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Wind industry set for growth as markets face policy shifts

SNL Image

Wind turbines made by Goldwind Science & Technology at the Da Bancheng wind farm in China.
Source: Associated Press

New wind power installations are projected to increase by at least 5% globally in 2019 and then remain steady for a number of years, mirroring an expected plateau in Chinese development as the world's biggest wind market moves away from subsidies and the government works to reduce electricity curtailment, S&P Global Platts said in a March 17 outlook.

Global wind power installations are expected to reach 45,000 MW to 50,000 MW annually from 2019 to 2025, from 43,000 MW in 2018, with China accounting for about 40% of annual installations during that period, according to S&P Global Platts.

"China has a strong pipeline of projects that will still be able to benefit from the prior or current support mechanism and will still be largely unaffected by the switch to auctions," said S&P Global Platts, which has a neutral rating on China's wind market. "However, about 40% of this pipeline is located in provinces where there are some sort of limitations to wind development, so they could face delays."

The move to auction-based development in China "will exploit the potential" of the country's wind industry, and that growth will continue during the transition, Jinru Ma, a vice president at Xinjiang Goldwind Science & Technology, told investors in October 2018. Goldwind, which is based in China, manufactures turbines and builds wind farms.

The future is offshore

"China will remain a strong market," Markus Tacke, CEO of wind turbine manufacturer Siemens Gamesa Renewable Energy SA, said on a January earnings call. "But even when excluding China, we see growth continuing at approximately 5% annually between now and 2025 in onshore and offshore." Within the offshore sector, growth is expected to top 20% annually, Tacke said.

"The future of wind is offshore," S&P Global Platts said. General Electric Co. CEO Larry Culp on March 14 called offshore wind "the fastest-growing energy segment." GE in March 2018 introduced the 12-MW Haliade-X offshore wind turbine, which it says will be the world's most powerful offshore turbine.

In the U.S., wind installations are expected to surge as the federal production tax credit, or PTC, phases out, with nearly half of the country's 10-year outlook coming online between 2019 and 2021, analysts at Wood Mackenzie Power & Renewables said March 19.

S&P Global Platts is also bullish on the U.S. market, noting "strong near-term momentum" ahead of the scheduled phase-out of the PTC after 2019.

"Looking at the U.S., certainly we see [2019] and especially [2020] as peaks of installations," with development "bottoming out after the PTC cycle," Tacke said.

S&P Global Platts also has a strong growth rating on the Indian market, though analysts noted a significant slowdown in development in 2018 and the first few months of 2019. Potential hurdles include infrastructure constraints, land availability and "broader power sector uncertainties."

Investor interest in India is "very, very strong ... because India is becoming the third-largest market in the world" after China and the U.S., Tulsi Tanti, chairman of India-based wind turbine manufacturer Suzlon Energy Ltd., said on a February 8 earnings call.

"There [are] very few opportunities for the large investors to invest in China, and the U.S. is becoming saturated," Tanti said. "So there is a good [appetite] for the large investors to invest in a big way in India."

The outlook for Europe's wind sector is less optimistic, according to S&P Global Platts, due in part to longer permitting times and setback requirements that are limiting potential sites for project development.