Settling down to rapid growth

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The wind industry's traditionally strong markets in western Europe are being elbowed aside by rapid growth in the United States, Asia and the emerging markets in Europe's east, while some of the most established suppliers are losing market share to relative newcomers, reports Danish consultancy BTM consult in its annual survey of the global wind business

Based on continued rocketing growth in production of 23.5% annually, more than seven times the 3.1% growth of world electricity generation, wind power will be delivering 680 TWh of power by 2015 -- enough electricity to provide 2.93% of projected world demand in that year, or to cover the combined demand of the UK and Italy today. Supplying the electricity will be 300 GW of wind plant, five times today's installed capacity. Annual installations of new capacity will reach about 34,000 MW. So predicts BTM Consult in this year's edition of its renowned World Market Update of international wind energy development.

"The future looks very bright for the wind power industry. It is exploiting an inexhaustible resource and could be facing an insatiable demand. Demand will be just that in the not too distant future if the industry continues to reduce costs," says the BTM report.

The predictions for 2015 build on BTM's forecast for the next five years, in which wind's contribution to world electricity supply will increase from 0.69% to 1.59%. During 2006-2010, the cumulative annual growth rate for wind turbine sales worldwide will be 21%, compared with 26.3% over the past five years. Annual sales growth will average 16.4%, slower in the first years and faster towards the end of the period as offshore wind takes off. In 2010, new development will be more than 24,000 MW a year, with Europe contributing nearly 13,000 MW, North America and Latin America 4750 MW, Asia 4200 MW and the rest of the world 2475 MW.

If those growth rates are not exceeded (BTM predictions have consistently erred on the conservative side), global wind power will fall a thousand megawatt short of 150,000 MW by the close of 2010, well over a doubling of today's capacity. All but 11,600 MW of that will be in Europe (87,700 MW), North America and Latin America (29,560) and South and East Asia (20,900 MW). The forecast for 89,530 MW of construction globally in the next five years represents a total investment of more than $130 billion.

Offshore reduction

For the second year running, BTM reduces its expectations for offshore wind in the medium term. At 8388 MW to end 2010, down from last year's forecast of 8757 MW to end 2009, offshore will make up just 8.5% of the global market in the next five years, although in Europe 14.7% (7590 MW) of the forecast 46,650 MW will be built at sea. Just 800 MW of offshore wind is expected to see the light of day outside Europe.

"The whole offshore segment seems to be in a phase of re-evaluation," says the BTM report. "There will be a need to rethink costs and find new ways to improve the economics." Projects are being delayed by up to four years. "There are many concerns about likely progress -- when, how and what technology will be available and at what cost." BTM expects the UK and Sweden to take the lead, with strongest growth in the UK. It does not expect to see action in Germany before 2009, at the earliest.

The rise in wind turbine prices in 2005 has been a significant factor, not least for offshore, says BTM, where it received reports of equipment price rises of up to 30%. "That steep rise in prices was explained by increasing raw material costs caused by strong economic growth in Asia and higher oil prices. In addition, it became clear that wind turbine suppliers wanted to increase their margins and the strong demand seems to have made this possible," says BTM. "For the time being it is unclear whether the increase in prices during 2005 will continue for a few years."

Global wind power capacity grew to 59,264 MW in 2005 following the addition of 11,407 MW of new plant, according to BTM Consult, which bases its figures on reported sales from wind turbine manufacturers. Not all sold wind plant were necessarily operating by the end of the year. Europe's share of the world market in 2005 dropped to 56%, from 73% a year earlier, while the combined share of Canada, the US and Latin America increased to 23.4% from just 6.3% in 2004 when the US market, stripped of wind's production tax credit, lay dormant. Asia almost doubled its installed wind power between 2004 and 2005, from 3784 MW to 5618 MW, installing 650 MW more during the year than BTM predicted in its World Market Update 2004. Asia's world market share for 2005 is 16.1%.

Turbines sales

Sixty-four per cent of wind turbine sales went to the world's top four markets in 2005, Germany, Spain, the United States and India, slightly down on the 66% share of the global market held by the same countries in 2004. Among the top four, however, the changes were dramatic. In 2004, half the global wind market was equally shared by just two countries, Germany and Spain. Last year, the United States forged into the lead with a 21.3% market share compared with just 4.8% in 2004. Germany dropped to 15.8% and Spain to 15.5%. India in fourth place represented 11% of the global market, slightly more than the 10.7% achieved in 2004, when it was way ahead of the US.

