An uncertain future for the wind sector could slow the rapid reduction in costs seen recently, the head of Wind Europe has warned.
In the foreword to a new report on the outlook for the industry, chief executive Giles Dickson said Europe is expected to install almost 90GW of new wind capacity over the next five years, bringing the total to 277GW in 2023.
But he also cautioned that there is “a big risk we fall well below that” due a number of challenges: “Policy uncertainty. Poorly thought out regulations. Poorly designed auctions. A worrying lack of visibility on wind volumes.”
“Many of these problems are impacting on the supply chain already,” he added. “They could impact the significant cost reductions we’ve achieved in recent years.”
Dickson said no country demonstrates this better than Germany, the “former powerhouse of European wind energy”, which has seen onshore wind installations fall by 80 per cent this year and new permits by over 90 per cent.
The UK has similarly seen a sharp drop in installations since the Renewables Obligation closed to new applicants.
According to the report, if Europe countries are ambitious and permitting problems are resolved, installations over the next five years could reach as much as 112GW. If they are unambitious and planning issues persist then it could be as little as 67GW.
“Wind energy should be growing rapidly when you consider all the interest in climate change plus the fact the wind is the cheapest from of new power energy production,” said Dickson.
“But there is real uncertainty about how far it’s going to expand in the next five years. It’s getting harder to secure permits for new wind farms in many countries. The grids and energy markets are still not functioning as they should.”
The report says the UK is expected to remain dominant in the offshore wind sector, accounting for 35 per cent of new capacity over the period.
Across the continent 22GW of wind capacity is due to reach the end of its planned life by 2023. Most of this is expected to continue operating anyway but around 2GW is forecast to be repowered and 2GW decommissioned.
Wind Europe said policy and regulation is still not as supportive of repowering as it should be.
However, UK country manager for K2 Management, Gary Bells, said repowering may be difficult in many cases: “Onshore wind farm owners are beginning to consider extending existing projects that typically have a design life of 25 years, by 5 years, 10 years or even more. This is increasingly being preferred as a cheaper and more effective alternative to repowering.
“With technology moving so quickly, virtually nothing of the original infrastructure of a project can be used as part of a potential repowering,” he added.
“Bigger and better turbines are typically not compatible with old, existing foundations and these can be expensive to remove and replace. Bigger machines mean that turbine spacing and layout needs to be changed, which also comes with additional costs.”
Bells concluded: “Once all of these practicalities have been considered, owners are finding that it is much more economical to utilise their existing equipment for as long as possible by finding ways to extend the useful and profitable life of the project.”
A total of ten wind projects – six offshore and four on remote islands – secured agreements the latest Contracts for Difference auction in September.
The auction cleared at around £40/MWh – roughly £10MW/h less than the government’s forecast of wholesale prices for intermittent generation over the early years of the contracts.