TODAY’S STUDY: WORLD WIND’S GROWTH GOES ON

Global Wind Report; Annual Market Update 2013

April 2014 (Global Wind Energy Council)

The Global Status Of Wind Power In 2013

More than 35 GW of new wind power capacity was brought online in 2013, but this was a sharp decline in comparison to 2012, when global installations were in excess of 45 GW In terms of overall investments the global wind sector saw a small decline to USD 80 3bn (EUR 58 7bn1 ) in 2013, down from USD 80 9bn (EUR 59 2bn) in 20122

The new global total at the end of 2013 was 318,105 MW, representing cumulative market growth of more than 12 5 percent, strong growth for a manufacturing industry given the economic climate, even though it is lower than the average annual rate over the last 10 years of approximately 21 percent

At the end of 2012, the expectations for wind power market growth were uncertain, as continued economic slowdown in Europe and the political uncertainty in the US made it difficult to make projections 2013 turned out to be another difficult year for the industry, mainly due to the dramatic drop in the US market after record installations in 2012

China, the largest overall market for wind since 2009, had a good year, and once again gained the top spot in 2013 Installations in Asia again led global markets, with Europe reliably in the second spot, and North America a distant third

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A result of this was that in 2013, unlike in 2012, the majority of wind installations globally were outside the OECD once again This was also the case in 2010 and 2011, and is likely to continue to be the case for the foreseeable future

By the end of last year the number of countries with more than 1,000 MW installed capacity was 24: including 16 in Europe;3

4 in Asia-Pacific (China, India, Japan & Australia); 3 in North America (Canada, Mexico, US) & 1 in Latin America (Brazil) By the end of last year six countries had more than 10,000 MW in installed capacity including China (91,412 MW), the US (61,091 MW), Germany (34,250 MW), Spain (22,959 MW), India (20,150 MW) and the UK (10,531 MW)

China will at some point in 2014 cross the 100,000 MW mark, adding another milestone to its already exceptional history of renewable energy development since 2005 Largely driven by China, Asia is likely to overtake Europe as the region with the most deployed wind capacity by the end of 2014

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Looking ahead, while 2014 is likely to be much better than 2013 in terms of overall installations, the picture is complex across various regions Europe’s framework legislation and its 2020 targets ensure a degree of stability, but a wave of policy uncertainty and the lack of clarity on its post 2020 regime for renewables, combined with the on-going economic crunch means that the outlook for the 2014 market is subdued

The slowdown in Asia in 2012-2013 was a result of a combination of factors, but these conditions are expected to be short-lived, and Asian dominance of global wind markets is expected to continue Market consolidation and rationalisation in China is now almost over which could lead to installations at 2010/11 levels A partial reinstatement of support mechanisms (GBI) in India is likely to lead to a better 2014 outcome than in 2013, but the market is unlikely to return to 2011 levels before 2015-16

Canada, Brazil and Mexico are expected to have strong years in 2014, and more than five hundred megawatts from sub-Saharan Africa will come on line for the first time: in South Africa, Ethiopia and possibly Kenya Global installations will be further propped up by new projects coming on line in Japan, Australia, Pakistan, Vietnam and Thailand

Although in the US, the Production Tax Credit expired again at the end of 2013, the new PTC rules mean there will be strong installations in 2014 and 2015, and a more comprehensive set of tax reform legislation may be in the works.

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Asia: China And India Remain At The Top

For the sixth year in a row, Asia was the world’s largest regional market for wind energy, with capacity additions totaling just over 18 2 GW

In terms of annual installations China regained its leadership position, adding 16 1 GW of new capacity in 2013, a significant gain over 2012 when it installed 12 96 GW of new capacity In 2011, the new annual installed wind power capacity in China (excluding Hong Kong, Macao and Taiwan) was 17 63 GW By the end of 2011, its cumulative installed capacity was over 62 GW In 2011, China was the world’s second-largest wind producer, generating 73 billion kWh, a level about 64% higher than in 20104

In 2012, wind-generated electricity in China amounted to 100 4 billion kWh, accounting for 2 percent of the country’s total electricity output, up from 1 5 percent in 20115 Wind power generated 134 9 billion kWh of electricity in 2013, up 34 percent year on year, contributing 2 6 percent of the country’s total electricity generation.

