the United States 24% and Spain 15.4%. Between them the three installed 5312 MW of the 6824 MW that went up in 2001. Italy, India and Japan follow with market shares of between 3.2% and 4%.

FORECAST DROP

Compound market growth over the past five years has been 39.5%, says BTM Consult. It does not, however, expect this rate to continue and forecasts a drop to 16.2% over the next five years. The year on year growth rate in 2001, at 52%, is the third highest recorded by the industry. Over the last three years, compound growth has been 34.8%. Split into national markets, Japan has led with a rate of 128.3%, followed by Greece at 86.7%, Spain at 59,2%, Italy at 52.5%, and Germany at 44.8%. Alongside Japan's meteoric rise to the sixth most active market last year, Denmark's fall from third position to seventh in the top ten market leaders are flagged by BTM as the most significant market changes in 2001.

There have been bottlenecks in the supply chain leading to long delivery times for key components such as blades, gearboxes and generators. But things have improved in the past year and there seems to be manufacturing capacity enough in 2002 for 12,000 MW of wind power, says the report, adding that severe bottlenecks are not expected. Manufacturers should not, however, be complacent. The year on year market growth for megawatt scale wind turbines was a stunning 88% -- and the trend towards ever larger turbines is likely to continue. "It is therefore crucial for the industry that component suppliers have their capacity improved in time for the coming 2-4 MW turbines," says BTM Consult. The report authors retain their expectation of a 15% drop in the cost of wind power between 1999 and 2004 and stress that economics are "crucial if wind energy is to be the preferred means of reducing emissions." Larger turbines and improvements in industry disciplines such as siting, service and maintenance will all contribute to the falling cost.

Top ten

The top ten list of manufacturers has changed, with several companies under performing in the market, particularly Gamesa and Ecotècnia of Spain, Danish Bonus and German Nordex (graph). Vestas maintained the top position with 24.1% of the market, selling 1648 MW. New in as second largest is Germany's Enercon, with 15.2% of the market share. Denmark's NEG Micon and the US company Enron Wind came in at third and fourth with 12.8% and 12.7% respectively. The remaining six of the top ten all hold single digit percentages (table). BTM provides data on the relative market shares of each of the major wind turbine manufacturers on a series of national markets.

The report notes that only one offshore project was installed in 2001 -- the 10 MW Yttre Stengrund in Sweden. The pace of development for offshore will not take off before 2003, when some 386 MW might be installed," it states. But even when offshore development peaks within the five year forecast in 2006, due to the timing of German regulatory instruments, the offshore market will still only represent 13.6% of the global wind turbine market of 14,430 MW.

Tipped for growth

Emerging new markets tipped for "significant growth" are those which have recently put framework conditions in place to facilitate wind power development, says the report. France, Italy and eventually Sweden are earmarked for annual growth of 300-600 MW, while outside Europe, Japan and Australia are markets with an annual potential for 200-300 MW a year. BTM points out that it is "consistency" in regulation for wind energy rather than any particular support system which achieves the best results.

Beyond 2006, the report forecasts, the European market will stabilise from an annual installation of 9850 MW to around 9000 MW a year by 2011. America will see a steady growth from 2250 MW to around 6000 MW a year. In Asia, rapid growth is predicted from 1330 MW to 5000 MW a year, similarly for the rest of the world. In support of these predictions the report says the demand for electricity is increasing in Asia and South America, the price of wind power electricity will come down beyond 2005 and the kWh price of conventional capacity will be higher than wind power. The emissions reduction targets set by the Kyoto protocol will also drive the wind market in the 2008-2012 period.

Interestingly, after more than a decade with environmental concern as the main driver for the development of renewables in Europe, "lack of supply" or at least "political dependency of supply" has become an important issue. "The need for energy and environmental concern are both major drivers for the demand for wind power," it says.

CENTRALISED DEVELOPMENT

BTM also notes a gradual shift from dispersed to more centralised development of wind power over the past six years. In 1995 dispersed development -- single wind turbines and small wind farms under 5 MW -- accounted for 75% of the world market, with commercial and utility owned wind farms taking just 24%, with 1% as niche markets. By 2001, however, only 35% of development was in the form of dispersed generation, with 64% built commercially or by utilities.

The report highlights the stability of the price of wind power compared with fossil fuel because it has no "fuel" costs. But the fact that the technology is still relatively new -- and that price is a commercial parameter and thus installation costs are not always available -- still makes putting a cost on wind power difficult. "There are still uncertainties about what the operational cost is over the entire lifetime compared with established generating technologies." The rapid scaling up of the size of turbines during the nineties is another reason for relatively short track records for the commercial models in today's markets.

BTM notes there is no evidence that turbines in high wind areas have higher specific costs for operational and maintenance (O&M) than turbines in less windy areas. The normal calculations for O&M costs for wind power plants are $0.005/kWh at the beginning of the life cycle. After ten years this rises to an estimated $0.01-0.02/kWh. BTM believes the O&M costs for modern wind turbines in today's commercial sizes will be around $0.005 and 0.01/kWh over a 20 year plant lifetime.

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