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Massive growth but little impact on global supply

Global wind power capacity will more than treble to 58,000 MW within five years -- and it will increase to 145,000 MW by 2010. The projection for the decade represents an eightfold growth in capacity, but even then wind will only provide 1.78% of the predicted world electric energy output in ten years' time. These are just some of the many conclusions reached by Danish company BTM Consult in its latest World Market Update, the fifth in an annual series on international wind energy development.

World wind power capacity will almost treble by 2005 and then grow by a factor of two-and-a-half in the following five years, but such will be the growth of global electricity consumption during the decade that wind will be making little impact on world electricity supplies

Global wind power capacity will more than treble to 58,000 MW within five years -- and it will increase to 145,000 MW by 2010. The projection for the decade represents an eightfold growth in capacity, but even then wind will only provide 1.78% of the predicted world electric energy output in ten years' time. Today it accounts for 0.25%. These are just some of the many conclusions reached by Danish company BTM Consult in its latest World Market Update, the fifth in an annual series on international wind energy development.

The report for 2000, published in late March, indicates an average growth rate for wind power over the next five years of about 25.5%, down from the 31% average growth between 1995 and 2000. Newly installed capacity each year will grow from about 4500 MW last year to over 10,000 MW during 2005. At the estimated growth rate for this decade, the target for 2010 of 60,000 MW for Europe, set by the European Wind Energy Association (EWEA) in 2000, will be achieved "before 2006-2007." BTM forecasts that Europe will reach 41,900 MW, up from 13,630 MW at the end of 2005.

The contrast with projections for wind by the International Energy Agency (IEA) is startling. Compared with BTM's global figure for wind of 145,000 MW in 2010, the IEA is forecasting 34,000 MW -- considerably less than BTM's total for Europe for five years earlier. The IEA largely represents the interests of the conventional power sector. BTM refers to the IEA figures as "very conservative" and says "they do not reflect current trends in the market." BTM notes that at present growth rates for wind it is likely "the IEA projection for the year 2010 will be achieved in the year 2003." Historically, BTM has never overestimated wind power capacity and has frequently shot under the mark, while the IEA has consistently been proved wrong by wind's growth.

Most of the 58,000 MW forecast for 2005 will be in Europe, according to BTM Consult. Spain will install 8400 MW in the next five years, Germany 8200 MW, and Denmark, Italy and Britain will each manage around 1500 MW. By the end of 2005 Germany, with its relatively poor wind resource, will have 14,236 MW of wind capacity, compared with about 6000 MW today, with Spain at 11,235 MW. In third place, and a long way behind, will be Denmark at 3841 MW. For Germany to achieve this level, it is "crucial" that offshore takes off. BTM has every confidence that it will have done so in Germany by the end of the period.

The report takes a dim view of the American market -- Canada, the US and Latin America -- especially with President George Bush at the helm in the United States. The Americas will only reach a total of about 8700 MW in 2005, up from a level today of about 2800 MW. The assumption is qualified, however. "If the PTC is extended or if other means are put into force, the growth rates can be much higher that estimated," states the report, with reference to the federal Production Tax Credit (PTC) in the US. After America, Asia takes third place with a projected 5208 MW by 2005. The rest of the world will accumulate 2409 MW of wind power in the same period.

BOTTLENECKS

Even though the wind power industry has achieved growth rates in manufacturing output of more than 50% in the past two years, BTM questions the ability of companies and their suppliers to keep pace with the demand for turbines and components. "Definitely there have been bottlenecks in the supply chain regarding some key components," states the report, referring to long delivery times for key parts such as blades, gear boxes, generators and transformers. "Whether this problem has been solved or not has yet to be demonstrated." The reports identifies manufacturing capacity, however, which should allow for manufacture of 7000 MW this year -- well over its 6255 MW projection for new capacity.

On the cost of wind power BTM sticks to its prediction last year that continued technology advances will lead to a reduction in price of 15% by 2004, compared with 1999. Beyond 2005, the cost of wind power will be $0.03-0.04/kWh, a price which projects on exceptionally good wind sites can achieve today. The reduction is unaffected by outside policy and economic issues. BTM notes the continuing growth in size of machines -- with the average size sold in Germany now at 1 MW. Other technology trends include the use of ever more advanced control and power regulation systems for MW technology and the increasing focus on "direct drive" wind turbines -- those without gear boxes -- from German Enercon and Dutch Lagerwey. "Several new concepts have been announced," states the report. "Within a few years we will see commercial direct drive machines from other companies."

Top ten

The top ten list of manufacturers remains little changed, with Vestas improving its lead, installing 17.9% of all new turbines in 2000, followed by its Spanish part-owned subsidiary, Gamesa, at 13.9%, with Enercon and NEG Micon close behind. Together, Vestas and Gamesa are responsible for a quarter of the world's accumulated wind power capacity, with NEG Micon accounting for 19.7% and Enercon 11.8%. The remaining six of the top ten all hold single digit percentages of the world total.

There are few major changes in the manufacturing sector, according to the report, but worth noting is the loss of market share by both Enron Wind and NEG Micon, while Vestas, Bonus, Nordex, Gamesa, Spain's Ecotècnia and German DeWind all improved their market shares. BTM notes that the concentration of the majority of the market share in a few companies will continue. The top ten accounted for 91.8% of sales in 2000. "It will become more difficult to become a new player in the wind industry," says BTM consult.

NOTE: The wind power capacity totals for national markets reported in BTM Consult's World Market Update are based on "shipments of turbines" as reported by their manufacturers. Other sources, including Windpower Monthly's Windicator, base their national market totals on reports of operating wind plant connected to the grid.

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