China’s total installed electricity generation capacity was an estimated 1,145 GW at the beginning of 2013 By the end of 2012, wind energy (5 percent) had the third largest installed capacity after coal (66 percent) and hydropower (22 percent), surpassing natural gas (3 percent) and nuclear (1 percent)7 By the end of 2013, wind’s contribution had risen to 6 percent8

The Chinese wind market more than doubled its capacity from 44 7 GW in 2010 to reach 91 4 GW by the end of 2013, cementing China’s global lead in terms of cumulative installed wind power capacity

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Everyone has been surprised by the astonishing growth of China’s wind sector since 2006, but it is now entering a more steady development and refinement stage The pace of growth in the Chinese wind energy market had in the period from 2010-12 outstripped the ability of the power grid and system operators to manage it effectively Curtailment of electricity generation became a new challenge for wind power projects In 2011 alone, more than 10 billion kWh of wind power was lost because the grid had no capacity to absorb it

In the meantime, however, the NEA and State Grid are working to solve the transmission bottlenecks and other grid issues The NEA is also actively encouraging wind farm development in lower wind zones that are closer to load centers.

India today is the second largest wind market in Asia, presenting substantial opportunities for both international and domestic players The Indian wind sector has struggled in the last couple of years to repeat the strong market in 2011 when over 3 GW was installed, and 2013 was a slower year due to a lapse in policy in 2012

Nonetheless, India saw new wind energy installations of 1,729 MW in 2013, for a total of 20,150 MW This pace of growth kept the Indian wind power market firmly in the top five rankings globally As of January 2014, total wind installations had risen to 20,298 8 MW bringing the total grid connected renewable energy installations in the country to 30,177 9 MW9

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By the end of 2012, renewable energy accounted for over 12 8% of total installed capacity, and about 5% of electricity generation, up from 2% in 1995 Wind power accounted for about 66% of total renewable energy capacity and about 8 6% of the total installed capacity of 234 GW at the end of January 201410 With the acute need for electrification and rising power consumption in the country, wind energy is going to provide an increasingly significant share of the renewables based capacity While the rest of Asia did not make much progress in 2013, there are some favourable signs on the horizon.

The Japanese market saw new installations of 50MW in 2013 to reach a cumulative capacity of 2,661 MW This represents around 0 5% of the total power supply in Japan After the Fukushima accident in March 2011, Japan is slowly moving towards a transformation of its energy system to allow for a more diverse energy mix including more wind power and other renewables However, removing existing barriers will still take some time Offshore wind development, in particular floating turbines, is a promising prospect for the future

The Government of South Korea made “green growth” one of its national development priorities Although wind power is still a relatively small energy generation technology in South Korea, 2013 saw 79 MW of new installations onshore, which brought the total installed capacity to 561 MW The Korean government had earlier put forward a strategy for offshore wind development with a target of 2 5 GW by 2019

Thailand added 111 MW of new capacity in 2013, bringing its total up to 223 MW Pakistan commissioned another large-scale commercial wind farm of 50 MW in 2013, with total installed capacity reaching 106 MW by the end of the year Taiwan added 43 MW of new capacity, bringing its total installed capacity up to 614 MW As for the rest of Asia, we expect new projects to come on line in Vietnam and the Philippines in 2014.

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North America: Record Installations In Canada

1,599 MW of new wind capacity came online in Canada in 2013, making it the fifth largest market globally Compared to the 938 9 MW added in 2012, Canada’s wind power market saw significant growth in 2013, its best year ever Wind power now supplies approximately 3 percent of Canada’s electricity

Ontario leads Canada with more than 2,470 MW, now supplying over 3% of the province’s electricity Ontario’s Independent Electricity System Operator (IESO) confirmed that the production of wind energy in Ontario had doubled over the past four years, from 2 3 to 5 2 TWh between 2009 and 201311 Quebec ranks a close second with 2,398 3 MW in installed capacity Quebec is likely to see a total of 3,300 MW of wind energy commissioned by 201512

The Canadian industry expects another record year in 2014 with the addition of almost 2,000 MW of new capacity, led by Ontario and Quebec

Uncertain federal policies in the US continue to inflict a ‘boom-bust’ cycle on the country’s wind industry The US had its strongest year ever in 2012, but 2013 saw a precipitous drop in installations of over 92% year on year with just 1,084 MW in new installations, most of that in the fourth quarter

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The US is now home to over 61 GW of wind power capacity, up from 60 GW in 2012 By the end of 2013, wind provided 5 23% of total installed generation capacity in the US13

The production tax credit for wind and other renewable energy technologies expired at the end of 2013 However, an important provision was included in the American Taxpayer Relief Act of 2012 (enacted in January 2013) allowing eligible projects that were ‘under construction’ before January 1, 2014 to qualify for the PTC Although the US market came to a near complete stop in 2013, the nature of the extension has created a combined pipeline of over 12 GW of projects under construction14

In terms of total capacity, Texas again leads the Top-5 rankings with 12,355 MW, followed by California (5,830 MW), Indiana (5,178 MW), Illinois (3,568 MW) and Oregon (3,153 MW) In the US, 29 of the 50 states have firm RPSs, and seven states have renewable energy goals According to AWEA, by the end of 2025 RPS markets will drive the development of more than 63 wind equivalent gigawatts (GWe) of new capacity15

Mexico installed 380 4 MW of new capacity to reach a total of 1917 MW by the end of 2013 Last year was an important year for the wind industry in Mexico especially with the Constitutional Amendment enabling energy reform in December 2013 The market reforms for the electricity sector will have a significant impact on the future of wind power in the country Mexico has a target of 35% of electricity from renewable energy by 2024 2014 is set to mark a year of change for the wind industry in Mexico thanks to the new legislation.

