Big hike upwards for five year forecast

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As the political drive for clean energy gets stronger so does the global appetite for wind power. New players are emerging and markets growing at a pace never seen before. BTM Consult has significantly increased its five-year forecast for the world wind market

Global wind power capacity is set to triple in the next five years. Around 194 GW will be added between now and the end of 2012 to bring the grand total to 288 GW. By then the wind industry will be supplying more than 50 GW of new generating capacity a year, up from 20 GW delivered last year. The five-year period represents a $420 billion market.

By 2012 sales of wind turbines alone will be running at $111 billion a year, up from around $40 billion last year and an expected $58 billion this year. Wind's contribution to world electricity supplies will rise to 2.7% by end 2012, having reached 1% in 2007. Over the next decade, global wind capacity will reach 691 GW, a sevenfold increase.

The projections are made in the latest annual World Market Update from Denmark's BTM Consult and add over 11 GW to the five-year forecast from a year ago. Far from being overly optimistic, BTM has tended to underestimate industry growth for the past 13 years. "The upgrade of the forecast is justified by the strong global drivers, not least the strong economic growth in Asia," states BTM. These drivers include the Kyoto Protocol, the industry's job creation potential and a desire for greater energy self-sufficiency, which "have been stronger than ever."

BTM reports installation of 19.8 GW of new wind capacity last year, up 32% on the previous year and "higher than expected." A further 2.2 GW of wind turbines had been shipped but were not operating by the December 31 cut-off date for the report. The growth confirms a compound annual growth rate for the past five years of 24%, which BTM expects will rise to 25.1% up to 2012.

Global cumulative capacity reached 94 GW in 2007 spread across 35 countries. Europe added 8285 MW, a 600 MW increase on the 2006 figure. Even so, it made up less than half the annual world market for the first time, accounting for 42% of new installations, down from 51% in 2006. The United States, Canada and Latin America took a 29.4% slice of the pie, adding 5.8 GW, 2.3 GW more than in 2006, and Asia and the OECD Pacific countries added 5.6 GW, up 1.9 GW for a 28.3% slice.

National rankings

The US again added more wind power than any other country last year, putting in a record breaking performance of 5.25 GW, while "explosive growth" in China saw it add just under 3.3 GW, a 146% increase. According to BTM, this propels China into second place ahead of not only Germany but also Spain. BTM says it cannot verify Spanish wind lobby claims of more than 3.5 GW new capacity last year. Its figure of 3.1 GW puts Spain behind China. Germany fell two places to fourth with 1.67 GW, just ahead of India with 1.6 GW.

China is the fastest growing market by far, with an average growth rate of 97% over the last three years. Only France comes anywhere near close at 87.5% (table far right). Performing below expectations in 2007 were Portugal, the UK, and India, which slipped two places to fifth in the top ten. In all, the top ten markets in 2007 accounted for 89% of demand, 4.5% up on 2006, and the top three countries alone took 59%. Despite the clear market consolidation, the broad trend is for more countries to become wind markets, says BTM.

In terms of cumulative capacity, Germany's 22.28 GW keeps it in pole position as the world wind power leader, ahead of the US at 16.9 GW, Spain at 14.7 GW, India at 7.85 GW and China, which at just under 6 GW, moves into fifth place ahead of Denmark with 3.1 GW. The remaining four countries in the top ten are all in Europe and all have passed 2 GW.

Looking ahead

Europe is projected to add 72.67 GW in the next five years to take its cumulative tally to 129.5 GW. It will continue to lose global market share, however, as other regions pick up (graph right). The US will consolidate its position as the world's most active wind market, but its crown will be closely coveted by China (table below left), says BTM. Between them, China and the US will account for almost 40% of the annual market in 2012, slightly more than Europe.

New markets will drive European growth as the German market dwindles and Spain stagnates. Average demand to 2012 in both countries will be around 2-2.5 GW, though Germany will not be in the market for more than 1.5-1.6 GW annually until the offshore market gets fully underway in 2010. BTM has again upgraded its expectations for France, Portugal and the UK while also forecasting higher growth for Italy. "France and the UK are expected to grow to the level seen in Germany and Spain today," it notes, with France heading the pack come 2012 with 2.8 GW of new capacity that year.

