Indeed, unveiling GWEC’s, Global Wind Report: Annual Market Update 2014, in a recent webinar Sawyer noted that at 813 megawatts (MW) of installed capacity the UK produces more offshore wind energy than the rest of the world combined. Denmark is “a distant second”, he said. In 2014 the annual installed capacity of offshore globally was 1,713MW.
Germany took “great strides” in offshore in 2014, with more expected in 2015, and there was offshore progress in China, the Netherlands and Belgium.
But Sawyer forecast: “The UK dominance will diminish but I don’t think it will be overtaken until and unless the Chinese market takes off in earnest over the course next of the next three or four years and that is by no means a certainty”.
On the key global challenges faced by the offshore sector, Sawyer said: “I would say it’s costs, costs and costs”. He noted that it had taken 30 years to bring onshore costs down, warning: “I don’t think we have that kind of time” for offshore. It has “to show strong evidence of achieving that by 2020 or it’s going to be difficult” to encourage long-term investment.
Despite UK dominance in offshore capacity, China once again topped the global wind energy league table overall. On the cumulative market, “China was out in front and moving away from everyone else”, Sawyer said.
It was a similar story in the annual market where, “China was the big story”, adding 23GW of new wind power to bring its cumulative total to more than 114GW.
“I don’t think anybody expected 23”, Sawyer commented.
Worldwide 2014 was a “very good year” for wind energy with 16 per cent cumulative market growth, bringing the total up to 369,597GW globally. Led by China and Brazil, then Mexico and South Africa, non-Organisation for Economic Cooperation & Development (OECD) markets outstripped the traditional markets in Europe and North America again in 2014. Germany, Chile, Canada and Turkey had record years for expanding wind power.
The report, which also updates GWEC’s rolling five year market projections, shows continued growth for the rest of the decade, but concentrated in China and other non-OECD countries. Sawyer noted that growth in these countries is “less driven by climate change issues. Increasingly it’s driven by air quality issues. Certainly one of the reasons bolstering Chinese resolve to transform their energy system is the choking smog that is making Beijing, Shanghai and other cities in the developing world unliveable and they have to do something about it and renewable energy is something they can do and are doing”.
When it came to wind energy in the UK in 2015, Sawyer said that public policy “looks pretty good but we’ll see what happens after elections next month”, which could see energy policy taken from the green-leaning Liberal Democrats.
Utility Week asked Sawyer how barriers to wind energy in the UK compare to other countries and he replied that “the UK is unique in many, many ways, having to do with wind and everything else, and some of them are really, really good and some of them are really, really bad”.
Sawyer continued: “The stability of the policy framework in the UK has been the biggest problem all along, combined with the nimbyism in relation to onshore. All of those characteristics exist elsewhere in some degree or another but they reach a perfect storm in the UK, which coincidentally I think, is the primary reason why the country with the best onshore resources in Europe has in fact become the leader of the offshore market”.
Challenges for wind over the next decade are “continuing industrialisation and squeezing every bit of costs out of the system, particularly for onshore, but also for offshore. That’s certainly one. We will face increasing competition from solar- PV (photovoltaic) and they are continuing to come down the cost curve particularly in sunny places”.
Despite this, Sawyer argued the two were “quite complementary and compatible in most markets as we reach high-level penetration rates”. He said: “In an increasing number of countries the complementarity is going to turn into cooperation and there will be some countries where it just makes more sense to build solar than wind and vice versa and we’ll just have to live with that”.
However, Sawyer said that the biggest challenge the sector faced, particularly in OECD countries, was market design.
“It’s quite clear from the European experience over the past few years that market design we’ve had at the moment just doesn’t work. Wholesale prices are through the floor, retail prices are too high. With the absence of a carbon price in Europe, the only thing that makes sense economically to build at the moment are solar, wind and lignite.”
That result is not serving a clear agenda, so the market is not helping achieve coherent energy and climate goals, “and we need to figure out a way to incorporate some of the externalities, particularly carbon”.
Another key message was to “give economic incentives to renewables” and the need “to incentivise flexibility, not capacity”. Capacity markets, national capacity markets in particular are “just an excuse to keep old coal fired plants running”, he argued.
Dr Phil Hare, head of energy markets at consultants Pöyry, agreed, and told Utility Week that while it was encouraging to wind turbine growth worldwide, there was clear evidence that this relied on support mechanisms, especially for offshore projects. Even with the cost reductions expected of the industry, subsidies are likely to be around for a long time, “and governments and policymakers will face many challenges to get this right”.
Hare added: “Recent developments in solar technologies – as seen in the first CfD auctions in the UK – show how competitive PV is becoming.” As well, developments in electricity and demand side participation in markets could help make intermittent renewables become more viable economically and technically.
Nevertheless, Hare warned that much renewables growth in Europe has been insulated from local markets: “We are seeing growing signs that this situation is coming to an end, and that going forward wind farms will have to face to some extent exposure to wholesale market prices, balancing markets and manage market risk in similar ways to conventional generators”.