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Europe: Stronger Than Expected Market

During 2013, 12,031 MW of wind power was installed across Europe, with European Union (EU-28) countries accounting for 11,159 MW of the total The 2013 figures reflect orders made before the wave of political uncertainty that has swept across Europe since 2011, which is taking a toll on the wind power sector

There are now just over 117 GW installed in the EU-28, and a total cumulative capacity of 121 4 GW for all of Europe Wind is now meeting 8% of EU electricity demand, up from 7% at the end of 2012, 6 3% at the end of 2011 and 4 8% at the end of 2009

The overall EU installation levels mask significant volatility across Europe In a number of previously healthy markets such as Spain, Italy and France installations decreased significantly compared to 2012, by 84%, 65% and 24% respectively This has contributed to 46% of all new installations in 2013 being in just two countries (Germany and the United Kingdom), a significant change compared to previous years when installations were less concentrated and spread across many more healthy European markets

Wind energy represented 32% of all new EU power capacity installed last year, and investments of between EUR 13 bn and EUR 18 bn Renewable power installations accounted for 72% of new installations during 2013 - 25 GW of a total 35 GW of new power capacity, up from 70% the previous year 2013 installations were led by Germany (29%), the UK (17%), Poland (8%), Sweden (6%), Romania (6%), Denmark (6%), France (6%), Italy (4%), Austria (3%) and all others accounted for 12%

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Offshore accounted for almost 14% of total EU wind power installations last year, up from 10% in 2012 It was a record year for offshore installations, with 1,567 MW of new capacity grid connected

Currently, destabilized legislative frameworks, economic crises and austerity measures being implemented across Europe are hitting the wind industry The year ahead will be tough, and the long-term prospects for the wind industry are closely linked to the outcome of the debate over the EU’s 2030 targets for climate and energy The German wind energy market continued its steady growth in 2013, adding 3,238 MW to bring Germany’s total installed capacity up to 34 25 GW The German wind industry expects a solid 2014 as well

The Renewable Resources Act (EEG) will be amended some time in 2014 Chancellor Merkel’s government agreed to phase out nuclear power in favour of renewables; however, her new coalition has talked about reducing the support available to renewables

In January 2014, Vice Chancellor and Economy Minister Sigmar Gabriel proposed a plan for the reform of the EEG The proposal includes a cap on renewables of 45% of German electricity output by 2025, and of 60% by 2035 It also stipulates a 10% to 20% cut in feed-in tariffs for onshore wind and an annual cap to its expansion, as well as more hardship for PV16 The German and European renewables industry has been critical of the terms being discussed

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The United Kingdom was the second largest market for wind in Europe last year, adding 1,883 MW in 2013 of which 1,150 MW was onshore and 733 MW was offshore The UK is the largest offshore wind market in the world with total installations of almost 3,681 MW, accounting for over half of the European (and global) offshore market The UK Department for Energy and Climate Change (DECC) statistics released in February 2014 show that the amount of electricity produced by wind grew 38% from 2012 to 2013 In total the amount of electricity generated by wind grew from 5 5% in 2012 to 7 7% in 201317

Following on from the 2012 launch of the Offshore Wind Cost Reduction Taskforce report, the UK government and industry are working together through the Offshore Wind Programme Board The UK’s offshore industry has signed up to a target of reducing costs by 30% by 2020, based on the delivery of 18GW of offshore wind.

The other noteworthy European markets last year include Poland, Sweden, Italy, Turkey and Denmark Poland has had strong annual growth in the past couple of years despite a difficult political environment for renewables It now has a total installed capacity of 3,390 MW, up from 2,496 MW in 2012, the ninth largest wind market in Europe Sweden installed 724 MW in 2013 to reach a total installed capacity of 4,470 MW At the end of 2013, wind power accounted for 7% of Sweden’s total electricity consumption

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France’s wind capacity is also growing steadily and has now reached 8,254 MW The French government set a target of 25 GW by 2020, but it looks like it will be hard pressed to meet it Italy installed only 444 MW for a total of 8,552 MW, 65% below its installations for 2012 Denmark installed 657 MW for a total of 4,772 MW In 2013 wind power accounted for over 33% of Denmark’s total electricity consumption

Turkey continued to be a growth market for wind power in 2013 It installed 646 MW for a total of 2,959 MW Looking ahead, the future of Turkey’s wind sector looks very promising Facing extensive impacts from domestic austerity measures Spain continued to be the second largest market in the EU in cumulative terms, but just 175 MW in new capacity was added in 2013, to reach 22 9 GW of cumulative capacity The future of the Spanish wind market at present is very uncertain.