In the United States, presuming wind's federal production tax credit is extended, BTM expects yearly installations to double to 10.5 GW in 2012, bringing the cumulative total to just over 60 GW. Including Canada and Latin America, the region is expected to install 56.5 GW over the next five years.

South and east Asia, led by China, will not be far behind. The region is forecast to install 53.5 GW between now and 2012, with China hitting 9 GW a year in 2012 to take cumulative capacity above 42 GW. The OECD-Pacific countries will install 6.45 GW to 2012, lead by Japan and Australia, and the rest of the world will add 4.75 GW.

The blip on the horizon remains offshore wind. For the third consecutive year, BTM has downgraded its offshore expectations, suggesting the sector will contribute no more than 3.6% of the 194 GW forecast for installation in the next five years.

The suppliers

The top ten wind turbine manufacturers (graph left) supplied 91% of the 2007 market, 3% less than in the previous year, a sign of the impact of new market entrants, particularly from China. China's Sinovel joined Goldwind in the top ten, with a 3.4% market share compared with Goldwind's 4.2%. Two further Chinese firms, Dongfang and Windey, are poised to enter the top ten next year, notes BTM. Repower has been pushed out.

Vestas maintained its position as market leader, but with a 5.4% drop in share to 22.8%. It is the only fully fledged global supplier in the wind industry, delivering units to almost every country active in wind development, but is dominant in just one of the top ten countries, Italy. The remaining top ten suppliers primarily serve their home markets. Enercon is the only other company with a significant presence in more than ten markets, says BTM, and is the leading supplier in Portugal and Canada, making it the only company to hold pole position in more than one market. That did not, however, stop it registering a 1.4% drop in market share from 15.4% to 14%.

With development in its home country booming, America's GE Wind is closing the gap on Vestas and took the second biggest chunk of the global 2007 market with 16.6%, a 1.1% gain on 2006. In third place was Gamesa (15.4%), followed by Enercon. India's Suzlon, maintaining its fifth position, raised its market share the most, up 2.9% to 10.5%.

With demand for turbines outstripping supply, price hikes by manufacturers continue. Prices have risen around 40-50% since 2004, says BTM, including by 10% last year.

Customer shift

Increasingly, customers for wind turbines are big utilities, independent power producers (IPPs) and investment firms. Even the German utilities, long time adversaries of wind power, are now active in the market, notes BTM. The market is rapidly moving away from the Danish and German models of private equity investment in mainly tax driven projects towards commercially motivated investment. Even so, 63% of world wind power capacity is still owned by private individuals.

Big utilities are now willing to develop projects as well as buy them, the report says. "For the wind turbine manufacturers there will be a much clearer picture of who they are selling to in future as speculative developers will increasingly disappear with the arrival of the big utilities," adds BTM. "This in turn will require even more technical expertise on the part of wind turbine suppliers as the more professional buyers demand tighter and harder contractual terms."

Of the 37% of the global market now commercially owned, more than half is held by just three firms: Iberdrola and Acciona from Spain and US company FPL Energy. With Portugal's EDP in fourth place, companies from the Iberian Peninsula are the dominant investors by far. Seven new entrants joined the top 15 list of owners (table left), including two Chinese utilities.

Yet again the BTM projections contrast with those of the International Energy Agency (IEA). The IEA predicts 261 GW by 2015 and 612 GW by 2030, compared with BTM's 691 GW by 2017. BTM's projections reveal the wind industry is even beating its own ambitious targets: the European Wind Energy Association's current target for 75 GW of operational wind capacity by 2010 will be fully achieved next year, says BTM. With the current pace of development, the industry is also threatening to outstrip Greenpeace's targets for 1250 GW of wind by 2020, as outlined in its Wind Force 12 scenario, BTM notes.

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