Double-digit growth continued in the global wind market in 2013, according to a new report from Worldwatch Institute. Of today's 318 GW total generating capacity, 35 GW was added in 2013 alone. However, the report says this growth (12.5% increase over 2012) was a significant drop from the average growth rate over the last 10 years (21%). In addition, overall investment declined slightly from $80.9 billion in 2012 to $80.3 billion in 2013.
According to the report, onshore wind power is becoming more cost-competitive against new coal- and gas-fired plants, even without incentives and support schemes. Over the past few years, capital costs of wind power have decreased because of large technological advances such as larger machines with increased power yield, higher hub height, longer blades and greater nameplate capacity.
The report says offshore wind capacity continued to see impressive growth in 2013 as projects became larger and moved into deeper waters. Until recently, deepwater offshore wind has developed on foundations adapted from the oil and gas industry, but deeper waters and harsher weather have become formidable challenges requiring newly designed equipment. Shipbuilders are expanding to make larger vessels to transport bigger equipment and longer and larger subsea cables to more-distant offshore projects.
Thee report says these trends have kept prices high in recent years. As of early 2014, the levelized cost of energy (LCOE) for offshore wind power – which includes the cost of the plant's full operational and financial life – was up to nearly $240/MWh. By comparison, the report says the LCOE of onshore wind installations in various regions of the world is under $150/MWh, having fallen about 15% between 2009 and early 2014.
Furthermore, the report says tighter competition among manufacturers continues to drive down capital costs, and the positioning of the world's top manufacturers continues to shift. The top 10 turbine manufacturers captured nearly 70% of the global market in 2013, down from 77% the year before.
In an effort to maintain profitability, manufacturers are trying new strategies, such as moving away from just manufacturing turbines, the report notes. Some companies focus more on project operations and maintenance, which guarantees a steady business even during down seasons and can increase overall value in an increasingly competitive market. Some manufacturers are also turning to outsourcing and flexible manufacturing, which can lower overall costs and protect firms from exchange rate changes, customs duties, and logistical issues associated with shipping large turbines and parts.
Among the world's regions, the report says the European Union is in the lead for installed wind power capacity. Its 37% share of global capacity edges out Asia's 36%. However, the European wind market slowed in 2013. The two most dynamic markets were Germany, which added 3 GW to bring its total to 34.25 GW, and the U.K., which installed nearly 2 GW, much of which was offshore installations.
In 2013, China installed 16.1 GW of new wind power capacity, 24% more than it added the previous year. By the end of 2013, total installed wind capacity there measured 91.4 GW.
In India, the report says government policies in support of wind power have lapsed. Only 1.7 GW were installed there in 2013, compared with a record 3 GW in 2011. To return to more robust growth, the Indian government reintroduced its generation-based incentive for wind and solar power projects between 100 kW and 2 MW.
According to the report, the U.S. now has 61 GW of wind power capacity installed. But the report also notes that the expiration of the production tax credit (PTC) at the end of 2013 led to factory closures and layoffs due to the scarcity of new turbine orders. Renewal of the PTC was proposed as part of a larger bill this spring. If the legislation passes, the report says it could mean an uptick in new wind power projects this year and in 2015. However, the bill will likely remain stalled until after the November elections.
Sub-Saharan Africa, North Africa, and the Middle East saw only 90 MW of new wind power additions in 2013. Taken together, these three regions have 1,255 MW of installed capacity.
Continuing its drive to increase energy security and diversify supply, Latin America added almost 1.2 GW of new capacity, bringing the region up to 4.8 GW by the end of 2013. The report says innovative policy approaches taken by Brazil and Uruguay played a big role in the region's wind expansion last year.