The following article appeared in an edited form in Renewable Energy World‘s July—August 2003 (Vol. 6 No.4) issue.
Though more new capacity was added in 2002 than 2001, and total new investment exceeded any previous year–some US$6,000 million–the rate of growth stalled at a mere 6% last year. Growth in the market was down from the more than 50% increase in 2000 to 2001 and previously in 1998 and 1999. As in past years, much of the fall off in new additions is attributed to the topsy-turvy U.S. market where dramatic swings from 1,600 MW in 2001 to 400 MW last year have become commonplace.
That’s just some of the detail provided in the latest issue of BTM-Consult’s market survey. The authoritative report from the small Danish consultancy annually lists the winners and the losers in the fight for global market share.
Though wind energy contributes less than one-half percent to total world electricity supply today, BTM estimates that by 2012 wind’s growing contribution will reach 2%. The implications of this estimate are the staggering number of new turbines that will be added to networks by then. Currently, there are more than 60,000 wind turbines operating worldwide, representing 32,000 MW of installed capacity. Within a decade, BTM expects another 145,000 MW of new capacity will be installed: a market potentially worth US$ 150,000 million!
Europe’s Lead Lengthens
Nearly 90% of new capacity in 2002 was added in Europe, with the giant German market accounting for more than half the expansion. Spain accounted for one-fourth. The poor 2002 showing for the potentially mammoth U.S. market knocked the Americans off their second-place perch, pushing them behind Germany, Spain, and Denmark.
The German powerhouse continued to gain in strength. The nearly 3,350 MW added in 2002 represented 46% of the more than 7,200 MW installed worldwide last year. Total capacity topped 12,000 MW by year end, 2.5 times that installed in the U.S.
Installation of 430 MW in the U.S. last year amounted to only one-fourth that of the boom year in 2001. 2003 is shaping up as another strong year for the U.S., though far less robust than in the American Wind Energy Association’s early projections. With 4,700 MW in the ground and with more than 1,000 MW on the way, the U.S. should reach 6,000 MW of total installed capacity by the end of this year.
Still, mighty little Denmark surpassed the U.S. giant last year with an addition of 530 MW, bringing total capacity to near 3,000 MW. Denmark now provides 19% of its electricity with wind energy, says BTM-Consult.
Spain roared past the U.S. in 2002 with almost 1,500 new megawatts. At slightly more than 5,000 MW of total installed capacity, Spain edged past the U.S.–and the entire North American continent. Though some have questioned the veracity of Spanish statistics, clearly the Spanish market is growing apace.
Growth in Great Britain again stalled despite reassurances that the slow growth of the 1990s was past. With only 55 MW installed, the 2002 market was half that of the previous year. Italy and even France out paced the British, worldwide purveyors of RECs, ROCs, and quotas to the staid Continental’s fixed-price tariffs.
Portugal grew steadily and new capacity rivaled that in Britain. Even landlocked Austria, with a population about one-tenth that of Britain installed more than 40 MW in 2002. Greece 100 MW almost twice that in Britain.
In Asia, China continues to remain an “also ran” with a modest 70 MW. Total wind capacity in China still is less than that in Britain or the Netherlands. China seems content to rest its future on the country’s huge coal reserves.
Elsewhere, Australia’s new quota system has stirred the giant down under from its lethargy and the market is abuzz with entrepreneurs and new players. Both Australia and Japan installed somewhat more than 100 MW in 2002, but BTM-Consult expects to see a major jump in Australian installations this year.
MW Class Emerges
Manufacturers continue to reach for the stars as machines grow ever larger. Megawatt class turbines dominated much of the world market in 2002 for the first time, pushing average installed capacity per turbine above the one-megawatt mark. Britain, USA, and Spain saw average size approach 900 kW per turbine while Denmark, Germany, and Sweden have fully passed into MW class territory. The average size of each turbine installed in Denmark and Germany approached 1.4 MW in 2002.
