In part 1: The mood amongst exhibition visitors and conference delegates gathering in Vienna in early February for the European Wind Energy Association (EWEA) annual event was one of short term frustration, but real optimisim for the long term. And with day one speakers such as Robert Clover from Make Consulting declaring wind will meet 50% of Europe's electricity demand by 2050 – becoming the cheapest technology along the way after 2020 – who can blame them?(Read more)...
There is “very interesting potential for wind in eastern Europe and the Balkans, the Mediterranean basin, and emerging markets like central and south America and Asia,” said Francesco Starace, CEO of Enel Green Power and Chair of EWEA 2013. “The expertise developed in decades of European industry leadership needs to be used exploring business opportunities at the periphery of, as well as outside, the Old Continent”.
It was a point echoed by Adnan Amin, director general of the International Renewable Energy Agency (IRENA). “Whatever the short term difficulties that beset us from day to day, the long-term fundamentals of wind remain strong, and are growing stronger,” he told delegates. “I am confident that the best days for the wind industry lie ahead.”
Amin highlighted the dramatic fall in annual growth rate for the global wind industry since the economic crash. “We are all keenly aware of the challenges the industry has faced since 2009, when annual market growth dropped from the 15 year average of about 28% into the single digits; and although I understand market growth is likely to exceed 10% in 2012, 2013 promises another difficult year,” he said. “This partly came about due to one of the sector's main challenges: high market concentration, in a period of economic uncertainty and fiscal challenges.”
As he pointed out, 75% of the annual onshore wind market is based in just four regions of the world: China, India, USA, and Europe. “Offshore wind is even more concentrated,” he said. “Any regulatory uncertainty affecting one of these major markets can have a dramatic effect upon the entire global supply chain.”
Diversification is vital, he said. “The spread of wind to new markets is already starting to take place: 68 countries now boast above 10MW in wind capacity. But large areas of the globe remain unexplored, and untapped,” he said. “We see enormous potential in Africa, Asia, and Latin America in markets hungry for energy, with growing populations, high economic growth, expensive electricity and widespread shortages.”
Preliminary results from IRENA's work in Africa has “outlined the tremendous strength of the economic case for creating an East African renewable energy corridor, connecting the East and South African power pools, from Ethiopia to South Africa”, he said. “This initiative could unleash massive economies of scale, bringing cheap wind and hydro from the north to the energy hungry markets of the south. The region as a whole is experiencing some of the highest economic and demographic growth in the world, including electricity demand growth rates over 7%.
“The potential to meet this demand with renewables is huge. Kenya and Ethiopia, for example, have world-class wind resources. One project in Kenya's Turkana region, for example, is looking at 300MW of wind capacity, while Ethiopia has plans to develop 7000MW by 2030. If we can match this supply to Africa's burgeoning centres of industry, we could see a genuine transformation of the energy landscape, every bit as dramatic as the continent's recent leapfrog to mobile telecommunications.”
The same opportunity exists for South East Asia, where the Copper Institute suggests that currently 28% of the population has no access to electricity, electricity demand is projected to grow by 6–7% per year, and may triple by 2030.
“Preliminary studies show that a visionary ASEAN power grid with a larger interconnection capacity and stronger market integration would increase the competitiveness of renewable energy against conventional sources, and could reduce the cost of meeting energy demand by US$29bn,” Amin said. “The wind potential for countries like the Philippines, Vietnam or Thailand is extremely high, and potentially represents an unexploited wind power market between 2GW and 13 GW/year up to 2030.” The technical potential for the Philippines is estimated to be 55GW, while for Vietnam or Thailand the potential is even higher at 642GW and 190GW respectively, he said.
In Latin America, while a number of markets such as Brazil, Chile and Uruguay, are emerging strongly, smaller markets are also growing, Amin said. These include Costa Rica, Honduras, Nicaragua, Dominican Republic, and the Caribbean. “And the continent has sleeping giants like Argentina whose wind potential could supply the Latin American electricity demand several times over.”
The rise of Turkey
Meantime, closer to home for the EWEA delegates, wind power in Central and Eastern Europe was flagged up to become “a significant source” of electricity production by 2020 while Turkey's wind power generation capacity will grow even faster, provided there is a stable legal framework in each country, a new report from EWEA suggested. Launched at the Vienna conference, the EWEA's Eastern Winds: Emerging European wind power markets report says 12 newer EU Member States in Central and Eastern Europe plan to increase wind power capacity from the 6.4GW installed at end of 2012 to 16GW by 2020. This is equivalent to the electricity supply of 9mn households, it notes.
Turkey is set to be a major market too, aiming to increase wind power capacity from its current 2.3GW to 20GW by 2023, Turkish Deputy Energy Minister Mercan told delegates, inviting them to participate in the market's growth. He acknowledged the policy support framework could be improved – EWEA says bureaucracy and complicated administrative procedures in Turkey are a significant hurdle for wind energy developers – but he urged delegates to remain positive.
And you can see why. Turkey has one of the largest wind energy pipelines in Europe with operational, under construction and planned projects adding up to 11GW, according to the Turkish Wind Energy Association. “The country's substantial wind potential of around 48GW is expected to attract significant investment,” notes the EWEA report. “The wind energy sector in Turkey has one of the fastest growth rates in Europe. During 2011, Turkey's cumulative wind farm capacity increased by 36%.”
The industry expects annual wind power installations in Turkey to reach between 500MW and 1GW per year and total installed capacity to hit 5GW by 2015. Under the country's support scheme, which is based on feed-in tariffs and an additional local content investment incentive, producers currently receive $73/MWh and a bonus for using locally manufactured components ranging from $6–13/MWh.
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