Windpower Monthly spoke to Global Wind Energy Council (GWEC) secretary general Steve Sawyer, Actis investment principal Nicolas Navas, Gamesa marketing director Juan Diego Díaz and Nordex SE chief customer officer Lars Bondo Krogsgaard about the emerging markets developers and manufactuers are looking at expanding into.
Question: Where will the next big, emerging markets be for developers and manufacturers to enter into?
Juan Diego Díaz, marketing director, Gamesa
According to the International Energy Agency's latest report, the center of gravity of global energy demand is shifting decisively towards emerging economies, which will account for 90% of total growth in demand up to 2035.
Those regions, where Gamesa has a leading position, are the next markets into which wind energy will expand. In our opinion, in addition to India, Brazil and the North of Africa, emerging countries from the South of Asia — such as Taiwan, Korea and the Philippines, with very high wind locations — and from Central Asia — Kazakhstan, Kyrgyzstan, Turkmenistan or Uzbekistan — will also register a medium-term growth in their wind activities.
On the other hand, the European Union needs to accelerate the diversification of external energy suppliers. Some countries, such as Latvia, Lithuania, Estonia or Finland, must reduce their dependence on Russian gas imports. Renewable energies, especially wind, will actively be developed in some European countries in order to achieve their "20-20-20" targets.
To conclude, there is another market that I would like to highlight: Russia. Its coal and nuclear facilities are becoming more and more obsolete while their energy demand is increasing. Besides, they have wind and space. All the conditions are given to create a big market for wind energy and we think that it will become true in the coming years.
Lars Bondo Krogsgaard, chief customer officer, Nordex
Nordex has been quite successful over the last three to four years when entering new emerging markets. Today we have installed a strong volume in Uruguay and in South Africa.
As a mid-size company, our approach is based on focusing not on more and more rising opportunities worldwide, but on few. And these countries have to fulfill several criteria for a market entry.
One is that the market conditions deliver a stable revenue stream for our customers. We typically do not enter markets when we do not see a short-term potential volume of 50-100MW.
A general stable policy and security in the country, as well as a grid system and capacity that fits our turbine technology is also of importance. In doing so, in the coming years Nordex is looking in selected countries in Latin America like Chile or Peru, but also in the Middle East region.
Nicolas Navas, investment principal, Actis
In reality we think the next markets have demonstrated some initial activity and are setting themselves up to significantly increase. Those are Mexico, Chile and India. If you would have asked me the same question two or three years ago I would have said South Africa.
Let me put each one in context. For example, Mexico is set to benefit from a significant increase in its installed wind power generation facility with the new energy law. It has been extremely positive.
In Chile, president Michelle Bachelet's new administration is stepping up all of the efforts started in the Piñera government by increasing the renewable energy targets.
And in India there is an ongoing deficit of electricity, and with the restrictions around gas and coal, there is a lot of opportunity to add capacity to the system.
These countries are growing very fast, and their economies are performing very well, and it is now imperative to provide new large installed capacity to the system. Wind power is a very good way to add to the system fast. If you build a hydro facility it could take seven or eight years. With a wind farm, the whole process, with the right wind measurements in place, could take you two to three years.
Steve Sawyer, secretary general, GWEC
Besides China, global growth in the wind industry is now being driven by Brazil, Mexico and South Africa. But what's next?
Needless to say, most of the growth in the coming years will come from Africa, Asia and Latin America.
In Africa, beyond Ethiopia and South Africa, we can see markets developing in Kenya, Tanzania and Mozambique. There are signs of potential new markets in West Africa: Senegal, Nigeria and Ghana; and of course Egypt and Morocco will be the major markets in the northern part of the continent.
In Latin America, beyond Brazil and Mexico, Uruguay and Chile are starting to move, and there are early developments in Peru, and potentially Colombia and Venezuela. Panama may finally get started and small but dynamic markets are developing in Nicaragua, Guatemala, Honduras and Costa Rica.
In Asia, India is set for a growth spurt, and new markets in the Philippines, Mongolia, Pakistan and Thailand are of most interest in the short term.
But the two big chunks of 'vento nullus' remain Russia and Saudi Arabia — both with huge potential, both with huge problems associated with operating there, and varying degrees of political commitment (and opposition) to going down the renewables road. My bet is that one or the other takes off in the coming decade, but I'd be lying if I told you I knew which, when or how.