Q4/2016 Global Wind Power Market Outlook Update

MAKE’s Q4/2016 Global Wind Power Market Outlook Update presents an analysis of global and regional wind power installation forecasts through 2025.

A host of political events have had a negative impact on global growth expectations. Anticipated cuts to wind power targets in China under the country’s upcoming Thirteenth Five-Year Plan headline the most impactful of recent decisions that reduce capacity over the 10-year outlook. Politics also undercut growth momentum in other leading markets. The election of Donald Trump in the US, the suspension of the Large Renewable Procurement II process in Ontario, Canada, and the delay in offshore tenders in Sweden have contributed to a global downgrade.

Despite adverse policy developments, the underlying fundamentals of wind power are as strong as ever. Onshore auction results in Latin America and offshore auction results in Denmark, for example, reveal wind power pricing heretofore unseen, underscoring advancements in cost of energy that will ultimately make wind power less sensitive to political change.

MAKE downgrades the 10-year outlook by 4% in its Q4 analysis, primarily due to the weight of the cut to the outlook in China. The downgrade is most severe from 2016 to 2020, as 4GW of average annual growth is removed. Despite the Q4 adjustments, higher growth expectations QoQ in 2025 results in a CAGR of 1% over the 10-year outlook.

Excluding China, the Q4 adjustments from 2016 to 2020 are negligible, a positive indicator of near-term growth. However, a 5% downgrade in the US and a 12% downgrade in Sweden between 2022 and 2025 impact the global longer term outlook excluding China negatively. Nonetheless, an upside exists if policies improve and cost-out measures advance over the next 5 years.

Damaging policy activity in North America results in a 4% downgrade in the Americas, masking positive developments in Latin America. The power auctions in Chile and Argentina offset some growing pains for Brazil, as the sub-region’s leading market continues to struggle with transmission and project finance.

The outlook in Europe is downgraded by 0.4% QoQ. Downgrades in Sweden, Portugal, and Turkey have the largest impact, but most capacity is merely shifted beyond the outlook period. An upgrade in France partially offsets these adjustments as political will intensifies to increase power generation.

A 5% downgrade in Egypt due to ongoing uncertainty around its FIT program influences a 1.3% downgrade in MEA. Several emerging markets in the sub-region are downgraded as project schedules are delayed and general market maturation is slow. Nonetheless, long-term growth prospects remain strong.

Proposed changes to the wind power targets in China result in a 6% downgrade. Attention shifts to reducing the average rate of curtailment in northern regions and fully implementing the guaranteed purchase of power produced by renewable energy by 2020. A cut to the 2020 offshore target reduces expected growth by 63%, as slower growth impacts development of best practices and know-how.

The outlook in the rest of Asia remains stable (+0.1% QoQ), as strong activity in India, Pakistan and Thailand counters slow growth in Australia.

Firm order intake increased 36% YoY in Q3/2016 to more than 13GW, primarily due to a surge in orders in China following delayed announcements in 1H. Buyers in India continue to place orders (+41% YoY) in an effort to capitalize on full incentive levels in 2016, supporting growth expectations. Order intake in the US has increased 76% YoY, as developers gain PTC eligibility before the end of the year.

The Q4/2016 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 an analysis of wind turbine order and pricing trends.