Wind represents 61% of European investments in 2018

The wind energy sector spent a record €65 billion in Europe last year, accounting for more than 60% of all investments in new power assets in 2018, according to new analysis.

The €26.7 billion spent in new wind assets represented 61% of all investments in new power capacity in 2018, WindEurope noted
The €26.7 billion spent in new wind assets represented 61% of all investments in new power capacity in 2018, WindEurope noted

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Over 40% of this (€26.7 billion) was in new wind capacity — up 20% from 2017 — and due to cost reductions, this will finance a record 16.7GW, according to WindEurope

The 16.7GW of new capacity financed last year (12.5GW onshore, 4.2GW offshore) marks a 46% increase from 2017 — a sharp uptick following a gradual increase since 2012.

Total wind investments were more than double any other form of generation last year.

This record total occured in the same year installations across Europe fell to their lowest level since 2011.

New asset finance in wind energy 2010 - 2018 (source: WindEurope)

WindEurope added the €26.7 billion spent in new wind assets represented 61% of all investments in new power capacity in 2018.

Giles Dickson, the organisation’s CEO, said: "Cost reductions means investors now get more MW per euro they invest, and lenders are more comfortable with the risks so the costs of finance are falling too."

The industry body found that in 2018, 1MW of new onshore wind would require €1.4 million of capital expenditure (Capex) — down 30% from €2 million/MW in 2015.

Meanwhile, new offshore wind would cost €2.5 million/MW — down 44% from €4.5 million/MW in 2015.

"But Europe needs to keep investing significant amounts in wind if it’s going to meet its 32% renewables target for 2030," Dickson added.

"The money is out there, but there aren’t enough bankable projects."

Dickson added that difficulties in getting projects permitted due to increasingly slow and complex regulatory processes hindered development.

A lack of visibility of governments’ plans for renewable energy development also obstructs project financing and development, he said.

The geographic spread of investments increased last year, with projects reaching a financial investment decision in 22 countries — compared to 20 in 2017, and 16 in 2016.

Northern and western Europe accounted for the vast majority of investments in new assets last year, with the UK (€5.9bn) and Sweden (€3.7bn) leading the way.

Meanwhile, southern, central and eastern Europe only accounted for 4% of the €26.7 billion in financing.

However, WindEurope expects investments within these regions to increase in 2019, especially in Spain and Poland.

Maturity and competitiveness

A further €24.1 billion was spent on acquisitions of projects and companies — much more than previous years.

This total included €18.9 billion used in project acquisitions more than doubling from €9 billion in 2017, with a further €5.2 billion spent on company acquisitions — a figure similar in value to 2017, WindEurope stated.

The industry body explained that the maturity and competitiveness of the wind power sector had attracted more investors as equity partners, particularly from financial services.

As investors become more confident about wind power, they can calculate risk more accurately and invest earlier in projects, it explained.

Wind power attracted a more diversified pool of investors, including banks, institutional lenders and export credit agencies, changing the way that projects are funded, WindEurope noted.

Specifically, projects are increasingly being backed through ‘affordable debt’, particularly via non-recourse financing not visible on companies’ balance sheets.

WindEurope added that, as lenders become more comfortable with the risk of investment in wind power, interest rates and risk premiums are falling. This, in turn, means wind farms are getting more competitive funding and lower financing costs.

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