In 2010, seven countries - China, the US, India, Germany, the UK, Spain and France - shared more than 80% of the global wind energy market. This compares with five countries accounting for almost the same proportion of the market nine years ago.
The three countries leading the global wind sector shared 66% of the market in 2010, according to BTM. For the second year running, China was the world's largest single market, with 18.7GW installed. The US remained in second place with 5.1GW, despite seeing growth slowing by around 50%. India leapt from fifth to third position, with 2.1GW installed compared with 1.2GW in 2009. BTM attributes India's rapid growth to the recent liberalisation of the country's energy market, which has paved the way for independent power producers and allowed the country's energy sector to begin moving beyond the dominance of private enterprises generating electricity for their own consumption.
All change
There has been significant jostling in the rankings among European countries. Spain dropped from third position in 2009 to sixth in 2010, reflecting a 35% drop in installed capacity. Sweden appears on the list for the first time, at number ten, with 604MW installed. The UK advanced to number five, while Italy fell back to number eight and Portugal dropped out of the top ten altogether.
China's rampant growth is forecast to continue, followed by steady growth in the US. Development in Europe will continue to be strong, although some markets will stagnate, including Germany, Spain, France and the UK. This will be offset by rapid growth in the emerging markets of Romania, Poland, Bulgaria and Turkey.
It will be just a matter of a few years until Asia overtakes Europe in cumulative wind capacity, according to BTM Consult director Birger Madsen. That said, Madsen admits he has been surprised by the strong performance of European emerging markets, particularly Turkey, Bulgaria and Romania. "These three were more or less invisible a few years ago and now they have many projects," he says.
One factor driving increased geographical spread of wind energy projects, according to Birdger, is the United Nations' programme of international climate talks, which have raised the profile of renewable energy on a global basis. "Countries know what will be demanded of them in the future. There is still progress in the negotiations, even if they have been a little slow since Copenhagen," he says.
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Chinese advances
Last year saw top supply chain companies lose further market share to those lower down the rankings. Before 2007, companies outside the top ten accounted for just 5-6% of the market. However, rapid growth by Chinese firms has altered the supplier landscape and in 2008 companies outside the top ten accounted for 15.8% of market share. In 2010, this increased further, to 20.2%. BTM's list of the 15 largest suppliers in the world now features seven Chinese companies - four of them in the top ten: Sinovel, Goldwind, Dongfang and United Power.
Sinovel jumped to number two in BTM's rankings, with a market share of 11.1%, overtaking GE Energy, which took 9.6%. This represents spectacular growth for Sinovel, which entered the top ten as recently as 2007. Goldwind, pioneer of the Chinese wind power market, increased its market share from 7.2% in 2009 to 9.5% in 2010, which represents one of last year's best performances among top-ten suppliers. United Power, established in 2007, entered the top ten for the first time last year, while Chinese Mingyang, Sewind and Hara XEMC took places 11, 14 and 15 respectively, pushing established European turbine suppliers out of the top-15 rankings.
On the customer side, BTM identifies a continuing shift in the ownership of wind projects, with utility companies gaining in influence in all regions. In Europe, the shift toward utilities has been at the expense of the Danish and German model based on private-equity investment in mainly tax-driven projects. In the US, ownership has migrated increasingly away from independent power producers. In China, state-owned utilities are the established dominant force in wind farm development and by 2010 accounted for some 41% of China's cumulative capacity.
BTM believes the trend toward utility-based wind energy development is the result of three primary factors. First, the global wind market is no longer driven solely by subsidies and the incentive-based policies underpinning such subsidies. Increasingly, wind has an accepted place in developers' overall energy portfolios. With national and international targets to incorporate renewable energy within portfolios, utilities have a reason to integrate wind into their corporate strategies.
Second, the large capital investment that wind projects demand, especially offshore developments, has pushed the sector toward cash-rich utilities. Finally, many utilities are seeking to change their image from that of high-carbon polluter to clean-energy developer, and investing in wind energy assists them in this.
Growth forecast
Overall, 2010 was a mixed year for wind. The industry experienced decline in growth for the first time since 2004, with year-on-year growth decreasing from 35% in 2009 to just 3% in 2010. Despite this, the industry achieved a record installation of 39.4GW, a remarkable achievement given that the North American market contracted by nearly 50%. Wind's buoyant global installation rate was largely due to phenomenal growth in China - 48% of last year's wind power installations worldwide were in China.
Another positive sign was the news that penetration of wind power in the world's electricity supply reached 1.92% in 2010 - the figure BTM predicted for this year.
BTM's forecast for 2015 anticipates that wind will grow from the current annual installed capacity of 39.5GW to 81.4GW, including offshore development. Average annual growth in new installed capacity for the period to 2015 is forecast at 15.5%, an improvement on last year's forecast for the same period, which was 13.5%. This slight increase is due to an expectation of continued phenomenal growth in China and a rise in offshore activity.
