|Wind turbines produced by Chinese turbine maker Goldwind are seen at the Da Bancheng Wind Farm, south of Urumqi, in Xinjiang, China in 2009. China has been at the forefront of the Asia-Pacific region's wind market growth, but countries such as Japan and South Korea are starting to catch up. |
Source: Associated Press
Both Asian onshore and offshore wind sectors are projected for major market development.
China's onshore wind market alone is estimated to contribute a third of the roughly 200,700 MW of wind energy capacity to be installed worldwide from 2018 through 2020, Xinjiang Goldwind Science & Technology's vice president and secretary of the board Jinru Ma said during the Chinese turbine maker's last earnings call, citing Bloomberg New Energy Finance figures. The Asia-Pacific region is poised to see wind project development and supply chain grow significantly over the next decade, though traditional market leaders China and Taiwan will not be solely responsible for the region's maturation.
China is transitioning to a more market-based price setting and away from subsidies for wind power development, which Ma sees as boosting the prospects for wind power.
"We firmly believe this will exploit the potential of China's wind power and China will contribute more capacity in the future as it switches to auction," Ma said.
In an Oct. 24 research report, Wood Mackenzie Power & Renewables indicated that Asia-Pacific's offshore wind capacity will rise twentyfold to 43,000 MW in 2027, with China and Taiwan taking the lead in the sector's growth.
"Taiwan presents the biggest offshore market in [Asia-Pacific region, excluding China] due to a relatively stable regulatory regime, a supportive government and openness to foreign investment," Wood Mackenzie senior analyst Robert Liew said.
Within the turbine manufacturing industry, Asia-Pacific will lead the global wind turbine market through 2022, especially in onshore wind; between 2018 and 2022, the region's market will reach an aggregate market value of $93.85 billion, according to GlobalData. Asia-Pacific will have annual wind turbine market revenues of $19.65 billion by 2022, with $17.24 billion coming from onshore wind turbines.
While China and Taiwan will remain the two biggest drivers in Asia's wind regime, other countries are starting to carve out their own niche. Japan and South Korea both have wind energy providing just 1% of their respective countries' energy mix, said Amit Kumar Sharma, a data analyst from GlobalData. However, wind power is expected to take off in both countries in the 2020s and 2030s thanks to government intervention.
Japan is planning to introduce renewable energy auctions in 2019 or 2020 in place of a feed-in tariff to achieve grid parity, which Sharma said would boost the country's wind energy market. Japan is expected to attain a cumulative installed capacity of almost 10,000 MW of wind power by 2030.
"Considering the market dynamics of Japan in the wind power sector, it will be difficult for the country's wind power sector to attain a similar market share of China's onshore sector, owing to China's significant amount of onshore wind installations," Sharma told S&P Global Market Intelligence. "Japan's onshore sector is expected to catch up Taiwan in the forecast period [of 2018-2020]. However, the offshore sector in Taiwan is expected to grow at a faster rate than that of Japan."
Similar to Japan, it is unlikely that South Korea's onshore wind sector will come close to its Chinese counterpart by 2020, he added. But, South Korea is expected to achieve a similar market share to Taiwan's by that point.
As for South Korea's offshore wind industry, its energy ministry aims to add 12,000 MW of offshore wind capacity by 2030. The country will start with procuring 500 MW of capacity through small and medium-sized facilities as part of its goal to power the country with 20% of its electricity coming from renewable energy. Sharma said offshore wind will attain a share of nearly 1.3% in the country's energy mix by 2022, allowing South Korea to catch up to Taiwan's growth pace and come closer to China's cumulative installed capacity.
While the government support will help boost the region's wind markets, analysts have noted that heavy investments will be needed to unlock the energy sources' potential, especially for offshore wind. Liew, from Wood Mackenzie, said that East Asia would need about $37 billion in investments in order to "meet the mammoth growth in offshore wind capacity over the next five years." Technology maturity and limitations in regional wind supply chains will also need to be addressed to push the offshore wind market forward.
"The good news is that prices are coming down. Future offshore wind prices are projected to be competitive with traditional thermal prices by 2025," Liew said. "This should attract investments in offshore wind, though Asia-Pacific is still playing catch-up with Europe as it is still in the process of establishing a dedicated infrastructure to support large-scale offshore growth."