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European wind experiencing a crisis of confidence
8/3/2023
News
The European Union (EU) built 16 GW of new wind capacity in 2022, but it isn’t enough to meet the region’s 2030 goals, according to WindEurope, which says there is a clear need to restore investor confidence and ramp up the sector’s supply chain.
Europe built 19 GW of new wind energy capacity in 2022. Of this, 16 GW was in EU member states. That’s 40% up on 2021, but it’s much less than what’s needed for the EU’s 2030 goals, according to the Association’s latest analysis. Furthermore, investments in new wind farms and new wind turbine orders were down in 2022, due to ‘unhelpful government interventions in electricity markets and inflation’.
‘The EU and national governments must restore investor confidence. And they must engage proactively to support the European wind supply chain and enable it to grow,’ states WindEurope.
Of the 19 GW built in Europe, Germany built the most followed by Sweden, Finland, France and the UK. Europe now has 255 GW of wind energy capacity in total, according to the report. Some 87% of the new wind capacity was onshore, with only 2.5 GW of new wind farms constructed offshore.
WindEurope forecasts that over 2023–2027 the EU will build 20 GW of new wind every year on average. However, it warns that this is not enough to reach the EU’s energy and climate targets; to do that the EU needs to build on average 31 GW every year up to 2030. It believes this is achievable if Europe ‘continues to simplify permitting rules and procedures, restores clear signals to investors, and invests substantially in the wind energy value chain – factories, grids, ports, vessels, and skilled workers’.
Meanwhile, the report suggests that Europe is ‘finally making progress on the simplification of permitting rules and procedures’, helped by the EU’s new REPowerEU energy strategy that was unveiled last year. ‘Emergency measures on permitting enshrined for the first time that the expansion of renewables is in the “overriding public interest”,’ notes WindEurope, adding that: ‘In Germany, overriding public interest is already unlocking wind energy projects that had been stuck in court cases.’
The ongoing revision of the Renewable Energy Directive is also key, according to WindEurope. ‘The trilogues must really nail the improvements on the table: enshrine overriding public interest in the Directive; the clearer definition of the two-year permitting deadline; the population-based approach to species protection; and the new rules on repowering,’ it says.
‘Governments are beginning to simplify their permitting rules and procedures for new renewables. Germany is leading the way. They’ve doubled their rate of new onshore wind permits compared to three years ago. Their average permitting time has dropped to two years. Others must follow suit. Permitting is still the number one bottleneck for the expansion of wind in Europe,’ comments WindEurope CEO Giles Dickson.
Meanwhile, the share of wind in Europe’s electricity consumption is growing, according to the latest analysis, reaching 17% in the EU27+UK. ‘The European Commission wants wind to be 43% of EU electricity consumption by 2030. But right now, new investments and wind turbine orders are falling. 2022 saw only 13 GW of new wind farm investments announced. Not a single offshore wind farm reached final investment decision. Wind turbine orders fell by 47% on 2021 to 11 GW,’ reports WindEurope.
It says there are two reasons why wind investments are falling. First is the high inflation in input prices, which is insufficiently reflected in developers’ revenues. Higher commodity and other input costs have added 25–40% to the price of turbines, but wind farm developers are often stuck with a revenue base that is not indexed in line with this. The report calls for governments to ‘fully index their auction prices and tariffs’.
Second, a series of ‘unhelpful interventions’ in electricity markets by different national governments are claimed to have ‘badly undermined investor confidence’. ‘The EU’s upcoming reform of electricity market design must urgently restore this confidence,’ states WindEurope. ‘It must make it clear that emergency measures are temporary and must be aligned between member states. Contracts for difference(CfDs) will play a key role for new investments. But investors must also be allowed to finance their projects with power purchase agreements (PPAs) and on a purely merchant basis if that’s what works best for them.’
Europe’s wind energy supply chain continues to struggle with low volumes, due to unsolved permitting bottlenecks and inflation in input costs. But it badly needs to grow: Europe doesn’t have enough factories to build all the new turbines it wants, WindEurope also warns.
It says the EU Net-Zero Industry Act ‘should make state aid rules more flexible and facilitate grants and finance for investments in new plant and infrastructure’. It continues: ‘National investment tax credits have a key role to play. And the European Investment Bank should be allowed to finance individual plant investments.’
Lastly, WindEurope concludes that ‘the idea that Germany and France will benefit much more from this than others is wrong, pointing out new investments in offshore foundation manufacturing have just been announced in Spain and the Netherlands; Greece is upgrading a cable plant; and Poland is attracting investments in new turbine factories and port facilities.
New study of seabirds and wind turbines
In other wind related news, Vattenfall reports that a new study has shown that the risk of birds colliding with wind turbine blades,which is sometimes used as an argument against the use of wind power, is much lower than previously thought.
Using radar and cameras, researchers were able to monitor how seabirds behaved in the Aberdeen bay in the North Sea on the east coast of Scotland for a period of two years, with not a single collision between a bird and a rotor blade recorded at the Aberdeen offshore wind farm.
The results could potentially pave the way for simpler permit processes for offshore wind power, suggests Vattenfall.