- Published: 08 June 2016 08 June 2016
MAKE’s Q2/2016 Global Wind Power Market Outlook Update presents an analysis of global and regional wind power installation forecasts through 2025. Policy clarity in the industry’s two largest markets – China and the US – boosts MAKE’s 10-year global outlook by 1%, the overall impact of these two markets balanced in part by significant downgrades in several countries. Upgrades to both the China and US markets, however, erase a previously expected growth peak in 2018. Instead, two distinct growth periods, 2016 to 2020 and 2021 to 2025, split the global outlook.
MAKE upgrades the 2016 to 2020 outlook by 5.5%, due largely to a 15.4% upgrade in the US market over this period. The upgrade also reflects a push across global markets to capitalize on policies and subsidies that are scheduled to wind down before 2021.
The second growth period, 2021 to 2025, is downgraded by 2% relative to the outlook in Q1, as continued inaction to fill policy voids dampens optimism and puts pressure on the industry to accelerate reductions in the LCOE of wind power. The 10-year CAGR is maintained from the outlook in Q1 despite a net capacity increase of 6.3GW.
The 2016 to 2018 outlook in the Americas took a 6% hit from unfavorable events in Latin America and a shifting of expected capacity in the US beyond 2018. The disastrous auction results in Mexico, coupled with a weak A5 auction in Brazil and extreme electricity rationing in Venezuela, results in a 7% downgrade in Latin America in the near term.
A 62% upgrade in the US from 2019 to 2021 more than compensates for the cuts in Latin America – there the updated guidance on PTC qualification lifts the medium-term outlook in the US, as developers rally to capitalize on full-value PTCs over a four-year construction window.
Quarter-over-quarter, the 10-year outlook in Europe is the most stable of all global sub-regions. Other than France, which MAKE upgraded due to improving conditions for development, modest project adjustments in Southern and Eastern Europe have a relatively neutral impact.
Conversely, onshore markets in Scandinavia (primarily Sweden and Norway) are downgraded in Q2 due to a phase-out of green certificates and lower power prices. The forecast for European offshore wind remains within 1% of the Q1 outlook, with an acceleration of post-2020 activity in Germany the most significant adjustment.
In China, aggressive policies from the NEA result in a 4% upgrade to the 10-year outlook. A national wind development plan for 2016 as well as national and provincial targets will facilitate more capacity from wind power than previously expected. This exemplary policy support increases annual growth in China to more than 26GW across the outlook. The grid gap will undoubtedly swell under a re-invigorated installation push, requiring additional investment in transmission capacity.
Downward adjustments to subsidy schemes and long-term policy discontinuity result in a 9% downgrade in Asia Pacific excluding China. Increasing doubt in Australia over a post-2020 plan for renewables support represents the most significant cut (45%) of any developed market globally and adversely impacts the sub-region’s outlook. To a lesser degree, a lack of policy leadership in Pakistan and Vietnam motivates significant cuts in the Q2 outlook.
Firm order intake decreased 13% YoY in Q1/2016 to nearly 11GW, yet this was still the second highest-ever recorded Q1, behind 2015, which supports the 2016 outlook adequately. As expected, order intake in China dropped following the FIT-push in 2015. Record quarters for order intake in the US and India propped up global order volume offsetting the decline in China to some degree. New policy support in the US and China will continue to strengthen order intake in 2016.