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Wind Industry Groups Brace for Downturn in Market Growth Starting in 2013

Last week saw the release of three reports from influential wind industry groups. The Global Wind Energy Council (GWEC) foresaw annual global market growth rates of about 8% for the next five years, though it cautioned of a “substantial dip” in 2013. The American Wind Energy Association (AWEA) urged congressional renewal of wind tax credits, and the European Wind Energy Association (EWEA) called for more binding post-2020 policies to ensure sector growth in the European Union.

GWEC: Asia Poised to Be the World’s Largest Wind Market

In its report, Copenhagen-based GWEC said total wind installations around the world for the period spanning 2012 to 2016 would reach 255 GW, driven by significant contributions from new markets in Latin America, Africa, and Asia. But “While the market continues to diversify across all continents, it is at the same time plagued by continued slow economic growth and budget crises in the OECD, as well as the continuing credit crunch,” said Steve Sawyer, GWEC secretary general in a statement.

Asia will continue to be the world’s largest market, with far more new installations than any other region, installing 118 GW between now and 2016, and surpassing Europe as the world leader in cumulative installed capacity sometime during 2013, ending the period with about 200 GW in total.

The Chinese market has finally stabilized, the report notes. After nearly a decade of double- and triple-digit growth, it will remain roughly at current levels for the next few years. Having achieved a 3 GW market for the first time in 2011, the annual market in India is expected to reach 5 GW by 2015. Japan may also emerge as a key player: The future of Japan’s energy system, given the near-universal rejection of nuclear power after the Fukushima crisis, promises a “new beginning for the wind industry in Japan,” it says.

The European market remains stable, and given the European Union’s clear policy framework and targets out to 2020, “there are unlikely to be many major surprises.” Germany had a strong year last year, and the government’s decision to phase out all nuclear power by 2020 gives the industry a new boost. Spain had a disappointing 2011, and 2012 is likely to be even more so, but Romania, Poland, Turkey, and Sweden have taken up the slack.

GWEC expects the North American market to have a strong 2012, as both Canada and Mexico will install well over 1,000 MW to complement what is expected to be a strong year in the U.S., where more than 8 GW were under construction at the beginning of the year. “It now seems unlikely that the reauthorization of the U.S. federal Production Tax Credit will happen in time to have a major impact on the 2013 market, so a substantial drop is expected in 2013 in the US market, while Canada and Mexico remain strong,” the report says. Overall, just over 50 GW is expected to be installed in North America from 2012-2016, bringing total installed capacity to just over 100 GW at the end of the period.

The Latin American market is dominated by Brazil, now becoming established as a major international market with a strong manufacturing base. It could supply a growing regional market in the Southern Cone, at least, and will constitute the vast majority of the regional growth in the period out to 2016.

AWEA: Private Investment in Wind Sector Could Drop Two-Thirds if PTC Expires

Five years of “bipartisan policy stability” allowed the $20 billion U.S. wind power sector to created “one of the largest providers of new American electric generation with 35% of all new power capacity, right behind natural gas,” claims the AWEA in its 2011 Annual Market Report.

The U.S. wind industry installed 6,816 MW in 2011. That’s 31% higher than in 2010, for a total of 46,916 MW installed in the U.S. to date. More than 8,300 MW are under construction, setting the stage for a strong 2012, the report notes. South Dakota and Iowa lead a record five states that received more than 10% of their electricity from wind in 2011.

“In hard economic times we’re creating jobs and delivering clean, affordable electricity,” AWEA CEO Denise Bode said in a statement. “But we will lose all these consumer benefits and a brand new, growing manufacturing sector if Congress allows the Production Tax Credit [PTC] to expire [at the end of this year]. Businesses need certainty. That is why it is urgent that Congress extend the PTC now, or risk losing a bright new manufacturing sector.”

A House bill seeking to extend the existing PTC for wind energy (H.R. 3307, the “American Renewable Energy Production Tax Credit Extension Act”) has reportedly garnered the support of 90 cosponsors, including 20 Republicans. Extension legislation was introduced in the Senate on March 15 by seven senators, including three Republicans. The industry group said that a separate report by Navigant Consulting found that if Congress allows the PTC for wind to expire, private investment in the industry would drop by nearly two-thirds.

EWEA: More Certainty Needed to Ensure Wind Sector Growth

In Europe, the wind sector increased its contribution to the EU’s gross domestic product (GDP) by 33% between 2007 and 2010, according to EWEA’s “Green Growth” report released last week. In 2010, the industry’s growth was twice that of the EU’s GDP overall, with the sector contributing €32 billion to an EU economy in slowdown.

Among key figures from the report are that the sector was a net exporter of €5.7 billion worth of goods and services in 2010 and invested 5% of its spending in research and development—three times more than the EU average. Wind turbine manufacturers commit around 10% of their total turnover to R&D, EWEA noted separately.

EWEA cautioned that the future of wind in the EU is bleak, however, saying more certainty is needed to ensure its growth. It requires stable national renewable energy frameworks and ambitious implementation of 2020 requirements at national level; a post-2020 energy policy with a binding renewables target for 2030; a joined-up European power grid and single energy market; and a more ambitious 30% greenhouse gas reduction target for 2020.

The EU has set a legally binding goal for 2020 of reducing its carbon dioxide emissions by 20% and increasing the share of renewables in the energy mix by the same amount, both measured against 1990 levels.

Sources: POWERnews, GWEC, AWEA, EWEA

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