While 2023 and subsequent years this decade promise record installation of new wind energy around the world, possible supply chain bottlenecks could derail new wind projects and consequently stall the transition to zero-carbon energy, GWEC warned in its annual Global Wind Report.
The production and supply of key components in wind turbines such as blades, generators and gearboxes is expected to continue through 2023 and 2024, the report stated, but the picture remains more complicated further ahead.
However, GWEC called for further supply chain investment to accomodate growth beyond 2024.
“Following recent investment, gearbox manufacturing capacity is well positioned to support the expected growth up to 2027. A concentrated supply chain and regionalised sourcing strategies, however, look certain to create bottlenecks,” it added.
Supply chain disruptions are threatened by a lack of diversity amid China’s continued dominance in manufacturing of key components such as wind turbine nacelles, the report read.
China controls 60% of the market share of wind turbine nacelles, while in terms of assembly it is even more dominant — accounting for 82GW of identified annual capacity of onshore nacelle assembly, ahead of Europe (26.1GW), the US (13.6GW) and India (11.5GW).
“Even assuming that all of the existing nacelle production capacity in Europe and the US can be fully utilised – an unlikely occurrence as buffer room is normally required to ensure sufficient supply and production capacity will be impacted by the introduction of new onshore turbines with greater power rating – we foresee a bottleneck occurring from 2026," GWEC stated.
Hopes and fears
GWEC expects more than 100GW of new wind capacity to be installed in 2023 and additions of 630GW in the next five years under current policies — an average of 136GW of new wind installations every year until 2027.
However, recent crises such as the Covid-19 pandemic and war in Ukraine — and subsequent geopolitical responses to them — have signalled the vulnerability of global supply chains for the wind industry.
For example, the report pointed out that while 77.6GW of new wind capacity was added in 2022, investments in wind energy fell in the Americas, Europe and Africa. Only Asia-Pacific bucked the trend.
“This marks a paradox during a period when various crises are disrupting energy security and climate deadlines are drawing closer. Wind energy has never been more needed: it builds energy security, lowers the cost of electricity and supports decarbonisation. Last year’s investment trends exemplify how faster political action is now critical,” Morten Dyrholm, chairman of GWEC, said.
Nevertheless, other areas regarding the relationship between global politics and the wind industry showed encouraging signs for the growth of wind infrastructure in the coming years.
“With a double-digit growth rate of 15%, the mid-term outlook for wind energy looks very positive,” the report read.
It cited Europe’s embrace of energy security amid the fallout of Russia’s invasion of Ukraine as a key example of the turn towards renewables.
Europe itself “performed well in a volatile 2022”, according to Feng Zhao, GWEC’s head of strategy and market intelligence. This was driven by record wind installations in Sweden, Finland, and Poland, and recovering installations in Germany, he added.
Elsewhere, the impact of US President Joe Biden’s landmark Inflation Reduction Act (IRA) legislation was also likely to “turbocharge” the wind market in the US, GWEC said.
The report referenced American Clean Power Association (ACP) data which estimates the IRA will help to deliver upwards of 550GW of new clean energy by the end of the decade, with renewable energy projects, including wind, supplying 40% of US electricity.
“Support for domestic manufacturing is poised to spur the buildout of a robust domestic supply chain for both onshore and offshore wind,” GWEC said of the IRA’s wider impact on the wind industry.
China meanwhile is expected to continue to dominate as a global market leader in the wind industry. GWEC expects “explosive” growth of wind energy in China, with the country expected to lead in new onshore wind installations of 300GW between 2023 and 2027. China, the US, and Europe are together expected to make up more than 80% of total capacity of new onshore wind additions between 2023 and 2027 according to the report.
