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Europe built 19 GW of new wind energy capacity in 2022. Germany built the most followed by Sweden, Finland, France and the UK. Europe now has 255 GW of wind energy capacity. Those are some of the findings of the WindEurope Annual Statistics report 2022 published today.
87% of the new wind capacity Europe built last year was onshore. There was only 2.5 GW of new offshore wind farms.
Over 2023-27 WindEurope expects the EU to build 20 GW of new wind every year on average. But that is not enough to reach the EU’s energy and climate targets. The EU needs to build on average 31 GW every year up to 2030. That’s achievable if Europe: (a) continues to simplify permitting rules and procedures; (b) restores clear signals to investors; and (c) invests substantially in the wind energy value chain- factories, grids, ports, vessels, and skilled workers.
The share of wind in Europe’s electricity consumption is growing. In the EU27+UK it’s now 17%. The European Commission wants wind to be 43% of EU electricity consumption by 2030. But right now new investments and wind turbine orders are falling. 2022 saw only 13 GW of new wind farm investments announced. Not a single offshore wind farm reached final investment decision. Wind turbine orders fell by 47% on 2021 to 11 GW.
There are two reasons why wind investments are falling.
First is the high inflation in input prices which is insufficiently reflected in developers’ revenues. Higher commodity and other input costs have added 25-40% to the price of turbines, but wind farm developers are often stuck with a revenue base that is not indexed in line with this. Governments must fully index their auction prices and tariffs.
Second, a series of unhelpful interventions in electricity markets by different national Governments have badly undermined investor confidence. The EU’s upcoming reform of Electricity Market Design must urgently restore this confidence. It must make it clear that emergency measures are temporary and must be aligned between Member States. Contracts-for-Difference will play a key role for new investments. But investors must also be allowed to finance their projects with Power Purchase Agreements (PPAs) and on a purely merchant basis if that’s what works best for them.
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