A dramatic drop in new installations, thousands of job cuts, long-winded permitting processes and inconsistent policies — you could be forgiven for thinking that a dark cloud hangs over the European wind market. But there is plenty to be positive about, according to the chief executive of the region’s trade body, WindEurope.
Giles Dickson, who has been heading the lobby group for almost four years, was a man in much demand when we met in Bilbao, during the association’s annual conference in April.
Indeed, it was not until the second attempt that we managed to sit down to discuss the outlook for the European wind market after a year that saw installations fall to the lowest level since 2011.
But 2018 should be just a blip as the region positions itself for a pivotal decade.
By 2030, Europe’s installed wind base could, in theory, double, and produce more than 30% of the region’s electricity, if afforded the right backing.
That support does not need to be monetary, he stressed, but could instead take the shape of firm capacity deployment procured through regular auctions.
"It’s a question of scale and market size," Dickson said.
"The industry thrives on scale. We’re much more likely to have that scale if we have clarity and visibility on volumes.
"If you were to take away that level of clarity and the perspective of revenue stability that auctions offer, you will increase the costs of capital for investments. That would make things more difficult.
"As far as the industry is concerned, it is very important that countries provide the visibility on auctions and schedules, that they continue to run auctions that offer a very clear perspective of revenue stability. And this is not about subsidy, it’s about revenue stability," Dickson stressed.
"When developers seek the financing for a project and the only revenue perspective they can offer to the financiers is a variable wholesale electricity price, then the cost of capital will increase, and the total cost to society will increase," he added.
Dickson is confident this clarity and visibility is coming. In 2018, the European Union agreed to a 32% renewable energy target by 2030, from less than 20% today.
To achieve this, under the European Commission’s Clean Energy Package (CEP), member states need to put together national energy and climate plans (NECPs).
While WindEurope was disparaging about the first draft of the NECPs, Dickson said the top-sheet numbers are encouraging.
"On the face of it, the headline numbers don’t look too bad in the drafts. What is lacking is the detail about policy measures that will enable countries to deliver on those volumes. Without the detail about the policy measures, the pledges are not meaningful.
"The Clean Energy Package does lots of good things. It establishes the template for the NECPs, which will give good visibility on volumes for the next ten years; on auction timetables and volumes; on budgets that are supporting auctions.
"We have this legally-binding requirement: every government must provide five-year visibility to the market on the auction volume, timetable and budget. We’ve not had that level of visibility before."
A number of markets, particularly Germany and France, are facing permitting logjams that are now damaging installation rates.
Under the CEP, final decisions on project-permit applications have to be taken within three years of the initial application and within two years for repowering projects.
"That’s [also] something we haven’t had before, which we hope will speed up the permitting process. And having a one-stop-shop [for appeals] should ease permitting at a national level," Dickson explained. This move could prove vital to the bloc’s progress.
Germany fell victim of its shift to the auction process, which allowed citizen projects to enter the tender process without a final permit in place.
"The rate of successful permit applications has declined by 70% in the last two years," said Dickson.
"In Germany there are particular issues about the north-south grid connections. We are concerned that those new lines should be built as quickly as possible, but we are heartened that the German government is giving top priority to this."
French projects, meanwhile, are repeatedly hindered by countless legal appeals, dragging out the permitting process, in some cases for up to seven years.
The stringent laws also means developers, once they finally do get a project approved by authorities, are tied to the technology outlined in the original plans. This means they often miss out on the latest generation of turbines.
"We would like permits to be awarded as quickly as possible," said Dickson.
"We would also like there to be flexibility in national permitting regimes that allows developers, if they wish to do so, to modify the technology they deploy so that they are not tied to the original specification with which they bid in an auction or applied for the permit.
"In France, this has been a major issue, with many long delays in projects, and permits taking six to seven years to be awarded, and the French system doesn’t allow any modification to the technology specification," Dickson complained.
Europe’s CEP also details new rules on the electricity market design, giving wind projects equal access for balancing and ancillary services.
This is something that is becoming vital to grid security. As carbon-emitting generation capacity is phased out, grid systems will need to find new ways to manage peaks in demand and to control frequency using renewable sources.
"We have the electricity regulation and new rules on electricity-market design, which give wind farms full and equal access to the balancing and other ancillary services markets," said Dickson.
"We have the technology to deliver frequency control. It’s absolutely not right that we have been excluded from ancillary service markets in a number of countries. We can offer frequency control cheaper than the conventional operators, so it makes sense that we should be in those markets," he argued.
Corporate power purchase agreements (PPAs) are also set to change how the industry operates. Already big business in the US, Europe is starting to catch up, with a number of large deals already in place, particularly in Nordic countries.
While such deals offer strong revenue stability for the generators, and price predictability for the consumers, they remain the domain of large corporations with the budgets to match. Dickson is keen to open up their potential for smaller generators and end users.
"There is the legally binding requirement of national governments now to remove regulatory barriers to corporate PPAs and facilitate their uptake.
"The corporate PPA market is booming in Europe. We had over 2GW of new PPA deals last year for wind alone. We had our first deals in Germany, Poland and Spain, which is very encouraging," he said.
Dickson pointed to the trade body’s Resource platform that aims to connect sellers and purchasers of renewable energy.
The association is also working to produce a "model contract" that can be an off-the-shelf solution for smaller companies to access renewables.
There is also a need for more complex deals, with either a number of customers or generators, said Dickson. "Germany’s first PPA involved four small wind farms. We are going to need many more of these aggregated deals, especially in markets such as Germany, where there are lots of these smaller sites.
"What’s going to happen in Germany as well, is that we will see a lot of PPAs signed with existing wind farms as they come out of the feed-in tariff," Dickson said, adding that corporate PPAs could help the repowering and life extension market in Germany, as early wind projects exit the support system.