The offshore market may demand even larger machines. Several manufacturers installed multimegawatt prototype turbines last year. GE Wind installed 100 meter diameter, 3.6 MW-turbine in Spain. Vestas erected its V90 3-MW turbine in Denmark, while Enercon raised its monstrous 4.5 MW-turbine with a 112-meter rotor in Germany. NEG-Micon completed its NM92, a 2.75-MW turbine on the isle of Orkney. Nordex has been operating its N90, 2.3-MW turbine and Bonus is marketing its 2.3 MW-model.
Nearly 300 MW were installed offshore in 2002, says BTM-Consult. Most of that was in Denmark, but there were some 20 MW installed off the Dutch and the Swedish coasts. the 160-MW Vestas’ Horns Rev project off Denmark’s west coast port of Esbjerg became the world’s largest offshore wind plant when it came on line early this year. With an additional 23-MW project off the Danish island of Samsø, offshore wind has become truly commercial. Horns Rev alone is expected to produce 2% of Danish electricity. The Rødsand project (158 MW) is slated for the Baltic Sea next year. Altogether, offshore installations accounted for 3% of the world market, says BTM-Consult, but by 2007 offshore will account for 14% of the world’s new wind capacity.
Danish manufacturer Vestas continues to dominate worldwide sales, followed by Enercon, the dominant player in the German market, followed by NEG-Micon. Each of the top three manufacturers sold more than 1,000 MW of new wind turbines in 2002. Gamesa Eolica, a former Vestas’ affiliate, became the world’s fourth-largest producer, in large part because of it’s commanding lead in the large Spanish market. GE wind ranked fifth with about sales about half that of Vestas and Enercon.
There are still a number of smaller manufacturers who are serving niche markets. RePower, a relative newcomer, sold 220 MW in Germany for about 3% of the world market. Catalan manufacturer Ecotecnia remains a player with about 2% of the market, and even troubled Dutch company Lagerwey sold more than 100 MW last year. Surprisingly, central Germany’s Fuhrländer outfaced Mitsubishi, the giant Japanese conglomerate. DeWind still hasn’t found its footing and sales hover at slightly more than 1% of the market.
Project Size Grows
BTM confirms what’s apparent on the ground: projects are becoming bigger worldwide. Projects greater than the relatively low threshold of 5 MW accounted for two-thirds of the market last year, says BTM Consult. Today, it’s not uncommon for U.S. developers to boast of 200 MW projects–and larger. For example, Florida Power and Light will complete its 204 MW project in eastern New Mexico this year. For its very first wind project, Los Angeles Department of Water and Power will build an 120 MW plant in the mountains north of Tehachapi, California. (No one has ever accused Angelenos of lacking chutzpah.)
Repowering Gathers Steam in Denmark
While the long-awaited repowering of California’s aging turbine fleet continues to flounder, Denmark has launched an aggressive plan to rid the country of smaller turbines. BTM reports that last year 300 MW of new capacity were installed after the removal of 100 MW of turbines less than 150 kW. Danes decommissioned about 1,200 turbines under the program. Unfortunately, the old but still usable turbines were then destroyed rather than placed on the used turbine market.
Meanwhile in California, uncertainty over bird kills, pricing, and transmission capacity have continued to hinder repowering. In a successful example of what can be done even in California’s uncertain market, Calwind replaced more than 100 derelict turbines from the 1980s wind rush with 13 Vestas V47s in the Tehachapi Pass.
Big Dogs at Play
BTM notes that the names of new wind farm developers entering the field reads like a “Who’s Who” of the big names in the utility industry. Florida Power & Light and American Electric Power continue to dominate the U.S. wind market. But French giant Electricite de France (EdF) has joined the U.S. fray through its unregulated subsidiaries’ purchase of EnXco. Dutch (Nuon), Italian (Enel), Spanish (Endesa), and Scottish Power have all become players in the European wind market with Nuon also making a play in North America. Shell’s wind group now operates wind projects in California and Texas. Shell also hosted one of the larger exhibits at the American Wind Energy Association’s Conference in Austin, Texas this spring.
