Report: Competitive Auctions Playing Big Role In Countries’ Wind Development

Posted by Betsy Lillian on February 27, 2017 No Comments
Categories : New & Noteworthy

In a changing policy environment, some mature markets for wind energy growth have plateaued, and others are experiencing or preparing for further expansion, according to a new report from Navigant Research.

The report examines the strengths and weaknesses of policies to promote the development of wind power capacity in 28 countries.

Until recently, most wind-related policy mechanisms were transparent: There were fixed power purchase prices upfront for developers in order to encourage wind investment – despite the higher cost of wind compared with traditional power generation sources, says Navigant.

Now that the cost of wind energy has plunged – due to technology improvements and efficiencies of scale – many countries have begun exploring or implementing market-oriented policy options that decrease costs for supporting governments, utilities, ratepayers and other purchasers of renewable energy, the report explains.

In particular, competitive power contract auctions are sweeping the globe, says Navigant.

“One of the biggest stories in the wind energy markets is the steady rise of competitive power contract auctions, which is driving down the cost of wind power to utilities and ratepayers while still enabling the profitable construction and financing of wind plants,” says Jesse Broehl, senior research analyst at Navigant Research.

“The concept is not new, but the pace of implementation is significant,” he continues. “Since the previous version of this report was published in Q4 2015, nine countries have seen positive, substantial progress implementing power contract auctions; two countries are likely to enact new power contract auction schemes, and three countries have stumbled in their implementation of these auction programs – leading to a higher-risk environment.”

Navigant notes that the global wind industry has faced a series of policy changes as markets mature and as various countries position to take advantage of wind energy’s newfound competitiveness against fossil-based power plants.

According to the report, within this changing environment, growth has plateaued in some of the countries with the most installed wind power capacity, but others are still warming up for further expansion.

An executive summary of the report, “Global Wind Energy Policy and Market Risk Assessment,” is available here.

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