The Blog - Wind energy market analysis

Posted 28/09/2018

Ilaria Valtimora

    

Wind power companies: what are their prospects for 2019?

Despite an appetite from investors, wind companies are still facing uncertainty in Europe for the year ahead. Want to learn more about the future of the European market? Take a look at our free report, 18 Predictions for Wind Investors in Europe.

European wind power companies

What do wind prospects look like in 2019?

Last year was a record-breaker for wind farm installations in Europe. But are wind energy companies set to break their record this year? We are not that optimistic. 

Countries in the European Union ended 2017 with 169GW of installed wind capacity, with developers adding a record 15.7GW onshore and offshore throughout the year. This is figure is up 25% year-on-year, according to industry association WindEurope.

Its annual statistics released in February 2018 showed that Germany, the UK and France all had record years in terms of installations. However, as we approach the end this year, it is a good time to ask whether companies in Europe’s wind sector would be able to repeat itself this year.

Should wind power companies be worried?

Over 70% of last year’s new capacity was completed in Germany (6.6GW), the UK (4.3GW) and France (1.7GW). But a similar rate of growth in these countries this year and beyond seems unlikely.

For example, wind energy developers in Germany completed 5.3GW of onshore wind farms in 2017, compared to 4.2GW in 2016. But this boom was the result of a rush of activity before auctions came into force last year, and won’t be repeated. German consultancy Windresearch has forecast a worst-case scenario where just 1GW of new onshore wind farms would be completed in 2019.

In the UK, the record 2.6GW of onshore wind farms installed last year followed a rush by developers to secure subsidies in 2015 and 2016, after the Conservative government’s move to ban onshore wind subsidies in 2015. RenewableUK has forecast 940MW of onshore wind farms will be built this year, and only 370MW in 2019. It’s not a good situation.

And finally, French trade association France Energie Eolienne warned in July that the development of new onshore wind farms in the country had stalled since the beginning of 2018 because of the absence of an environmental authority.

According to the FEE, at least 170 wind projects totalling 3GW are currently in a limbo, waiting for environmental approval. The French wind sector doesn’t look close to break any record this year.

What does this mean for wind energy investment?

It’s a great shame, as the appetite from investors is still there. In total, investors committed €22.3bn to new onshore and offshore wind farms in 2017, which is a reduction of 19% year-on-year, but still shows healthy activity.

Final investment decisions were taken on 11.5GW of projects last year – 9GW onshore and 2.5GW offshore – and onshore wind financings hit a record level of €14.8bn in 2017. We see no shortage of financial sector interest in wind.

But where will they get the opportunities? Last year, €6.7bn of these deals were in Germany and €5bn in the UK, and so we shouldn’t expect to see that matched this year. After them, €2.6bn was in Sweden, €1.2bn in Russia, and €1bn each in France and Spain. Activity is still concentrated on a selected few countries.

It is a cliché to say it, but what developers and investors need is certainty.

The good news is that European countries have taken steps this year, which are set to reassure wind companies in the long run.

For example, the European Union reviewed in June its Renewable Energy Directive to increase its renewable energy target to 32% by 2030, up from a previous goal of 27%. Those in the wind sector will likely push for an even higher goal, but this already gives important support to the market.

The amended directive also requires state members to provide at least five years’ visibility on public support for renewables, including timing, volumes and budget for future auctions. This is set to give investors the confidence to take long-term investment decisions by providing more visibility on when and where to invest.

And finally, the 28 member states have agreed on the need to cut barriers to corporate power purchase agreements in Europe. This would hopefully give energy producers and buyers the clarity they need to finalise power purchase agreements and take schemes to financial close.

Unfortunately though, it will take time before we see the effect of these measures on the market and a contraction of the wind sector in terms of installations this year still seems the mostly likely outcome.

However, as European countries implement new rules to promote renewable energy and wind becomes more competitive, new markets in Europe are set to emerge and wind prepares to break news records in the upcoming years.

Interested in learning more about European wind? We host an annual European conference - our 2019 event will be on the 3rd November. Click below for more details.

Find out more about Financing Wind

You might also like...

 

New call-to-action

 

Our top 10 blog posts from the last month