Strategic Overview of the Wind Energy Sector

EWEA reports

Energy has become a top priority for EU policy makers. Until now, a reliable energy supply has been taken for granted in modern society, but the security of this supply is currently under threat.

Firstly, there is man-made climate change caused in large part by burning fossil fuels. In addition, and equally alarming, is the depletion of a once seemingly abundant supply of fossil fuels. Satisfying our energy needs over the coming decades will be a big challenge. For a region that currently imports 56% of its energy – and is on track to reach 70% in the next 20 to 30 years – the challenge is big. Our own fossil fuel resources are running out fast, fuel prices are increasing and the environment is suffering as result of our current energy supply structure. In 2030 the EU will be importing 84% of its gas, 59% of its coal and 94% of its oil.

The answer to the energy supply problem is now becoming increasingly clear: a transition is required from an energy supply dependent on fossil fuel combustion to a cleaner, smarter alternative, based on natural renewable resources and indigenous supply.

The first step of this transition was completed in December when the European Union agreed the Renewable Energy Directive which establishes the rules for achieving 20% of EU energy consumption from renewables by 2020.

In practice, the directive establishes the mandatory targets for renewable energy by 2020 for each EU Member State. The road to the ambitious target will be eased by the directive, which should speed up connection to the grid for renewables projects and trim administrative red tape. By June 2010 the Member States will draw up National Renewable Energy Action Plans detailing the ways in which they are to meet their 2020 targets, which will then be submitted to the Commission for assessment. They will report on how they are doing every two years, encouraging consistent progress.

The 20% target means that more than one-third of the EU’s electricity will come from renewable sources in 2020 – up from 16% in 2006. By 2020, wind energy is expected to have overtaken hydropower as the EU’s largest source of renewable electricity.



The European Wind Energy Association believes that renewable energies - with a significant contribution from the wind sector – alongside energy efficiency constitute the only possible solution to the EU’s future energy challenges.

Over the next 12 years, 332 GW of new electricity capacity - 42% of current EU capacity - needs to be built to replace ageing power plants and meet the expected increase in demand. Over the next 12 years, Europe must use the opportunity created by the large turnover in capacity to construct a new, modern renewable energy power supply and grid system capable of meeting the energy and climate challenges of the 21st century, while enhancing Europe's competitiveness and creating hundreds of thousands of manufacturing and related jobs.

 

The role of wind energy - wind energy markets

Wind energy has an important role to play in the energy scenario. In the past 15 years, the cost of wind energy has more than halved, and its production per unit of capacity has more than doubled. At any given site, a single modern wind turbine produces, on an annual basis, 180 times more electricity, at less than half the cost per kWh than its equivalent 20 years ago.

Nearly 5.4% of the EU’s electricity consumption is met by wind power (2009), but this share should increase to between 14.2% to 16.7% in 2020 and between 26% and 34% in 2030, provided that the right framework is introduced and current distortions in the EU energy markets are removed.

In terms of new capacity, more wind power was installed than any other generating technologies for the last two years running. 39% of all new capacity installed in 2009 was wind power. Investment in new European wind farms in 2009 reached €13 billion, including €1,5 billion offshore. 10,163 MW of wind power capacity was installed across the European Union - a 23% increase compared to 2008 installations - made up of 9,581 MW onshore (up 21% from last year) and 582 MW offshore (up 56% from last year).

 

Chart 1: New power capacity EU 2009

 

In 2009, 21% of Denmark’s electricity needs were covered by wind, with 14% covered in Spain and Portugal and 7% in Germany. The share is growing in many other countries and this upward trend will continue if current administrative and grid connection barriers are alleviated.

Whilst the market continues a steady drive forward within Europe, a major surge of activity is occurring on a global level. In particular, the United States, India and China have made pronounced leaps in their wind power capacity build up. The five countries with the most installed capacity in 2009 were: the United States, Germany, Spain, India and China.

 

 

Chart 2: Breakdown of projected global capacity installations into continents 2008-2012, showing increasing market diversification

 

Within Europe, Germany, Spain and Denmark - the three pioneer countries of wind power development - are being followed by a second wave of other European countries investing in wind power, such as Italy, France, the United Kingdom, Portugal and the Netherlands. Poland, Bulgaria and Hungary are also increasing wind power capacity.

 

Chart 3: Wind map 2009

 

Wind energy also creates benefits in terms of employment, investment, research and economic activity in the electricity sector.

Currently 192,000 people in the EU are employed by the wind industry, and the number of jobs will more than double to almost 450,000 by 2020.

Wind energy decisively contributes towards a reduction in CO2 emissions. Wind power power installed in Europe (end 2009) prevents the emission of around 106 million tonnes of CO2 every year. Wind energy also facilitates the reduction of other local environmental impacts, such as NOx and particulate matter emissions in large cities, which cause a variety of cardiovascular and respiratory illnesses.

Wind energy contributes towards a significant reduction in CO2 emissions. It is safe, clean, and abundant. Wind energy is a massive indigenous power source permanently available in virtually all parts of the world. It delivers the energy security benefits of avoiding fuel costs and price risks. Wind power also rules out the economic and supply risks associated with a reliance on imported fuels and political dependence on other countries.