Our ten predictions for wind in 2020

Predicting the future is a mug's game. We all know that. But we can't help it so stick a handle on us, pour coffee in our head, and call us a mug.

Richard Heap
January 6, 2020
Our ten predictions for wind in 2020

Predicting the future is a mug's game. We all know that. But we can't help it so stick a handle on us, pour coffee in our head, and call us a mug.

At the start of each year, we make ten predictions about trends and stories that we expect to shape wind in the next 12 months. We’ll look back at these at the end of 2020 to see how many we got right. Buckle up...

1) Hope emerges in Germany: The growing crisis in Germany was a big story in 2019, and we expect to see more insolvencies, more restructuring and more consolidation – with all eyes on the usually media-shy Enercon.

The fact that the latest onshore tender was oversubscribed gives some hope that the market is stabilising, but further progress will rely on the government showing it supports wind. We’ve not seen much so far but let’s be optimistic.

2) Chinese auctions squeeze sector: We have seen the impact of competitive auctions on profit margins and development activity in Germany and India, and a similar situation is now playing out in China.

We expect this to suppress development and force many large Chinese turbine makers to restructure. In addition, government backing for renewables seems to be dwindling, which will hit wind’s global growth stats in 2020 and beyond.

3) Climate culture wars in US and Australia: Australia’s devastating wildfires have reminded us of the culture wars between progressives and populists in which wind can be caught up. We expect this and other disasters to fuel the demand for further investment in renewables globally in the coming years.

Nowhere will this culture war be more evident that in the US election, where the 'windmill'-hating President Trump is bidding for a second term. We expect a fierce fight between Trump’s Republicans and the Green New Deal-loving Democrats over the best way to tackle the climate crisis. However, right now, we wouldn’t bet against Trump securing a second term, impeachment or not.

4) But PTC extension boosts US investors: After five years of key players in US wind saying another extension of the production tax credit isn’t needed, it must be nice to have got one anyway – at a 60% PTC rate for schemes where construction starts in 2020. This will prompt another spate of construction activity as investors seek to take advantage of their good fortune.

5) UK offshore pushes for 40GW clarity: Prime Minister Boris Johnson is set to increase the UK’s 2030 offshore wind target from 30GW to 40GW, based on his statements in the run-up to the December election, and he’s now under pressure to deliver. But we don’t expect the sector to get clarity quickly.

Brexit is looming, changes are due in his energy department, and he needs to work out how to achieve low prices and his plan for tougher local content rules. We think he’s likely to struggle to do both, which may further raise tensions with Scotland, where businesses are vocal about losing out.

6) M&A in floating wind and AI: Utilities and turbine makers are always on the lookout for the next technology play. In 2020, we expect to see more mergers and acquisitions of firms in the floating wind and artificial intelligence sectors. This is in addition to deals for development platforms as they seek scale.

7) Wind-and-hydrogen goes mainstream: In 2019, wind-and-hydrogen was a ‘breakout star’ as it went from a niche interest to a mainstream talking point in the industry, with firms like Orsted nailing their colours to the mast. This year, we expect to see more wind-and-hydrogen projects coming forward, including in the North Sea, that will see the ‘hydrogen revolution’ really take off.

8) Corporates shouting about net zero: In December, the European Council formally backed the European Union’s proposed goal to be a climate-neutral continent by 2050, and we expect ‘net zero’ to be an even bigger corporate talking point this year. In practise, this will mean that more corporates focus on buying renewable energy and occupying low-emission buildings, and more visible leaders in the wind sector.

9) Non-co-located hybrid projects: Understandably, discussion about hybrid wind, solar and storage projects tends to focus on co-located developments.

In 2020, we expect discussion to move on and make non-co-located hybrids more viable, in a move that would mimic the growth of virtual power purchase agreement structures in the PPAs market. This is a part of the sector that we think is crying out for some pilot projects and established legal structures.

10) Momentum picks up in Africa: We see huge activity in emerging markets in Latin America and Southeast Asia. However, we expect 2020 to be the year when momentum picks up in Africa, where there’s a wind project pipeline of over 18GW and a need for huge new projects following the commissioning of the 310MW Lake Turkana in Kenya last year. From Senegal and South Africa to Egypt to Ethiopia, this could be a great year.

