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Golden times for the wind energy market

A new forecast by analyst Wood Mackenzie predicts golden times for the global wind industry. The market will see explosive growth in the coming years - even if not all regions will participate equally.

If you listen around among wind turbine manufacturers at the moment, you'll hear complaints in many places. Global supply chains have been permanently damaged by the COVID pandemic, and bottlenecks and delivery problems are creating a real pipeline logjam. Most companies have record orders on their books, but actual construction is still lagging badly.

That is likely to change in the coming years. The energy crisis, triggered in part by Russia's war against Ukraine, and advancing climate change are creating huge demand for clean and cheap energy. Renewables can deliver both. And so, in recent months, efforts by governments and regulators around the world have increased to finally permanently reduce barriers to expansion, such as slow permitting, too little land, and lawsuits from environmentalists.

A new market outlook by Wood Mackenzie now predicts that these efforts will soon bear fruit: The global wind energy market will surpass the 1 terawatt (TW) installed capacity threshold by the end of 2023. "After needing more than 40 years to reach one TW of installations, the wind industry will reach the next TW of installations within the next eight years, a significant acceleration of growth," explains Luke Lewandowski, Wood Mackenzie Research Director.

In this regard, offshore wind is increasingly coming into international focus. So far, the market has been dominated by European countries and China, but rapid technological development is driving down costs and, through floating turbines, enabling more countries to use their coasts for this type of energy generation. As a result, the offshore sector will grow sevenfold by 2032, accounting for 26% of total capacity over the next decade. Around 30 countries will then have offshore wind farms, with the main focus (81%) continuing to be in Europe and China.

In other countries such as the U.S. and Australia, first projects are nearing the finish line, while emerging markets such as Brazil and India are exploring where their coasts will allow expansion, too. India's offshore wind market e.g. is currently still being developed. The central and state governments are working with a range of offshore wind stakeholders to create an ecosystem for a thriving offshore wind industry, as the Global Wind Energy Council (GWEC) recently highlighted in a white paper with the UK government.

There's plenty of space available: Interest in building offshore wind projects is growing worldwide (Image: Pixabay)

Onshore expansion will also pick up speed again. Here, too, China is ahead of the game. The Chinese wind energy market will rebound strongly in 2023, according to Wood Mackenzie, with developers nearly doubling annual capacity year-over-year as the country posts a record year for new wind turbine orders. Over the next 10 years, annual capacity additions in China will average 80 GW and account for 50% of new capacity worldwide.

In the rest of the world, however, expansion stumbled last year, with 44 GW added in 2022, a 4% decline from the previous year. Blame it on the aforementioned supply chain issues and inflation, which has led to more than 3 GW of projects being pushed into 2023 and beyond.

In addition, there are local issues, such as in the U.S. the decades-long neglected expansion of transmission grids. "For the US, developers await tax credit eligibility guidance from the US Treasury, with the ongoing uncertainty impacting near-term installations. However, with policy clarity, approval and investment in transmission projects, and development of the offshore market’s nascent supply chain, annual additions will intensify and average 20 GW per year from 2026 through 2032," Lewandowski predicts golden times for the U.S. wind industry.

Katrin Radtke
Wood Mackenzie, forecast, offshore, onshore, Europe, China, USA, Australie, India, Brazil, capacity, increase, growth, supply chain

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