Updated Global Wind Power Market Forecast

25.08.2016

Policy clarity in several global key markets will influence worldwide growth of the wind power market positively and negatively. But overall, the effects balance out over a ten year span with a net upgrade of less than 600 MW, renewable energy consulting company MAKE reported in an update of their Global Wind Power Market Outlook.

MAKE upgrades their 2016 to 2018 global outlook by 1%, mainly because of an upgrade of 23% in the outlook for India and a 9% upgrade in the outlook for Germany over this period. Project timeline adjustments in developing markets temper the overall upgrade.

After the update, the wind power installation forecast for 2019 to 2025 got downgraded by 2 GW, primarily due to policy announcements in the United Kingdom and Poland. However, MAKE does expect this to have a significant impact on the global outlook as the 10-year compound annual growth rate was maintained from the outlook in the second quarter of 2016.

Policy clarity in several key global markets since June has impacted growth projections both positively and negatively in those markets, but the adjustments balance out over the 10-year outlook, with a net upgrade of less than 600MW.

The Americas

For the American markets only dynamics in Latin America had to be taken into account, which led to a downgrade of the prognosis from the second quarter of less than 1%. Brazil and Mexico, Latin America’s top markets for wind power, also use more and more solar power, which leads to stronger competition in upcoming auctions.

The offshore wind outlook for North America was upgraded due to a new offshore policy, which requires Massachusetts power companies to procure 1,600 MW of offshore wind capacity by 2027.

Northern Europe

A lot of the adjustments involve Europe. Despite existing uncertainties in the UK after Brexit, upgrades in Northern Europe, increasing by 4% quarter on quarter over the outlook period, offset the overall impact of downgrades across European markets. Additionally, wind power development efforts in Norway and Sweden lead to positive adjustments.

Eastern Europe and Middle East Africa region

A new law from Poland’s national-conservative government that took effect in July expands setback requirements tenfold and increased tax burdens. Those policies resulted in an 11% downgrade in Eastern Europe compared to the Q2 analysis of MAKE. Unfortunately, positive developments in smaller markets in the sub-region – for example in Croatia, Macedonia and Serbia – do not carry enough weight to have a significant impact.

Downward adjustments in Egypt and in Saudi Arabia resulted in a 1% downgrade for the MEA region forecast, although MAKE expects the increasing long-term confidence in Iran to help offset the long-term impact. With -8% the near-term impact is more significant, as Egypt’s feed-in-tariff programme is still maturing and Iran continues to recover economically.

Asia Pacific region

There are no changes to the outlook for the Chinese wind power market as compared to the second quarter analysis. China’s central government introduced a mechanism to encourage more rational investment in wind projects. This has motivated developers in heavily curtailed regions in the north to pursue opportunities in southern regions, which is expected to offset a near-term growth decline in northern regions.

The latest policy announcements for India led MAKE to upgrade their second quarter analysis by 6%. A short-term boost in India is dampened modestly by project adjustments in the rest of the sub-region, but overall the outlook for Asia Pacific excluding China was upgraded by 3% over the 10-year period as compared to the last quarter.

Firm order intake decreased 15% year on year in Q2/2016 to nearly 12 GW, primarily due to a pause in orders placed for projects in the U.S. market as developers re-evaluated project timelines following IRS guidance on PTC qualification. Order volume in APAC stayed consistent year on year, as developers in India rushed to capitalize on full incentive levels in 2016 and developers in China direct focus to southern regions.

MAKE Consult / Tanja Peschel

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