Today’s Study – Big Wind Building Around The World

GLOBAL WIND REPORT 2021

March 2021 (Global Wind Energy Council)

2020 – A Record Year For The Wind Industry

2020 was the best year in history for the global wind industry showing year-over-year (YoY) growth of 53%. Installing more than 93 GW wind power in a challenging year with disruption to both the global supply chain and project construction has demonstrated the incredible resilience of the wind industry.

Market status

The 93 GW of new installations brings global cumulative wind power capacity up to 743 GW. In the onshore market, 86.9 GW was installed, an increase of 59% compared to 2019. China and the US remained the world’s largest markets for new onshore additions, and the world’s two major economies together increased their market share by 15% to 76%, driven by the Feed-in Tariff (FiT) cut-off in China and the scheduled phase-out of the full-rate Production Tax Credit (PTC) in the US, respectively.

On the regional level, 2020 was also record year for onshore installations in Asia Pacific, North America and Latin America. The three regions combined installed a total of 74 GW of new onshore wind capacity last year, or 76% more than the previous year. Due to the slow recovery of onshore installations in Germany last year, Europe saw only a 0.6% YoY growth in new onshore wind installations. Developing markets in Africa and the Middle East reported 8.2 GW onshore installations last year, almost the same as in 2019.

In the offshore market, 6.1 GW was commissioned worldwide last year, making 2020 the second-best year ever. China installed half of all new global offshore wind capacity in a record year. Steady growth was recorded in Europe with the Netherlands taking the lead followed by Belgium, the UK, Germany and Portugal. The remaining new offshore wind installations in 2020 were shared by the US and South Korea. Total offshore wind capacity has now passed 35 GW, representing 4.8% of total global cumulative wind capacity.

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Market dynamics

While the first half of 2020 saw auctions being postponed or cancelled due to COVID-19, the sector bounced back with vigour in the second half of the year as key mature and emerging wind markets began to overcome the impacts of the pandemic. According to GWEC Market Intelligence, nearly 30 GW of new wind power capacity was awarded globally through auctions in the second half of 2020, which is a slight increase compared to the 28 GW awarded during H2 2019. Although only 1 GW offshore wind capacity was awarded through auctions worldwide, more than 7 GW of offshore wind auctions/ tenders were launched in 2020. This surge in new capacity to be auctioned is a clear signal that the industry is back on track and that the global pipeline of wind power projects continues to grow.

Through technology innovations and economies of scale, 2020 saw wind power continue to build its competitive advantage throughout the world. Last summer, a consortium of Shell and Eneco won the third zero-subsidy offshore wind tender in the Netherlands. In Latin America, as wind power already had very competitive prices, private auctions or bilateral PPAs have already emerged as an alternative mechanism to government auctions to drive growth. According to BloombergNEF, 6.5 GW wind power was signed through corporate PPAs globally last year, 29% lower than the previous year. Considering the fact that COVID-19 disruptions across the world have caused revenues to plummet for many corporates, the level of commitment to sustainable green energy remains impressive.

Last year also witnessed governments of countries such as China, Japan and South Korea making net zero/carbon neutrality commitments, and similar commitments were also made by major corporates including oil and gas companies. To reach the net zero targets, completing a systematic and radical energy transition from fossil fuels to renewable energy and low-carbon solutions is imperative. The current crisis offers a unique window of opportunity to put the world on a sustainable trajectory and meet our international climate goals, but we must act now - or miss the opportunity. Although reaching net zero will require bold actions by a large number of sectors and actors, wind power is placed to be one of the cornerstones of green recovery and to play an important role in accelerating the global energy transition.

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Market Outlook

After an unusual 2020, global wind market growth is likely to slow down in the near-term primarily due to an expected drop in onshore installations in China and the US following the expiry of incentive schemes. Nevertheless, the market outlook for our forecast period remains positive. GWEC Market Intelligence expects that over 469 GW of new onshore and offshore wind capacity will be added in the next five years - that is nearly 94 GW of new installations annually until 2025, based on present policies and pipelines. We hope and expect that governments will significantly increase their ambitions and targets following COP26, and for that reason we are upwardly revising our forecasts for the GWR2022. The CAGR for onshore wind in the next five years is 0.3% and GWEC expects annual installation of 79.8 GW. In total, 399 GW is likely to be built in 2021-2025.