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Latin America: Growing Stronger, Brazil Leads

Wind power is reaching critical mass in a number of Latin American markets, and the region has begun developing a substantial wind power industry to complement its rich hydro and biomass (and potentially solar) resources In the medium to long-term, the demand for energy security and diversity of supply is expected to foster the growth of wind power in Latin America

For the second year in a row the Latin American market installed over 1 GW of new capacity In 2012, six markets in the region installed 1,225 MW of new wind capacity for a total installed capacity of just over 3 5 GW In 2013, just four markets including Brazil, Chile, Argentina and Uruguay accounted for 1,163 MW of new wind power capacity for a total installed capacity of 4 8 GW

Brazil once again led Latin America, adding 953 MW of new capacity; although the projects were fully commissioned not all of them could be given a grid connection before the end of the year Brazil is one of the most promising onshore markets for wind energy, for at least the next five years Brazil contracted for a total of 4 7 GW of new wind power in 2013 in three auctions, and has a strong pipeline of almost 7 GW to be completed by the end of 2015 Government projections foresee 17 5 GW of wind power installed in the country by the end of 2022

Chile added 130 MW to reach a total of 335 MW, and Argentina added 76 MW of new capacity to bring its total installed capacity up to 218 MW last year Both Chile and Argentina are potentially promising markets, which have substantial wind resources Uruguay added to its total tally with the commissioning of 4 MW of new capacity, bringing its total installed capacity up to 59 MW

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In the Caribbean, the Dominican Republic added 52 MW of new capacity last year, bringing the total installed capacity across the Caribbean to 221 MW by the end of 2013

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Pacific: Wind In Australia Gives Confidence

Total installed capacity across the region reached 3 8 GW last year The Australian market added 655 MW in 2013 (up from 358 MW in 2012), bringing its total installed capacity up to 3,239 MW

According to recent research conducted by the Clean Energy Council, wind farms have reportedly generated more than AUD 4 bn (EUR 2 6 bn) in investment in Australia since their introduction19

Last year Australia saw a new coalition government led by Prime Minister Tony Abbott come to power During the elections last year his party had stated that it would look again at Australia’s Renewable Energy target, which mandates that 20% of Australia’s power should come from renewables by 2020, with a 41 TWh annual generation goal from large-scale renewable sources A review panel has been constituted and will report to the government by the middle of this year, in time for its findings to be fed into an energy white paper This policy uncertainty may jeopardize up to AUD18 bn (EUR 11 6 bn) worth of investments and almost 30,000 jobs20 New Zealand and the rest of the Pacific did not add any new wind power capacity in 2013

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Africa And The Middle East

Africa and the Middle East are awakening to the opportunity of their enormous wind power potential Growth in 2013 was still small in absolute terms, with just 90 MW installed across the region, for a cumulative total of 1,255 MW However, the South African market will take off in 2014, and several countries have announced long-term plans for installing commercial scale wind power: Ethiopia, Morocco, Kenya, Jordan, Tanzania and Saudi Arabia, among others

Africa’s wind resource is best around the coasts and in the eastern highlands, but until last year it was in North and EastAfrica that wind power has been developed at scale This, too, is where current national policies are set to grow the sector further At the end of 2013, over 99% of the region’s total wind installations of 1,255 MW were to be found across nine countries - Egypt (550 MW), Morocco (291 MW), Ethiopia (171 MW), Tunisia (104 MW), Iran (91 MW), Cape Verde (24 MW), South Africa (10 MW), Israel (6 25 MW) and Kenya (5MW).

Africa is likely to emerge as a new hot spot for wind energy development with new projects in Ethiopia, Tanzania and Mauritius coming online, along with a resurgence in Morocco 2014 will be a milestone for the South African market, where up to 1 GW of new capacity will come online

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2013: Slow Year Due To Policy Uncertainty

2013 was a market with downward pressure on prices through oversupply in the turbine market; fierce competition with incumbents; and a wave of downward revisions to support mechanisms in an austerity driven economic landscape The industry continues to be challenged to compete on a price basis directly with heavily subsidized fossil fuel and nuclear energy plants, particularly in the OECD Having said that, all the fundamental drivers for wind power development still hold, and there is a need around the world for new power generation, which is clean, affordable, indigenous, reliable and quick to install…

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