German Turbines Verboten in U.S.
Vestas, NEG-Micon, Bonus, and GE Wind continue to rule the North American market. Despite the installation of two variable-speed turbines in Canada last year–an Enercon in Alberta and a Lagerway in Ontario–the technology is prohibited in the U.S. unless it bears the GE logo. To maintain its monopoly on the technology in North America, GE Wind has asserted its U.S. patent rights in Canada, effectively declaring the North American market verboten to German manufacturers Enercon, DeWind, and RePower.
Many a European manufacturer has foundered on the dangerous shoals of the wild U.S. market. Still, the size of the potential U.S. market remains a Sirens’ lure for those who don’t challenge GE Wind’s patents. 2003 will see the first installations for new entrants: Indian manufacturer Suzlon and Gamesa Eolica of Spain. Ecotecnia has chosen to sit this boom out and bide its time.
Exchange Rate Cuts U.S. Imports
The fall of the U.S. dollar relative to the Euro has boosted GE Wind’s U.S. sales to new heights and made it difficult for Danish manufacturers to compete. Like falling dominoes, the collapse of utility industry giants in the U.S., and the near bankruptcy of many others has hurt financing, cutting into AWEA’s projections for new projects in 2003. At one time, AWEA projected a repeat of the 2001 boom year with new capacity reaching 1,700 MW as developers rushed to beat another year-end, tax-credit deadline. But the roiling U.S. utility industry has led AWEA to cut its projection to somewhat more than 1,000 MW.
As if to confirm what is implicit in the boom and bust U.S. market, BTM’s report underscores their conclusion that “the fixed-tariff system (REFIT) seems to be the one which supports the most rapid development” of wind energy. The statement is consistent with previous BTM reports based on experience in Germany, Spain, and Denmark. Ever fair, BTM acknowledges that tax-credit driven markets, such as that in the U.S., can also be an effective instrument for establishing a wind energy market. They reserve judgment, however, on systems using renewable quotas, such as the U.S. renewable portfolio standard, and green certificate trading as too new to demonstrate a track record.
BTM sees the market expanding at an average rate of 11% from 2003 through 2007. They expect moderate growth in the European market this year, but a rebounding North American market. Expanded growth in the emerging markets of Australia, Japan, and Italy offer further promise.
Germany will continue to account for significant new capacity additions, says BTM, but the soft German economy, and the delicate balance of power between the ruling coalition and the opposition causes uncertainty for later in the decade. If onshore development has peaked–previously projected for 2001–offshore offers new opportunities as does the potentially large repowering market onshore.
The market in France grew modestly last year, but France is on the threshold of explosive growth. With fixed-price tariffs in place, some 20,000 MW of applications for new wind projects have been lodged with planning authorities. The backlog has alarmed renewables advocates and wind developers alike. Unfortunately, the National Assembly has launched another examination of the issue, which may only delay development further.
BTM expects cumulative investments in wind energy to reach US$42,000 million during the next five years. Total investment could be greater, depending upon the percentage of more expensive offshore projects in the total mix. Typically for onshore projects about three-fourths of installed costs represent the cost of the turbine and tower, the remainder the cost of installation.
Report Now on CD-ROM
BTM’s World Market Update has become a fixture in the wind industry. Charts and tables from the report appear in presentations by trade associations and government ministers at conferences around the globe.
With some reports on the world oil industry selling for a reputed US$35,000, BTM’s annual market update remains a steal. The price for one report is only US$365. Charts from the report are now available on CD-ROM in PowerPoint format. A combination of the hardcopy report and the CD-ROM full of BTM’s colorful charts is US$620.
World Market Update 2001: Forecast 2002-2006, by BTM Consult, Denmark, March, 2003, 65 pages, ISBN 87-987788-4-6.