• APPENDIX
• ABREVIATIONS
• GLOSSARY
• REFERENCES
• EVENTS

Part 4: Industry & Markets

Introduction

Europe is steadily moving away from conventional power sources and towards renewable energy technologies, a trend driven by the world’s most significant piece of renewable energy legislation to date: the 2001 EU Renewable Electricity Directive. The move towards renewables has been further underpinned by the European Council’s 2007 decision to establish a binding target of 20% of EU energy from renewable sources by 2020.

Thermal power generation now stands at about 430 GW, and combined with large hydro and nuclear, it has traditionally served as the backbone of Europe’s power production. In recent years, however, renewable energy, and specifically wind energy, have become mainstream sources of power. Between 2000 and 2007, wind energy capacity in Europe more than quadrupled, from 13 GW to 57 GW. The 2007 total of 57 GW represents over 5% of all power generation capacity in Europe, and 30% of all new power capacity installed since 2000. The bulk of European wind energy capacity has been concentrated in three countries, Germany, Spain and Denmark, which are now home to 72% of all capacity in Europe.

Wind’s spectacular European growth has attracted a broad range of players across the value chain, from local engineering firms to global vertically integrated utilities. There is strong competition, with about a dozen key suppliers vying for market share, and the leading suppliers consolidated their dominant position in 2003-2004. Recent supply chain pressure has been a key competitive driver in wind turbine supply, and the relationships between turbine manufacturers and their component suppliers have become increasingly crucial. As more and more players look to develop, own, or operate wind farms, wind power markets now include dozens of multinational players, illustrating the industry’s increase in size and its geographic expansion. Between 2005 and 2006, the industry also saw more participation by utilities.

If wind energy investment has been tremendous in the past, there is no sign that the speed of development will decrease. Europe’s top 15 wind utilities and IPPs have announced that pipelines of over 18 GW will be installed between 2007 and 2010, translating into well over €25 billion worth of investments in wind plants. Overall, the European wind market is expected to grow at a rate of over 7-9 GW every year until 2010.

The growth of the European wind energy sector has also recently been mirrored in other continents, most notably in China, India and the US. In 2007, over 11 GW of new wind capacity was installed outside Europe, bringing the global total up to 94 GW. In terms of economic value, the global wind market was worth about €25 billion in 2007 in terms of new generating equipment.

Both in Europe and further afield, wind energy expansion is facing a number of barriers, both administrative and in terms of grid access. These barriers are created when administrative or financial procedures are opaque or inconsistent. They can also occur in relation to grid connections, and often pose serious obstacles to investment in wind energy, as well as preventing it from achieving competitiveness with other power-generating technologies.