The electrification process, which is of increasing interest to the global economy, is an important factor when estimating the mid- to long-term increase in electricity demand. The rapid development of the energy storage market is a key element that could further accelerate the growth in the use of renewable energy sources, providing a solution to the problem of managing energy demand peaks and intermittent energy generation.

However, in the last 12 months the USA’s election of President Trump, who is hostile to policies for promoting renewable energy production, has led to fears of a swift slowdown in the development of new projects among financial operators due to the withdrawal of the world’s biggest economy from global pacts to support and plan green initiatives. In this regard, the tax reform presented by the Republicans involves the elimination of tax credits for those that invest in or produce energy through renewable energy sources.

In parallel to external political factors, the process of the global transition to the allocation of new projects in the renewables sector through a system of national auctions has resulted in an increase in competition and an acceleration in the fall of the prices paid for the energy produced. This change has joined the natural fall in production costs (Levelised Cost of Electricity) determined by technological advancement and product innovation, which is particularly evident in the wind power sector. In the last year production costs in the onshore segment were between 25 and 50 Euro/MWh.

The aforementioned critical issues have seen the main producers of wind energy plants, such as Vestas Wind Systems, Siemens Gamesa, General Electric and Nordex, undergo a period of significant weakness and revision due to the fall in future order forecasts and the rapid drop in profitability. As a result of these negative factors, the sector has witnessed a wave of consolidation actions with M&A operations such as the ones between Siemens (Business Unit Wind) and Gamesa, and Nordex and Acciona Wind Power. The goal of these mergers is to combat the fall in profitability through the creation of synergies and greater competitive power driven by economies of scale.

The Wind Europe Association recently updated its forecasts on wind energy scenarios for 2030, offering “recommendations” regarding European policies to support the development of the renewable energy sector. On one hand, an increase in the renewable energy target to 35% of final energy demand by 2030, as we wait for the new European Commission plan in the next few years when the current Horizon 2020 plan is completed. On the other, the adoption of binding development plans at Member State-level that go beyond 2020 with the aim of offering greater transparency to investors in the area of repowering, which will play an important role in the next decade. Around 50% of the current cumulative installed capacity will reach the end of its operational life by 2030 in the EU. This will generate a potential flow of investments aimed at repowering the plants to the tune of between 3 and 8 GW per year, rising continuously over the next decade.

According to the intermediate scenario predicted by the Association 323 GW of cumulative capacity would be installed in the EU by 2030, 253 GW onshore and 70 GW offshore, as compared with the 154 GW installed at the end of 2016 and the 204 GW forecast for 2020. This forecast is well above those provided by the European Commission (250 GW) and the International Energy Agency (275 GW). This scenario would entail investments of over €260 billion that would make it possible to create 570,000 new jobs thanks to a doubling of onshore capacity and a fivefold increase in offshore wind capacity compared to current levels. This level of production would lead to savings of around €13 billion in fossil fuel imports. The investments made would enable the European Union to meet just under 30% of its power demand using wind power. At Member State-level, Denmark would be able to meet over 70% of its power demand through wind energy alone while Germany, the UK, Spain and France would power respectively 47%, 38%, 34% and 26% of their electricity demand with wind energy. Meanwhile, Italy would be able to meet around 10% of its energy demand in this way.

Compared with the current decade, the offshore segment will become increasingly important thanks to production costs, which have fallen well below 100 Euro/MWh and are expected to drop under 80 Euro/MWh by 2025, and the segment of services connected with the installed fleet, which will benefit from a gradual increase in volumes requiring servicing.

All in all, although uncertainty in the sector remains rife, the issue of sustainability should guarantee an effective joint commitment at global level to promoting investments in green technologies, not just in the public sector but with key support from corporate policies with the aim of fostering growth and development for society and neutralising the phenomenon of global warming.

Wind Energy in Europe: Scenarios for 2030 – September 2017 Wind Europe