Wind power developers and suppliers banking on the so-called emerging markets for their continued growth have a long wait ahead of them, delegates at the recent European Wind Energy Conference (EWEC) in London were warned. Many of the issues facing emerging wind power markets are symptomatic of those facing the global industry generally, such as ensuring viable and economic grid connection. It is, however, the unwillingness of governments to set realistic and long term market frameworks that is the key obstacle to significant growth, said Alberto De Miguel of Spanish renewable energy developer Corporación Hidroeléctrica de Navarra (EHN). Until this changes, wind growth outside the existing strong markets of Europe, the US and India will continue to be sporadic.
While most speakers in EWEC's emerging markets sessions opted for the politically correct "pat-them-on-the-back" approach in outlining future market opportunities, De Miguel was far more no-nonsense. Without power purchase rates and market conditions there can be no long term sales agreements with utilities, and without these, wind power developers cannot proceed, he said. "There is no sign of any clear new emerging market for the short term."
De Miguel's comments came minutes after speakers from China and Brazil -- often hailed as two of the most promising emerging markets -- had outlined their ambitious goals to boost wind development. Professor Xu Hunghua of China's Institute of Electrical Engineering noted that by the end of 2003, China already had 40 wind farms up and running with a combined total of 567 MW. Moreover, wind power targets have been set at 1200 MW by 2005, 4000 MW by 2010 and 20,000 MW by 2020. His colleague, Professor Li Jungfeng of the Chinese Renewable Energy Industries Association, who is in charge of drafting China's renewable energy law, stressed that in working towards these targets China hopes to improve upon its position as the tenth biggest wind market in the world. New renewables legislation should help meet the country's wind targets, he said, with the use of a fixed price system "learnt from Germany and Spain" expected to be the key feature. In the last year alone, 40 GW of new power capacity was installed in China, he added. "So 20 GW of wind by 2020 is not a lot, but we need your help," he told developers.
Similarly, Everado Feitosa of the Brazilian Wind Energy Center urged developers to help his country meet its post-2006 wind targets as outlined under the government's renewable energy program, Proinfa. This will require 1350 MW of new renewable energy capacity a year, he said, with around ten per cent of that -- 100-200 MW a year -- expected to come from wind. He stressed: "Last year a big problem was grid connection, but now there is no problem because the government says the utility must pay." Moreover, "New political strategies are supporting wind and Brazilian investors are very interested," he added. "It is a concrete market."
Nonetheless, while China, Brazil and several other countries have announced ambitious targets for wind power development, significant growth prospects remain few and far between, De Miguel said. While countries such as China, Brazil, Japan and Australia remain as the emerging markets viewed with most promise, other markets have arisen. New markets have sprung up in Tunisia, the Pacific Islands, Hungary, Estonia, South Africa, Slovakia and Chile, he noted, but they are, he said, "insignificant" at present. Moreover, he said it is difficult to say with any confidence which market has the best growth prospects. "We have had so many promises over the years, but no results. It is clear that under-developed countries will not pay higher prices for environmental energy."
Numerous additional obstacles remain, he said. These include wind power's poor competitiveness with traditional energy sources in many emerging market countries, a lack of carbon dioxide reduction and carbon trading schemes, unstable market frameworks, planning inconsistencies, poor grid connection, and poor public acceptance of wind farms. Furthermore, country-specific economic and cultural issues increase the risk and capital costs of project ventures. "The growth potential of world markets is huge," he said. "The question is, when will it happen?"
The problems facing the industry are not insurmountable, he continued. Concerted action by both government officials and the industry itself is required, but this does not presuppose the continuation of the subsidy culture. "Wind energy will not survive long term based on subsidies," he stressed. Along with the introduction of long term and effective market frameworks, the most obvious solution, he noted, is to continue to reduce the cost per kilowatt hour of wind power, aiming for around EUR 0.03-0.038/kWh.
The trend towards multi-megawatt machines is not, he suggested, really helping significantly when it comes to younger markets. Best site selection to minimise risk and uncertainty is essential, while governments should internalise environmental costs of traditional energy sources -- this would push their cost up by around 30%. In addition, efficient CO2 markets need to be established while avoiding the current confusion caused by the existence of several different systems, such as carbon trading under the Kyoto Protocol and the just started EU CO2 market. "The industry must lobby for long term schemes and implementation of best practice," he said, adding that there "should be no restrictions on wind."