Offshore developments are expected to supply 7.2% of new installations for the period to 2015, predicts BTM. However, in Europe, offshore wind will take a larger share, making up some 20% of the market.
Looking beyond 2015, the consultancy predicts that wind energy will become less dependent on local incentives and policies introduced to stimulate growth. Instead, more traditional business drivers will gain in influence. Further expansion of the global renewable energy sector will be on the cards if a new UN convention to tackle climate change is agreed to replace the Kyoto Protocol for the post-2012 period. Any growth in global renewable energy would see wind power accounting for a major share in new renewable installations, notes BTM, thanks to wind's proven track record and increasing cost-competitiveness.
Increased demand for electricity, particularly in Asia and South America, combined with wind's improved competitiveness with fossil fuels, should also boost wind developments in emerging markets, says BTM. Another factor that may prove an increasingly important driver in wind energy expansion is growing concern over security of energy supply, particularly in the US and Europe. A crude oil price of $70-$80 a barrel was recorded throughout most of 2010.
Considering all of these factors, BTM expects rapid growth for wind in all regions of the world between 2015 and 2020, although growth in Europe will be less dramatic. Total capacity by the end of 2020 is predicted to be around 1,093GW - about five times current cumulative installation. This 2020 forecast represents annual growth of 11.5%.
A new financial dawn
Looking at financing, BTM believes that the worst of the financial crisis is over. Banks in Europe have begun lending again and institutions such as the European Investment Bank have stepped in to bridge funding gaps. However, BTM acknowledges that banks have become more critical and that smaller developers are struggling.
One effect of the credit crisis was to temporarily bring down the price of fossil fuels, making wind power less competitive, particularly compared with coal and gas. Last year saw the second consecutive drop in turbine prices after these peaked in 2008. Such price reductions, if they continue, should help close the price gap between wind and traditional energy sources.
BTM predicts an average price for onshore wind power of EUR1.45 million per megawatt. This is slightly lower than previous forecasts thanks to a fall in production costs caused by lower prices for raw materials and oil. For offshore wind, BTM maintains its price prediction of EUR3 million/MW. BTM believes that onshore prices will decrease by 3% a year from 2011 onwards, in part driven by strong competition among suppliers, including new entrants to the turbine market.
Total turbine sales of EUR66.8 billion are forecast for 2011, increasing to EUR111.7 billion by 2015. Wind turbine equipment represents about 70-75% of the total value of onshore installations. For offshore, the proportion drops to 40-50%, with remaining costs related to other aspects of development such as foundations, grid connection, sea cables and land leases. The cumulative global wind turbine market over the next five years is estimated to be EUR317 billion.
Fierce competition between turbine suppliers has resulted in the emergence of a new trend toward long-term, full-service contracts for turbine repair and maintenance, notes BTM. Until a few years ago, service contracts were often just two to five years in length. Now, Vestas, GE and Siemens all offer full-service packages for most of their new turbines and Enercon offers a 12-year contract, the longest on the market.
Optimistic outlook
BTM's growth projections are far more optimistic than those issued by other bodies. The consultancy predicts that the amount of electricity generated from wind will reach 2,491TWh by 2020, 80% higher than the International Energy Agency's most optimistic scenario.
The consultancy's projections also trump those published by the European Wind Energy Association (EWEA), which assumes the EU can reach 230GW by 2020 and 400GW by 2030. BTM believes the EU can achieve 315GW by 2020. But the most ambitious projection for wind to date emerged from a scenario produced jointly by EWEA and Greenpeace. Their "Wind Force 12%" scenario outlines how wind power could contribute 12% of the world's demand for electricity before the end of 2020. To achieve this goal, 1,200GW of capacity supplying around 3,000TWh per year would be needed.
While this scenario may seem very ambitious, BTM points out that recent development rates have been close to the EWEA/Greenpace projections. Indeed, 2010's achievements were almost exactly in line with the EWEA/Greenpeace projection, with 39.4GW delivered compared with 39.8GW predicted.
BTM figures for 2010 differ from American Wind Energy Association 2010 figures
THE RISE OF DIRECT-DRIVE TURBINES MORE MODELS TO BE LAUNCHED
This year's BTM report features a chapter on the increase in commercially available direct-drive turbines. Until recently, Enercon was the sole supplier of this technology in significant numbers. However, in 2010 Goldwind supplied more than 2,300 of its 1.5MW direct-drive turbines and Hara XEMC delivered 253 of its 2MW direct-drive turbines.
Last year, the direct-drive sector accounted for a market share of almost 17.6%. GE will introduce a 4.1MW direct-drive machine this year. The Siemens SWT-3.0MW turbine, due to be commercialised this year, represents a technological breakthrough as it is lighter than the preceding 2.3MW drive-train turbine.
Several Chinese turbine firms - Dongfang, Casc-Direct Wind and New Unite - have also announced they will introduce direct-drive machines with multi-MW capacities. BTM is therefore predicting rapid growth in this sector, which could achieve a market share of 20-25% within the next five years.
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