Wood Mackenzie provides a region-by-region glimpse into the future of the global wind market.
The outlook for the global wind market is on the upswing. According to Wood Mackenzie's latest global wind power market update, global wind power capacity is expected to grow by 60 percent over the next five years.
Our latest forecast shows a 5-gigawatt upgrade in the global offshore sector alone, yielding 129 gigawatts of new capacity and a compound annual growth rate of 26 percent for the burgeoning segment.
In the report we provide a comprehensive analysis of the global wind market and dive into key upgrades and downgrades by region, for both offshore and onshore segments. Below are a few highlights from this quarter's edition.
Life beyond the U.S. PTC
Eligible offtakers are rallying to capitalize on the Production Tax Credit for wind before the full-value incentive expires in 2020 and then phases down. Developers qualifying wind facilities in 2017 are eligible for 80 percent of the full credit amount, incentivizing U.S. wind market growth.
New state-level targets in the U.S. and the strengthening of renewable portfolio standard mechanisms across the country are expected to support post-PTC demand.
As a result, Wood Mackenzie has upgraded its outlook for the U.S. market by 16 percent quarter-over-quarter, highlighted by a 3.8-gigawatt upgrade in 2021 alone.
A modest upgrade of 1 percent from last quarter in Latin America is driven by near-term upgrades in Brazil and Mexico. Demand in Brazil’s free market should positively impact expectations from 2020 to 2022, while an uptick in commercial and industrial demand in Mexico will support a record year in 2019.
European outlook dismal as subregions downgraded
The outlook in Northern Europe has been upgraded in the forecast by 6 percent. This should offset an otherwise dismal outlook update in Europe, as the other subregions combine for a 2.2-gigawatt downgrade.
Permitting challenges and undersubscription of onshore tenders in Germany and France have impeded growth. However, an increasing appetite for unsubsidized projects and a proliferation of demand from the C&I segment across Northern Europe both support a modest 0.6 percent upgrade for Europe over last quarter.
Increasing competition from solar poses a challenge to Africa’s wind market
Slow project development due to political instability, immature support mechanisms and increasing competition from solar results has led to a slight downgrade in our forecasts for wind in Africa.
Clean energy ambitions in Africa are more prevalent than ever before, however. Renewable energy is attractive within the region, as wind and solar projects can be built much more quickly than other sources of energy. But as solar is becoming increasingly economical, Africa’s wind market faces stiff competition.
Policy deadlines boost near-term outlook in China
Onshore and offshore policy deadlines in China underpin a 2.9-gigawatt boost in the country from last quarter's projections.
Onshore developers are rushing to comply with a new policy that requires projects to be commissioned by the end of 2020 in order to capitalize on feed-in tariffs (FIT) before a subsidy-free era begins. Offshore developers must commission projects before the close of 2021 if they are to utilize the current level of offshore FIT.
The story is not entirely positive in the Asia-Pacific region, however. Current market conditions in India have bruised the region’s near-term outlook, resulting in a 4 percent downgrade since last quarter's report. The government-imposed auction ceiling prices and delays in commissioning awarded projects have slowed near-term growth expectations in India considerably — a decrease of 24 percent from 2019 to 2022。
Additionally, reliability concerns in Thailand have led to a 37 percent downgrade over the 10-year outlook, as the government’s focus has turned to other technologies.