The CAGR for offshore wind in the next five years is 31.5%. The level of annual installations is likely to quadruple by 2025 from 6.1 GW in 2020, bringing offshore’s market share in global new installations from today’s 6.5% to 21% by 2025. In total, more than 70 GW offshore is expected to be added worldwide in 2021-2025.

Wind energy’s role on the road to net zero…Enabling technology: Power-to-X and green hydrogen…Markets to Watch…

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Market status 2020…

Overview

2020 saw global new wind power installations surpass 90 GW, a 53% growth compared to 2019, bringing total installed capacity to 743 GW, a growth of 14% compared to last year. New installations in the onshore wind market reached 86.9 GW, while the offshore wind market reached 6.1 GW, making 2020 the highest and the second highest year in history for new wind installations for both onshore and offshore. Thanks to the explosive growth of installations in China, Asia Pacific continues to take the lead in global wind power development with its share of the global market increasing by 8.5% last year. Driven by a record year of installations in the US, North America (18.4%) replaced Europe (15.9%) as the second largest regional market for new installations. Latin America remains the fourth largest regional market (5.0%) in 2020, followed by Africa & Middle East (0.9%). The world’s top five markets in 2020 for new installations were China, the US, Brazil, Netherlands and Germany. These five markets combined made up 80.6% of global installations last year, collectively more than 10% greater than 2019. In terms of cumulative installations, the top five markets as of the end of 2020 remained unchanged. Those markets are: China, the US, Germany, India and Spain, which together accounted for 73% of the world’s total wind power installations…

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Market outlook 2021-2025

Global wind energy market expected to grow on average by 4 per cent each year

GWEC’s Market Outlook represents the industry perspective for expected installations of new capacity for the next five years. The outlook is based on input from regional wind associations, government targets, available project information and input from industry experts and GWEC members. An update will be released in Q3 2021. A detailed data sheet is available in the member only area of the GWEC Intelligence website.

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Global outlook

The market outlook for the global wind industry remains positive. The CAGR for the next five years is 4.0%, even though the installed capacity for 2020 marked a new high. l

GWEC Market Intelligence expects that over 469 GW of new capacity will be added in the next five years. That is nearly 94 GW of new installations each year until 2025.

Growth at the beginning of the next five-years will continue to be driven by government policy, including FiT, PTC, ITC, Green Certificates and renewable or technology-neutral auctions and tenders. New installations are expected to drop slightly in 2021, but it is still possible to make it the second-best year in history, taking into account the ongoing installation rush in the world’s two largest markets, China (offshore) and the US (onshore), driven by the cut-off of FiT and the deadline to qualify the full PTC value respectively.

From 2022 onward, although the PTC will remain as the main driver for installations in the US (where the one extra year PTC extension passed the senate last December can prevent the US onshore market from a cliff drop in 2025), the rest of world is expected to operate based on wind-only, hybrid, and technology-neutral auctions or on the grid-parity scheme (mainly China). To ensure stable growth in Europe, Latin America, Africa & Middle East and South East Asia, lessons shall be learnt from the previous auction market design failures in countries like Germany and India.

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Global onshore outlook

The CAGR for onshore wind in the next five year is 0.3%. The average annual installation is 79.8 GW. In total, 399 GW is likely to be built in 2021-2025. In China, from 2021, onshore wind has entered a new era: subsidy-free. Although the expected drop in the Chinese onshore market in the near-term will slow down global onshore growth, the net zero targets declared by the Chinese government and the implementation plans of provincial governments and corporates are likely to accelerate the new installations from 2022(for details, see the China net zero case study).

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Global offshore outlook

The CAGR for offshore wind in the next five year is 31.5%. New installations are likely to quadruple by 2025 from 6.1 GW in 2020. In total, more than 70 GW offshore is expected to be added worldwide in 2021-2025. This positive global offshore wind market outlook is supported by: 1) the sharp drop of offshore wind LCOE, 2) increased offshore wind targets in Europe, the United States and key markets in Asia such as Japan and South Korea, 3) the expected commercialisation and industrialisation of floating wind, and 4) offshore wind’s unique role in facilitating cross industry cooperation and accelerating the global energy transition from fossil fuel to renewables..,

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