Onshore Wind Converter Market To Plummet Due To Growth Of Offshore Wind, PTC Uncertainty

Posted by NAW Staff on September 05, 2012 No Comments
Categories : New & Noteworthy

Nearly 80% of revenues in the global market for wind converters in 2011 were attributed to utility-scale onshore projects, but that figure is expected to drop to less than 70% by 2016 due to an expected decline in the U.S. wind market and the growth of the offshore wind industry, finds a new report from IMS Research.

‘As sales in the U.S. accounted for nearly 20 percent of the global wind converter market in 2011, expiration of production tax credits (PTCs) strengthens the trend towards offshore wind production,’ explains Jared Kearby, an analyst with IMS Research.

"The tax credit expiration generally occurs every two to four years, with significant delays on the policy's renewal during presidential election years," he continues. "In addition, the increased investment into offshore wind energy production will shift market share from the onshore wind converter market."

The offshore wind converter market accounted for only 4% of sales in 2011 but continues to grow as more countries adopt offshore wind incentive policies and allow the bidding of offshore sites for the development of wind farms, the report says. The U.K., Germany and Denmark have strong incentive and tariff programs for offshore production, while several countries – including the U.S., France, India, Taiwan and Japan – are likely to have offshore wind farms in service within the next five years.

Overall, the offshore utility-scale wind converter market is growing the fastest, at a 32% average annual growth rate expected from 2011 to 2016.

However, on a global scale, grid-connectivity issues need to be resolved in the utility-scale market, which, in the meantime, is shifting investors toward the small- and community-scale wind converters that rely more on distributed wind applications. The small-wind converter market will benefit from the feed-in tariffs in countries such as the U.K., Portugal, Switzerland, Denmark, Italy, Japan and Australia, with a forecasted $9 million sales increase from 2011 to 2016.

Wind converters are an integral component of wind energy production and will become an increasingly important as grid code requirements become stricter in countries such as China, India, Germany, Spain and the U.S. In addition, government support mechanisms and renewable energy standards related to wind energy will also drive the total market for wind converters to nearly $2.6 billion by 2016, the report states.

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