Of the remaining six markets in the top ten, with shares of between 2.6% and 4.4%, France and Australia entered the 2005 ratings, replacing Japan and the Netherlands from 2004. The top ten represented 86% of the global market in 2005, compared with 85% in 2004. But over a five year period there has been a healthy spread in the global market, BTM points out, with eight countries now making up 80% of the market compared with just four markets in 2001.

Pole position

The US took pole position as the largest national market for the first time since the 1980s. The big surprises in the top ten, says BTM, were India's growth of more than 1000 MW in one year and Portugal's more than 500 MW addition, which doubled its total capacity and secured it fifth place, up from sixth last year. China shot from tenth to sixth place. In terms of top ten market growth over the past three years (table), China has been the world's top performer, with growth of 38.8%, ahead of India at 35.7%, Japan at 33.6% and the UK in a surprising fourth place at 32.8%.

In a radical change of mood in its predictions for the United States, BTM this year concedes that within two years the US will overtake Europe to become the world's largest regional market for wind turbine sales and within five years it will have more wind power plant than any other single country. Not that BTM is pessimistic on Europe. While the German market will continue its decline and Spain will remain flat, BTM upgrades its expectations for Portugal, France and the UK. Asian progress is expected to be "significantly faster than in the past."

GE, Suzlon and Nordex were the only companies to increase market share in 2005. All the others lost out, including the three leading wind turbine suppliers from 2004, Vestas, Enercon and Gamesa, mainly a result of GE entering the top three for the first time, displacing Gamesa and increasing its slice of the world pie by 6.7%. Vestas lost 5.5 percentage points and Gamesa 4.8 percentage points, while Enercon was down 2.2%. Suzlon doubled its market share to 6% and now lies fifth, though some way behind the big four, which together have nearly 72% of the market.

Vestas, despite losing share, continues to reign supreme with 28% of the world market in 2005, followed by GE with 17.7%, Enercon with 13.2% and Gamesa with 12.9%. The remaining five players in the top ten (chart) are headed by Siemens with a 5.5% slice. The top ten, completed by Repower, Nordex, Ecotècnia and Mitsubishi, supplied 95% of wind turbines in 2005, similar to the pattern of the past five years.

The wind turbine suppliers are still carving up the world between them geographically, with local companies dominating local markets, the top four markets being no exception. American GE was top supplier in the booming US market, with Enercon once again dominant in Germany. Gamesa ruled the roost in Spain as did Suzlon in India.

The tables are turned for exports, however. GE was pushed to third place or worse in eight of the top ten national markets, with the exception of Italy where it slipped into second place behind Vestas and ahead of Gamesa. As well as being top dog in Italy, Vestas was also the lead supplier in Australia, ahead of Germany's Enercon and Repower, and figured among the top three suppliers in all markets, barring China, where Gamesa ruled ahead of Goldwind (local partner to Repower), and GE. Vestas is unlikely to slip off the China radar this year. Like Vestas and Gamesa, Enercon managed to be lead supplier in two countries, staying ahead of Vestas and GE in Germany and Vestas and Gamesa in Portugal. Siemens walked off with the British market ahead of Vestas and Repower, with the only surprise coming in France, where Germany's Repower, with just 3% of the world market last year, led the pack ahead of Vestas and GE. In Spain, Acciona Wind Power crept into third place behind Vestas.

BTM tips two companies, China's Goldwind and India's Natural Energy Processing Company (NEPC), a one time partner of NEG Micon long before its merger with Vestas, as having "significant market promise." NEPC scored a place on the list of leading suppliers in the top ten wind countries by slipping into third place in India, behind Vestas and market leader Suzlon.

Technology stakes

With GE sticking mainly with its workhorse 1.5 MW machine, growth in the average size of newly installed wind turbines abruptly slowed, barely moving from 1.25 MW to 1.28 MW between 2004 and 2005. More than half the world market was supplied by wind turbines with rated capacities of 750 kW-1.5 MW, though the main Asian markets, with less developed infrastructure, incline towards sub-megawatt size machines, particularly India. BTM sees the main future market in the 1.5 MW to 2.5 MW size range, but points out that both Vestas, with its 3 MW turbine, and Siemens, with its 3.6 MW model, have even larger units commercially available.

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