Global: Worldwide Wind Power Market Outlook Update by MAKE

MAKE’s Q1/2016 Global Wind Power Market Outlook Update presents an analysis of global and regional wind power installation forecasts through 2025.

The reported 32.9GW of grid-connected capacity and 30.5GW of installed capacity in China in 2015 greatly exceeded industry expectations. Final data for China is pending completion of MAKE’s quality assurance. The rush in China at the end of 2015 to maximize expiring FIT levels is symptomatic – albeit an extreme case – of a broader dynamic facing several of the industry’s mature markets.

Near-term growth is largely driven by a winding down of policy incentives (e.g., Germany, the US, and China). A 2018 policy induced demand peak represents an inflection point, as markets adjust to either a lower level of incentives, a transition to a new support mechanism, or even a void in support.

Longer term, the question of successor policies loom, particularly with uncertainty surrounding the depth and scale of post-2020 renewable energy commitments. Optimism flourishes under expectations of the creation of national-level commitments under the Paris Agreement. Moreover, a burgeoning non-state, consumer-driven market supported by commercial and industrial commitments seemingly works both in parallel and independently of national-level policies. However, the question of wind power integration, storage, and further LCOE improvements linger and potentially limit growth potential as governments wrestle with the cost of compliance.

Global energy markets are undoubtedly changing, the breadth of divestments in fossil fuel assets testament to the fact that the private sector considers investment in these technologies a losing proposition. MAKE expects the political battle over constituent interests will eventually side with consumers. Strong, stable policies can accelerate this transition, but need to be implemented now in order to avoid soft growth beyond 2018.

MAKE projects global grid connected wind power capacity to decline by 17% in 2016, primarily due to a return to relative normalcy in China. The China market resets in 2016, dropping 35% YoY based on preliminary data for 2015, whereas global growth excluding China is flat. Due to another convergence of policy changes in key markets (e.g., China and the US) and a transition to market-based mechanisms, global growth spikes in 2018 before growing gradually from a lower 2017 level toward 2025.

The outlook in the Americas improved dramatically throughout the end of 2015 as pivotal policy decisions in the US (PTC extensions) and in Canada (provincial leadership) confirmed growth. Brazil continues to lead in Latin America with the impact from its economic woes offset by a strengthening Mexico market that will become the third largest in the Americas. By 2025, annual installations in Latin America surpasses that of North America, highlighting the importance of developing markets to the region’s growth.

European markets remain mired in regulatory uncertainty both in the near-term and post-2020. Policy decisions in Germany, the UK and in Poland, for example, could very well limit onshore growth. This will put pressure on both a maturing offshore sector and geopolitically at-risk markets such as Ukraine and Russia to support a greater share of growth. Rising markets in the Middle East and Africa continue to develop, ultimately contributing to the highest 10-year CAGR, 21.7%, of any global sub-region.

Adjustments to China’s FIT program cause annual variability in new capacity, but an expected upgrade to an already aggressive long-term target maintains China’s average annual share of the global market at 41%. Installation activity outpaces investment in transmission and adds to a 15GW grid connection gap and curtailment of more than 20% in some provinces.

Growth in the rest of Asia Pacific will result in a 10-year CAGR of more than 9%, led by an Indian wind market facing increasing competition from solar. A new government in Australia, a release of EIAs in Japan, and a developing Pakistani market combine with long-term growth prospects in the sub-region’s offshore sector to make it the second fastest growing sub-region in the industry.

Firm order intake increased 23% YoY in 2015 to nearly 48GW. China recorded the largest volume, but the market’s rush to finalize projects before year-end resulted in execution of a large portion of first half order intake. Firm order intake in Q4 also increased YoY, particularly in China as developers anticipated additional cuts to FIT levels.

The Q1/2016 Global Wind Power Market Outlook Update includes a detailed market forecast update for more than 50 key and emerging markets for wind power from 2016 to 2025. The forecast data includes a split of expected onshore and offshore development as well as analysis of the latest wind turbine order and pricing trends.