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Comment: Driven by 2020 targets, wind power market in CEE breezes ahead


Frost & Sullivan

With the traditional wind energy markets in Europe approaching saturation, wind turbine manufacturers and project developers are looking for new frontiers. Central and Eastern Europe (CEE) presents one such less developed territory that offers sizable opportunities for wind power development in the near future.

New analysis from Frost & Sullivan, Overview of the Wind Power Market in Central and Eastern Europe, reveals that the installed wind base in the region is over 1.5 GW in 2009 and estimates this to reach almost 23 GW in 2020 to meet the target set by the European Commission for all member states.

“The 2020 targets for the EU member states is the single-most important driver for the CEE countries to increase the number of wind power installations,” notes Frost & Sullivan Research Analyst Magdalena Dziegielewska.

“In December 2008, EU member nations agreed to support a new Renewable Energy Directive, with one of the objectives being to boost renewable energy use to 20% by 2020.”

All CEE countries that belong to the EU are being compelled to re-examine their energy portfolios. They are developing strategies that would enable them to reach these targets in the most efficient way.

“With an anticipated increase in installed capacity from slightly over 1500 MW in the whole region, the regional hotspots will need equipment, expertise and financial support in order to turn the opportunity into reality,” states Dziegielewska.

The front-runners will include Bulgaria, Poland, Romania and Turkey that are likely to outpace their neighbours. The Czech Republic, Estonia and Hungary may also offer some opportunities, although on a smaller scale.

In 2006, only 416 MW had been installed in wind energy in CEE, increasing to 1.5 GW by the end of 2009. This underlines the fact that countries are having a closer look at their energy mix and are establishing essential support in order to diversify it and increase the number of renewable installations. EWEA estimated in that order to fulfil EU obligations, 21.6 GW will need to be installed in wind power with a CAGR from 2009-2020 of 28%.

Politics

However, the lack of political will loom as a major challenge to market development. Poor grid access presents another restraint that threatens to slow down the wind power market in CEE.

The reluctance of countries to shift away from their over-reliance on fossil fuels and conventional energy generation has manifested itself in the lack of political will to develop a wind power market.

“However, countries are slowly moving away from their dependence on fossil-fuel sources and there is evidence of developing government support and financial aid,” comments Dziegielewska.

“There are four types of support mechanisms that countries can resort to: feed-in tariffs (FIT), quota obligation with tradable green certificates, tender procedures and fiscal incentive and grants.”

Feed-in tariffs are the most popular form of government support. They are being used in 15 countries in the CEE. Poland and Romania employ the quota obligation system and the Czech Republic has both of them in place. Feed-in tariffs provides better certainty for investors in terms of price level and investment payback period.

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