Thanks to policy clarity in the U.S. and China, MAKE Consulting has boosted its 10-year global wind market outlook by 1%. The firm says the overall impact of these two markets is balanced in part by significant downgrades in several countries.
As outlined in its Q2/2016 Global Wind Power Market Outlook Update – which presents an analysis of global and regional wind power installation forecasts through 2025 – MAKE has upgraded the 2016-2020 global outlook by 5.5%, due largely to a 15.4% upgrade in the U.S. market over this period. The upgrade also reflects a push across global markets to capitalize on policies and subsidies that are scheduled to wind down before 2021.
The second growth period, 2021-2025, is downgraded 2% relative to the outlook in Q1, as continued inaction to fill policy voids dampens optimism and puts pressure on the industry to accelerate reductions in the levelized cost of energy of wind power, MAKE says. The 10-year compound annual growth rate is maintained from the outlook in Q1 despite a net capacity increase of 6.3 GW.
The 2016-2018 outlook in the Americas has taken a 6% hit due to unfavorable events in Latin America and a shift of expected capacity in the U.S. beyond 2018. MAKE says the disastrous auction results in Mexico, coupled with a weak A5 auction in Brazil and extreme electricity rationing in Venezuela, results in a 7% downgrade in Latin America in the near term.
A 62% upgrade in the U.S. from 2019 to 2021 more than compensates for the cuts in Latin America; the recently updated guidance on production tax credit (PTC) qualification lifts the medium-term outlook in the U.S. as developers rally to capitalize on full-value PTCs over a four-year construction window.
Quarter over quarter, the 10-year outlook in Europe is the most stable of all global sub-regions, according to the report. Other than France, which MAKE has upgraded due to improving conditions for development, modest project adjustments in southern and eastern Europe have a relatively neutral impact.
Conversely, onshore markets in Scandinavia (primarily Sweden and Norway) are downgraded in Q2 due to a phase-out of green certificates and lower power prices. The forecast for European offshore wind remains within 1% of the Q1 outlook, with an acceleration of post-2020 activity in Germany the most significant adjustment, says MAKE.
In China, aggressive policies from the National Energy Administration result in a 4% upgrade to the 10-year outlook. The firm says a national wind development plan for 2016, as well as national and provincial targets, will facilitate more capacity from wind power than previously expected. In addition, the report says, the grid gap will undoubtedly swell under a reinvigorated installation push, requiring additional investment in transmission capacity.
Downward adjustments to subsidy schemes and long-term policy discontinuity result in a 9% downgrade in Asia Pacific, excluding China. Increasing doubt in Australia over a post-2020 plan for renewables support represents the most significant cut (45%) of any developed market globally and adversely impacts the sub-region’s outlook, says the report, which adds that to a lesser degree, a lack of policy leadership in Pakistan and Vietnam motivates significant cuts in the Q2 outlook.
Global firm order intake decreased 13% year over year in Q1/2016 to nearly 11 GW, yet this was still MAKE’s second-highest-ever Q1, behind 2015. As expected, order intake in China dropped following the feed-in-tariff push in 2015. Record quarters for order intake in the U.S. and India propped up global order volume, offsetting the decline in China to some degree. New policy support in the U.S. and China will continue to strengthen order intake in 2016, the report adds.