Wind Power

Growth onshore, hope offshore

 

This FactBook summarizes the status of the wind industry and its prospects, lists the main technological hurdles and principal areas for research and development, and analyzes the economics of this technology. It is one of a series of academically reviewed publications by the A.T. Kearney Energy Transition Institute, a non-profit energy transition research organization established in 2011.

FIGURE 1: GLOBAL INSTALLED WIND CAPACITY (GW)

SOURCE: GLOBAL WIND ENERGY COUNCIL (2015), “GLOBAL WIND REPORT 2014”; IEA (2015), "RENEWABLE ENERGY MEDIUM-TERM MARKET REPORT"; BLOOMBERG (ONLINE), "GERMAN OFFSHORE WIND INSTALLS SURGE TO 1.76 GIGAWATTS THIS YEAR"

Onshore wind-power capacity has grown at a robust rate over the last decade

Global wind-power capacity has increased by an average of 23% a year for the last 10 years to reach 370 GW at the end of 2014. Growth has been driven by onshore technology, which accounts for 97.6% of capacity. China accounted for 41% of capacity additions in 2014 and is the principal driver of market growth ahead of Germany (11% of capacity additions in 2014). The market in the U.S. recovered in 2014 with 4.9 GW capacity additions after having dropped in 2013 down to 1.1 GW due to the expiration of the Production Tax Credits. Despite this impressive deployment, wind is accounting globally for no more than 6.4% of total installed capacity, supplying around 3.6% of global electricity (the load factor of onshore wind farms is on average 23% to date, and 34% and 49% for new onshore and offshore projects, respectively).

Wind capacity is expected almost to double by 2020, driven by Asia

Going forward, wind growth is yet expected to continue, increasing capacity to over 630 GW by 2020. Asia will continue leading wind-capacity additions with 148 GW additional capacity expected in the next 5 years. North American and European markets are also expected to remain dynamic. In addition, wind development should continue to spread globally with emerging markets such as Russia, India, Brazil, Mexico, Turkey, Iran or South Africa. Growth in wind generation should exceed capacity growth because of increasing load factors, mainly as a result of improvements in turbine technology and accelerated deployment of offshore wind farms. However, despite European and Chinese interest, offshore should not account for more than 6.5% of global wind capacity in 2020.

FIGURE 2: TYPICAL LCOE RANGE FOR RENEWABLE TECHNOLOGIES AND REGIONAL WEIGHTED AVERAGES ($2014 /kWh)

SOURCE: SBC ENERGY INSTITUTE BASED ON IRENA (2015), "RENEWABLE POWER GENERATION COSTS IN 2014"

Wind economics are still largely shaped by policy support

As with most other emerging low-carbon energy technologies, supportive government policies remain crucial for wind-power deployment. These usually fall into two categories: altering prices to which investors are exposed, such as feed-in-tariffs or tax incentives; or mandating a certain quantity of wind power, within renewable portfolio standards or auctions, for example. Auctions are becoming increasingly popular and have proved an effective method of achieving very low prices. In April 2015, for instance, an auction for 90 MW of onshore wind concluded at around $60/MWh. However, prices this low do not necessarily reflect the true costs of wind power and such aggressive bidding may not be sustainable.

The ecosystem of wind power has matured

In parallel with the expansion in capacity, wind finance took off during the 2000s. However, it is now facing growing competition from solar photovoltaic. The ecosystem of wind power has developed and matured over the last years with a growing role of financing players. Whereas the onshore wind turbine market is relatively fragmented – with a significant presence of non-OECD players, offshore is still dominated by northern European companies.

FIGURE 3: EVOLUTION OF WIND-TURBINE ROTOR DIAMETER 5ROTOR SIZE IN METERS FOR MOST ADVANCED TURBINES)

SOURCE: SBC ENERGY INSTITUTE ANALYSIS BASED ON US DOE (2015), " 2014 WIND TECHNOLOGIES MARKET REPORT"; IPCC (2011), "SPECIAL REPORT ON RENEWABLE ENERGY, 2011"; GLOBAL WIND ENERGY COUNCIL (2014), "GLOBAL WIND REPORT 2014"

Despite attracting less attention than solar photovoltaic, wind power is by far the largest renewable energy after hydro power. The development of wind power has accelerated over the past decade and growth is expected to continue, increasingly driven by Asia, but also by emerging markets in Latin America or Africa. It is important to distinguish onshore wind power, a mature, proved technology, from offshore concepts, which still need to overcome the deployment challenge and to demonstrate their economic viability. In the longer term, airborne wind systems may change the game by harvesting higher wind speeds, while lowering investment costs. But airborne wind remains at an early stage of development.

 

Request the full FactBook presentation here.

Permission is granted to reproduce and distribute copies of this work for personal or nonprofit educational purposes. Any copy or extract must refer to the copyright of A.T. Kearney Energy Transition Institute.

Explore other links with further details about wind power.

Discover more about A.T. Kearney’s expertise and insights in energy: Oil & Gas and Utilities

Request the Full FactBook

Title: Wind Power
Size: 3.82MB PDF

dividerDownload the 2016 Summary

ExecSum2016

Title: Wind Power
Size: 3.77MB PDF