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Global wind installations set for double-digit growth
19/7/2023
News
Global wind additions could see sustained double-digit growth in 2024–2026, with potential for 150–190 GW by 2027, according to a new report from Bloomberg Intelligence (BI).
The analysis forecasts that global wind installations could jump to about 110 GW this year versus a lull of 87 GW in 2022, and that double-digit growth could be sustained in 2024–2026. Nearly half of this year’s capacity additions are likely to be in China, according to BI, with the country’s largest turbine manufacturer, Goldwind, set to boost top-line growth by 16%. Growth expectations are more tepid for European manufacturers Vestas, Siemens Energy and Nordex, although BI sees potential upside to predictions.
According to Rob Barnett, BI Senior Clean Energy Analyst, there’s scope for global wind additions to ‘soar to nearly 150–190 GW by 2027’, propelled by the US Inflation Reduction Act, Europe’s REPowerEU plans and other favourable policies. ‘Such a scenario would likely drive a significant surge in Vestas, Nordex and peers’ orders,’ he says.
‘European wind turbine makers’ consensus sales growth is in the doldrums compared with the International Energy Agency’s net zero outlook,’ notes BI, although it sees the potential for much faster advancement. It suggests that ‘the top lines of Vestas, Siemens Energy’s renewable-energy unit and Nordex could increase by an average of about 10% a year in 2023–2026’. These companies expanded revenue at a compound annual rate of around 16% in 2015–2021, and BI believes ‘similar gains could be achieved in 2025–2030, assuming net zero goals boost demand’.
Global wind installations expanded at a compound annual rate of about 15% in 2005–2021, and though that pace may stall in 2021–2023 amid supply-chain and permitting bottlenecks, BI believes that favourable economics and policy support could buoy 2024–2025 growth. The IEA’s accelerated scenario calls for annual installations to climb to about 190 GW by 2027.
Most segments in the wind supply chain, including turbine production, could benefit from passing elevated costs on to consumers, notes BI. In its view: ‘Equipment manufacturers and project developers (excluding turbine original equipment manufacturers) may report sales gains of about 10% in 2023. That figure is likely to rise in line with strong, policy-driven demand.’
Barnett adds: ‘Profit margins at Vestas, Nordex and peers could improve this year on sustained easing of steel costs, which have fallen more than 50% since running up to a peak in 2022. Though European steel prices are about 40% above their pre-pandemic level, they've declined significantly since Russia invaded Ukraine, which is likely to set the stage for a profit recovery at Europe’s main turbine manufacturers Vestas and Nordex. Rival Siemens Energy has been hamstrung by operational issues and warranty provisions, but lower steel prices could also help to lift margin once those issues are resolved.’
