December 24, 2017

A Revealing Look at Wind's Big Markets and Emerging Challenges

On the global stage, China is the leading market for wind energy. With wind capacity of 168.7 GW at the end of 2016, it held a market share in new deployments of over 42 percent. China’s commitment to renewables, with a focus on wind, doesn’t show signs of ebbing: aiming for 20 percent of its energy needs to be met with clean energy by 2030 and pledging to invest US$367 billion in renewables by 2020, MAKE Consulting predicts China averaging over 25 GW of new wind capacity annually for the next decade.

Steve Sawyer, secretary general of the GWEC describes China as “making steady progress,” noting recent success in dealing with long-standing curtailment problems an encouraging sign.

Outlook on the world’s second largest wind market, the U.S., is somewhat mired by developments surrounding the proposed tax reform bill in fall 2017.

“Legislators are wreaking havoc in Washington — I don’t think it will make it through the Senate, but it could have a big effect in the long run. Equally, so long as it has a chance it’s going to put a damper on the new investment in the short term,” said Sawyer.

He added: “Projects well into the pipeline, and already qualified under existing PTC rules, should be fine.”

On that front, 2018 may be busy; with over 14 GW of wind projects under construction and some 12 GW in advanced development as of July 2017, according to AWEA.

The U.S. DOE’s ‘Wind Vision’ report suggests wind energy can supply the U.S. with 10 percent of the country’s electricity by 2020.

In the north, Canada continues to foster a buoyant wind market. With over 12 GW installed wind capacity, onshore wind has been the dominant form of new energy generation for the last decade, with annual growth averaging 18 percent over the last five years. Robert Hornung, president of the Candadian Wind Energy Association (CanWEA), said he expects to see about 700 MW of new wind capacity come online through 2018, “representing annual investment of around CAN$1.5 billion,” he said.

“At that point, we’ll have largely concluded a series of initial procurement rounds which have delivered a really positive decade for wind.”

 Going forward, provincial governments continue to provide new opportunities. Of note, Hornung highlights: “Two governments, in Alberta and Saskatchewan, have made very strong commitments to decarbonization.”

“Alberta plans to procure 5,000 MW of new renewable capacity by 2030; in Saskatchewan they’ve committed to procure 1,800 MW wind between now and 2030,” he said. “Initial procurements are underway in both provinces and due to be announced in December 2017 and spring 2018, respectively. We expect these to start a regular stream of procurements from here onward.” 

Still, Hornung acknowledged Canada’s low growth in electricity, a significant electricity surplus in some regions and the fact the Canadian grid is already about 80 percent non-emitting, as significant factors impacting future growth.

“The coming years will not look like the last decade in terms of growth,” he said. “Nevertheless, in the mid-term, we’re optimistic for two reasons: one, opportunities to expand electricity exports to the U.S., and two, electrification driven by ambitions to meet climate targets.”

Optimism is also derived from existing generation coming offline. In Ontario, for instance, the leading wind province, new wind is pitched to play a major role as existing assets totaling some 20 GW come offline over the coming decade. 

“In this context, wind’s cost competitiveness against new natural gas generation is an issue — but by mid-2020s we expect wind to be cheaper,” said Hornung, adding that “wind energy is already the lowest-cost option for new electricity supply in most Canadian provinces.”

Contracts recently awarded through Hydro-Quebec set a new low average price for wind in Canada of 6.3 cents per kWh.

“Procurements currently underway in both Alberta and Saskatchewan will deliver even lower prices when results are announced in 2017/18,” said Hornung. “Like many industrialized nations, the challenge is to create new market opportunities out of evolving circumstances. Despite challenges, there’s real confidence that whenever an opportunity emerges, wind is extremely well-positioned to successfully compete.”

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