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Key Elements for Wind Energy Markets in Europe

Within the context of the Kyoto Protocol, Western European countries and a growing number of Eastern European markets have laid out renewables policies that are dependent on each market’s energy balance, political will and level of liberalisation.  Security of supply is also a key issue, as Europe works towards reducing its dependence on high-risk fossil fuel providers. An integral part of this policy is the regulatory mechanism that supports renewables, because it determines the economic model of renewables projects in most markets. 

In addition to support mechanisms, renewable energy markets depend on resources, site approval, grid issues and the competitive environment.  For the wind industry, these issues have been critical in defining both the market opportunity and its rules for participation.  Economically viable tariffs and efficient and flexible permitting, combined with available grid capacity, are the key elements of a sound market.  

 

Figure 2.13: European Wind Market Environment and Trends

 

Source: Emerging Energy Research

With a policy and support mechanism in place, wind energy markets then depend on the resources available. Europe’s highest wind speeds are seen offshore, where it is more expensive to install turbines, and on the coasts of countries in the northwestern of the area. While significant untapped potential exists offshore, two onshore markets – Germany and the Netherlands - have begun to exhibit a degree of saturation as turbine procurement moves toward IEC Class III models with larger rotors. Southern Europe, however, offers higher wind speeds. 

The issue of grid access to the local distribution or transmission network has generally obstructed the development of wind power. Part of this challenge has stemmed from project permits greatly exceeding infrastructure capabilities, as is the case in Spain, the UK, or other parts of Europe. At the same time, TSOs are in the process of understanding the technical requirements needed to integrate greater amounts of wind power. The application of new grid codes, improved fault ride through and more accurate production forecasting are all contributing to resolving transmission challenges across Europe, although problems in connecting wind farm projects to the grid are likely to persist at the local level (this is even truer offshore, where new lines must be built to absorb GW-size offshore power stations).

Given sufficient transmission capacity, another key way of increasing installed wind power capacity is to facilitate the authorisation process for projects. Authorisation processes must not only be streamlined, but they must enable plans to be successfully realised, bolstered by flexibility and an infrastructure that allows new wind plants to be connected to the grid.  Initiatives to unify overly bureaucratic permitting processes have been seen in the UK, Italy and Greece; though they have shown mixed results, these are key to shortening project execution time. Germany’s reputation for efficiency in turning around applications in well under a year, and regional designations of wind development zones in markets such as Spain, have proven important ways of facilitating new projects.