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Denmark

More predictions of strong growth -- Two new industry forecasts

A new advisory and consultant company has arrived on the wind power scene -- and like its established competitors is predicting strong market growth for the industry. MAKE Consulting, based in Denmark, predicts annual world market growth of 15% to 2010, but with offshore wind representing just 5% of installations.

The company's overall global growth predictions are more conservative than those of Danish rival BTM Consult, which predicts 19.6% growth to 2010 in the latest edition of its World Market Update. On the other hand, MAKE, in its newly released The Wind Forecast, expects the American wind market to log a compound annual growth rate (CAGR) of 45% in the next five years, Asia to grow at 20% (driven by China and India), but European growth to slow to 10%. It is predicting growth rates of more than 35% for China. BTM is far more conservative on America, expecting a CAGR to 2010 of 21.4%, but is more optimistic on Europe, forecasting growth of 14.5%. It agrees with MAKE on the Asian market.

BTM has just extended its market forecast in a new ten year review of the wind power industry published this month. The review predicts a CAGR of 17.1% to 2015, compared with MAKE's 12.5% for the same period. BTM believes offshore wind power will account for 10-15% of the European market beyond 2010, but only a marginal share elsewhere.

Despite the more optimistic view of the global market held by BTM compared with MAKE, historically its five year forecasts have consistently underestimated growth. The actual rate of wind development has been 40-45% stronger than its forecasts, reveals BTM's review, based on its annual World Market Update overviews since 1995. Average growth rate over the decade has been 29.7%.

The top five national markets in 2010, says MAKE, will be the US, India, Spain, China and the UK, all installing more than 1000 MW a year, with Germany, Italy and Canada also in the 1000 MW a year club. BTM's top five is similar, but it includes Germany instead of China. China will install 1000 MW in 2010 concedes BTM, but it will be the only country outside its top five to do so. It predicts Spain will peak at 2200 MW in 2008.

Over a ten year horizon, annual wind power additions will increase to reach 32,750 MW in 2015, says BTM. In total, 223,600 MW will be developed in the next ten years, an investment of $224 billion, based on costs today. By then, wind power will supply 2.7% of the world's electricity compared with less than 1% today, says BTM.

Beyond 2010, both companies concur that the wind market's fastest growth will be in America and Asia. MAKE logs a CAGR for America of 26.3% for the next ten years and 15.7% for Asia/Pacific. According to BTM, the Americas will install 9400 MW in 2015 for a cumulative total of 64,191 MW. Asia/Pacific will install 8950 MW to reach 54,362 MW.

But MAKE and BTM differ wildly on Europe. Europe's growth will slow, says BTM, but it will remain the largest regional market for wind until 2015, installing 12,750 MW that year to bring the European total to 143,800 MW -- a CAGR of 25%. MAKE, however, puts European CAGR at just 7.7% for the same ten years. It appears not to share BTM's belief in offshore wind.

German revival

BTM says Germany, after 1700 MW this year, will pick up, rising to 2400 MW in 2009-2010 when offshore gets going, levelling off at 2000 MW for three years, before hitting 2500 MW in 2014-2015. BTM attributes the delay in the German offshore market to lack of large turbines of 5 MW before 2010.

In terms of total installed wind capacity, BTM expects five national markets to break through the 20,000 MW barrier by 2015, with the US leading the way, reaching just over 50,000 MW that year. It will be followed by Germany (39,599 MW), Spain (25,863 MW), India (22,800 MW), and the UK (20,389 MW). BTM forecasts 15,119 MW for China.

The largest national market in 2015 will be the US at 7000 MW, according to BTM, followed by China and India at 3500 MW each, and Germany and the UK, both at 2500 MW. Other markets installing 1000 MW or more will be Canada, "other Americas," France and Spain, says BTM.

As well as a ten year forecast to 2015, BTM's review also contains a scenario to 2025. It expects security of supply to become a major political driver for renewables, with wind at the forefront of providing the cheapest CO2-free electricity. Wind's price will continue to fall, perhaps dropping to $0.025-0.05/kWh, half of today's $0.04-0.06/kWh. Oil and gas prices will remain high. After renewables, nuclear will become the second fastest growth technology for CO2-free supply.

If BTM's scenario holds true, global wind capacity will reach 1103 GW, or 1,103,000 MW in 20 years and provide 8.6% of the world's electricity. In Europe it will provide 20% in a fully saturated market, says BTM. To maintain that penetration, Europe will need to repower old wind plant at a rate of 18,000 MW a year. At today's installed cost of $1000/kW, the next 20 years of development will create a $1 trillion global industry.

MAKE Consulting will publish The Wind Forecast four times a year as well as offering advisory services to the industry. The principals of the company are Torben Bjerre-Madsen and Morten B Keller. Bjerre-Madsen was CEO of NEG Micon and deputy at Vestas until his departure a year ago. Keller was also formerly employed in NEG Micon's management before a position as wind energy analyst for Denmark's Nordea Bank.

Behind BTM Consult are wind energy veterans Birger Madsen and Per Krogsgaard, who founded the firm in 1986. As well as publishing The World Market Update, BTM offers a variety of services to the wind industry.

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