According to a new report from MAKE Consulting, the good news is that with 270 GW of installations worldwide, wind power has clearly become a mainstream energy choice. The bad news, however, is that challenges remain, and the U.S. is slated for a huge drop in new installed capacity this year.
The 2013 Global Wind Power Asset Ownership report says that over 70% of top owners view wind as a key part of a diversified generation portfolio strategy, while 85% of these owners seek to add value throughout the development value chain all the way to O&M, thus demonstrating that wind is now seen as a core generation technology.
The goal of many within the industry is for wind to be the most cost-competitive electricity source, free of subsidies and preferential treatment, since these are anathema to long-term sustainable industry growth, MAKE says. However, the report adds the transition from a subsidized to an unsubsidized industry at a time of reduced economic growth and some balance sheet pressure in Western markets is affecting the investment strategies and portfolio choices of asset owners.
As financial constraints lead to the prioritization of returns, capital recycling and balance sheet restoration, MAKE says it has observed a marked rise of co-ownership strategies, an increase in secondary asset trading, and new financial owners being drawn into the sector. A predominant favor toward onshore investments continues to be the trend, but a small core of offshore specialists has emerged, the report adds.
Utilities and independent power producers are seeking co-ownership opportunities, with partnerships with financial investors viewed as extremely mutually beneficial, the report continues. As a result, MAKE says it has observed an increase in the trading of assets between 2011 and 2012 and is on track to reach over 6 GW in 2013, equivalent to nearly 16% of MAKE's expectation for grid-connected installations this year.
Global ownership of wind power assets continues to shift significantly east, due to the high levels of installations in the China market. The report says China will constitute 40% of the global market from 2013 to 2020, enabling Chinese owners to control the top rankings for installed wind capacity. Asset divestitures by Western owners and slow growth in traditional Western markets will accelerate Chinese dominance.
Nonetheless, MAKE says recent policy-driven anomalies have led to a near 9 GW annual growth in the U.S. and Europe, while China's annual growth decreased over 2 GW. Western companies climbed up the rankings for capacity additions in 2012, claiming five of the top 10 positions versus only three in the previous year. U.S. market growth provided the majority of this boost.
This year, however, MAKE expects the U.S. will see a 85% decrease in new installed capacity, dropping from 12,884 MW in 2012 to 2,000 MW. New capacity in Europe is also expected to fall.