The Renewables Landscape: Wind at the Threshold

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
  • SOURCES
• ANALYSIS
  • Historically, large hydro has been the only commercially mature renewable technology; however, today, wind is at the threshold
    • The renewable energy industry is growing rapidly on the back of technological advancements, political will and subsidies
    • Wind power has become one of the broadest-based renewables technologies, with installations in more than 70 countries
    • Global installed wind capacity is experiencing significant growth, with the majority of new capacity now outside Europe
    • The growth of global wind energy generation has outpaced that of total global energy generation 10-fold
    • Wind is often considered an unreliable generation technology, yet wind turbine load factors have been very consistent, albeit low
    • While wind energy may be variable, it need not be unpredictable
  • In a market that is increasingly characterized by the rise of the portfolio investor, utilities with renewable energy targets are building wind portfolios through acquisitions
    • Among the major European utilities, the top 25 wind asset owners account for 20% of the total global installed wind capacity
    • The rise of the portfolio investor: institutional investors and IPPs own a significant percentage of the total installed wind capacity
    • Booming demand means that the global wind energy industry must now overcome significant challenges
    • Supply chain shortages have sparked industry restructuring
  • Policies have had a major impact upon the speed and extent of renewable energy development, despite many design and implementation problems
    • At present, at least 64 countries have a national target for renewable energy supply, including all 27 EU countries
    • The RES-E directive sparked the adaptation of legal frameworks in all EU countries, and several countries outside Europe
    • The EC intends to support the 2020 targets via a harmonized ' target-and-trade' system
    • Countries with an existing share of final energy supply that meets or exceeds the draft directive' s ' interim trajectory' will benefit most
    • The directive is designed to support renewable power in the EU, but could, instead, undermine existing local support schemes
  • Utilities have fallen behind the curve on renewable generation and are now tasked with applying successful strategies to tap major global growth opportunities
    • Utilities have fallen behind the curve on renewable generation and are only now beginning to catch up
    • Strong global growth will continue on the back of technology maturity, policy incentives and heightened investor appetite
    • Utilities have rapidly introduced global wind generation strategies by growing wind portfolios, mostly through acquisition
• APPENDIX
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  • List of Figures
    • Figure 1: Global renewable electricity capacity reached 207GW in 2006
    • Figure 2: in 2006, the world' s total renewable installed capacity accounted for less than one third of the total large hydro capacity and less than 5% of the world' s total power generation capacity
    • Figure 3: Global installed wind power capacity increased by an estimated 21GW in 2007
    • Figure 4: Germany led the way in total installed wind energy capacity in 2007
    • Figure 5: The US led the way in new installed wind energy capacity in 2007
    • Figure 6: European wind generation accounted for just 3% (98TWh) of the total energy generated in 2007 (3,444TWh)
    • Figure 7: EU wind energy generation has grown inline with capacity, suggesting consistent wind patterns throughout the EU wind fleet
    • Figure 8: From 2003 to 2005, load factors across the world' s wind fleets remained largely in the 18%−25% range, and never exceeded a 4.5 standard deviation
    • Figure 9: Despite heightened green credentials, utilities' installed wind capacity remains a modest part of their overall generation mix
    • Figure 10: A combination of heightened M&A activity and organic new build is keeping European wind energy ownership in a state of flux
    • Figure 11: The challenges facing the industry are borne from five main causes
    • Figure 12: EU targets for renewables' share of electricity production typically range from 5%-30%, but reach 3.6% in Hungary and 78% in Austria
    • Figure 13: No less than 60 countries (37 developed and transition countries and 23 developing countries) have some form of policy to promote renewable power generation
    • Figure 14: No less than 60 countries (37 developed and transition countries and 23 developing countries) have some form of policy to promote renewable power generation
    • Figure 15: Using 2005 as a baseline, each Member State will be required to increase their share of final energy supply.
    • Figure 16: Onshore and offshore wind will experience varying degrees of growth over different time frames
    • Figure 17: Utilities can access three main types of entry strategies to scale their wind portfolios globally