This article was first published in Windpower Monthly's June 2017 issue. It has been republished following the untimely passing of Steve Sawyer. Windpower Monthly's thoughts remain with his family, friends and colleagues.
Following his tenth anniversary as secretary-general of the Global Wind Energy Council (GWEC), Steve Sawyer reflects on the progress wind power has made and its hopes and expectations for the future in conversation with David Weston.
After the publication of GWEC's 2016 Annual Market Update at Windergy India, he spoke to Windpower Monthly about the report's findings and analysis, and the transformation of the wind power industry during his ten years at the top.
Was 2016 better or worse than expected?
I think surprisingly positive in a number of small European markets. The fact that Europe was essentially flat in an off-year for installations for offshore was a bit of a positive surprise.
The US was strong — as we expected; Canada and Mexico were down and Brazil, of course, is having its difficulties.
In South Africa, I certainly hoped the standoff with Eskom would have been resolved long before now. We are collateral damage in a much larger struggle over the future of the ANC and the future of South Africa.
As usual, we have no idea what the US administration is going to do. That market looks in very good shape and it looks very strong and has a solid pipeline but if he [Trump] starts messing around with the tax code and now they're saying he's going to pull out of Paris [UN 2015 Agreement] yeah, we'll see.
China is always again a bit of a mystery. The first quarter numbers were ok, not great, but that doesn't always mean much.
They are facing another FIT cut at the beginning of 2018 so I think they have rules now that are sort of similar to the US in that they have to have part of the construction done to qualify for it but it doesn't actually have to be online. There will be less pressure than before perhaps. I would expect it to be up on 2016 a little bit but not much.
(Last year) was not going to be a repeat of 2015 because China was not going install 30GW. Looking ahead, in the report we're projecting just under 60GW in 2017. I think that's pretty safe, but a lot could happen.
Just ten markets account for 84% of global capacity and 88% of last year's installations. Is this a concern?
In 2007, 86% of total capacity was in the top ten markets and 91% of annual installed capacity was in ten markets. Those numbers have hovered in that sort of range for a long time. Obviously we would like it to be more diverse, but when roughly half the market is coming from one country, I suppose there's an inevitable concentration.
(We need) less reliance on the big three markets; Germany, the US and China. India is going to play a big role there. Brazil, I hope, will come back and will be joined by Mexico and South Africa in due course.
In Argentina, we have the first big test of the (president) Macri revolution coming up with elections in October. If he can get another term, then they may very well end up being unstoppable.
Why has India been a particular interest and focus for you over recent years?
India has such enormous potential but needs so much work. Also we have a project focused on developing a roadmap for an offshore wind sector in India.
They need the power, and offshore wind has a lot of advantages, particularly in India, because we believe the offshore resources are less susceptible to the substantial seasonal variation that most of south India is subject to.
We had a delegation from the Indian government come over to the Hamburg show in 2014 and had a look at Bremerhaven and some of the infrastructure that had been developed.
At that stage they had a severe case of "sticker shock" — they saw how expensive it was. Now of course, given the news they've been hearing about the offshore auctions in Europe I think they're really thinking a realistic option for them in the not too distant future. And I would agree.
What was your reaction to the zero-subsidy auction results in Germany in April? What do you make of the rapid fall in offshore costs?
(The Germany auction) to me was much less surprising than when it all started with Borssele 1 and 2. These guys (Dong and EnBW) are taking a long-term bet, I think it's a good one.
It's not a sure thing, but I think their plans are predicated on the next generation of machines — the 1X-generation, so to speak — and the wholesale power prices recovering somewhat.
Although I see speculation they're talking about being able to generate power at €0.03/kWh, which even at today's wholesale prices would put them in pretty good nick.
EnBW surprised me given their history, until I heard who was running it now, Frank Mastieux, who I first met when he was running E.on renewables. A very intelligent, forward thinking chap so that surprises me a lot less now that EnBW's involved.
It is a risk, and we won't know until the mid-2020s whether it was a good one or not. From where we sit now, to me it looks like a good gamble, but a lot could change between now and then.
Will the low offshore prices make it competitive with onshore? How will this affect the markets?
I know the offshore prices have attracted a lot of attention in the US, in Taiwan, potentially in Vietnam, certainly in Korea and Japan, where they are struggling to get their offshore sectors going. I think it will help to start the spread of the industry beyond its home in northern Europe.
If something different had happened on 8 November (US presidential elections) I would say that the US would be on the cusp of some serious investment going forward in getting some megawatts in the water by the end of this decade. Now it's more difficult, but things are still moving ahead in Massachusetts, Virginia, North Carolina and New York.
China installed over 560MW of offshore wind in 2016, and the industry is ready to actually blossom and boom there. Maybe the curtailment in the north of the country will help and the emphasis now on the development in more wind-speed areas closer to load centres where you don't have the transmission issues.
How has the market changed in the ten years you've led GWEC?
In one way you can just add zero on to all the numbers. It was still a completely OECD-dominated industry, primarily German, Danish and Spanish companies, plus GE. No Chinese manufacturers to be seen, but Goldwind existed with 600kW turbines running.
The new markets we were looking at with some excitement were places like Italy, the UK, Portugal and France. Those are no longer new markets; Italy had its boom and crash and is now starting to come back.
In the UK, despite the political difficulties, onshore installations is five times more than it was, and the country has become the world leader in offshore, at least for now. Portugal is getting 24-25% of its electricity from wind; France has grown quite substantially.
We didn't have markets in Brazil, South Africa, and Mexico, so that's all emerged in that time and we had great hopes for Japan, which have not been realised due to the structure of the electricity system.
A disappointment I would say is that, due to the political situation, we still don't have anything substantial going on in Iran, which we could and should. They need clean power, but until the US treasury department changes its attitude, it's going to be a very bold investor indeed to take a stake in an Iranian wind project.
Have the people changed? Has the mood or culture of the industry altered?
I wasn't young, I was 50 when I started, but I was relatively new to the industry. Now people think I've been here forever. In this industry, you go from being the new kid at school to being an old hand very quickly.
There is so much growth and turnover, especially during the flat periods, the difficult times in 2009-2012 in the aftermath of the financial crisis, and now there's a whole new wave of growth, and new people coming in.
Let me go out on a limb and say that while I think there has been a move towards making it a more professional business, I think you still find in leadership positions in the wind industry, a very large percentage, are motivated to a significant degree by the consequences of what they're doing and are not shy about saying so.
It's not like a bunch of environmentalists, but its still clear. We had our report sponsored this year. The head of Ingeteam, a Spanish service company, put as the headline to his introduction "The future will be renewable-based or there won't be a future".
I think you still see a lot of that motivation. People see themselves as part of a larger transformation of the economy, away from one based on fossil fuels to one that's sustainable in the long run. And the effect their success or failure will have on their kids' future isn't lost on anyone. It colours the industry.
The wind industry has really had to grow up and become competitive on its own merits. We are successfully now competing against heavily subsidised incumbents.