What do you think we missed? No doubt we could have written more on energy storage, electric vehicles or the profit squeeze for companies in the offshore wind. We could have looked at the return to activity in Spain or bubbling discontent in Norway. If you think we’ve got something wrong or missed something crucial, we’d love to hear.

Let us know and all the best for a prosperous 2020.

NEWS IN BRIEF

SUZLON SET TO OFFER BANKS 68% REDUCTION

Indian turbine maker Suzlon is looking to restructure $1.6bn of outstanding debt into around $510m of new debt, which would force banks to take a 68% discount. Lenders have previously offered to take a 50% reduction. Read more

ØRSTED TO PAY £4.5M FOR 2019 BLACKOUT

Ørsted is set to pay a £4.5m 'voluntary contribution' to UK energy regulator Ofgem's redress fund because of the role that its 1.2GW Hornsea 1 offshore wind farm played in a huge blackout in the UK last summer.

IBERDROLA SECURES 371MW BRAZILIAN LOAN

Iberdrola has secured a $323m loan from Brazilian development bank BNDES to build 371MW of wind projects in Brazil. Read more

MING YANG TO BUILD 1.3GW CHINESE HYBRID

Chinese turbine maker Ming Yang is set to build a 1.3GW wind, solar and storage project near the city of Tong Liao in China's Inner Mongolia province. The project is set to include 1GW of wind, 300MW of solar and a 320MW lithium-ion battery storage system.

ISRAEL GREEN LIGHTS HUNDREDS OF TURBINES

The Israeli government has backed plans to develop hundreds of wind turbines in northern Israel as it seeks to go coal-free by the end of 2025. Read more

ESTONIA KICKS OFF 1GW APPROVALS PROCESS

The Estonian government has started the construction approvals process for a 1GW offshore wind farm by the state-owned Eesti Energia.

Predicting the future is a mug's game. We all know that. But we can't help it so stick a handle on us, pour coffee in our head, and call us a mug.

At the start of each year, we make ten predictions about trends and stories that we expect to shape wind in the next 12 months. We’ll look back at these at the end of 2020 to see how many we got right. Buckle up...

1) Hope emerges in Germany: The growing crisis in Germany was a big story in 2019, and we expect to see more insolvencies, more restructuring and more consolidation – with all eyes on the usually media-shy Enercon.

The fact that the latest onshore tender was oversubscribed gives some hope that the market is stabilising, but further progress will rely on the government showing it supports wind. We’ve not seen much so far but let’s be optimistic.

2) Chinese auctions squeeze sector: We have seen the impact of competitive auctions on profit margins and development activity in Germany and India, and a similar situation is now playing out in China.

We expect this to suppress development and force many large Chinese turbine makers to restructure. In addition, government backing for renewables seems to be dwindling, which will hit wind’s global growth stats in 2020 and beyond.

3) Climate culture wars in US and Australia: Australia’s devastating wildfires have reminded us of the culture wars between progressives and populists in which wind can be caught up. We expect this and other disasters to fuel the demand for further investment in renewables globally in the coming years.

Nowhere will this culture war be more evident that in the US election, where the 'windmill'-hating President Trump is bidding for a second term. We expect a fierce fight between Trump’s Republicans and the Green New Deal-loving Democrats over the best way to tackle the climate crisis. However, right now, we wouldn’t bet against Trump securing a second term, impeachment or not.

4) But PTC extension boosts US investors: After five years of key players in US wind saying another extension of the production tax credit isn’t needed, it must be nice to have got one anyway – at a 60% PTC rate for schemes where construction starts in 2020. This will prompt another spate of construction activity as investors seek to take advantage of their good fortune.

5) UK offshore pushes for 40GW clarity: Prime Minister Boris Johnson is set to increase the UK’s 2030 offshore wind target from 30GW to 40GW, based on his statements in the run-up to the December election, and he’s now under pressure to deliver. But we don’t expect the sector to get clarity quickly.

Brexit is looming, changes are due in his energy department, and he needs to work out how to achieve low prices and his plan for tougher local content rules. We think he’s likely to struggle to do both, which may further raise tensions with Scotland, where businesses are vocal about losing out.

6) M&A in floating wind and AI: Utilities and turbine makers are always on the lookout for the next technology play. In 2020, we expect to see more mergers and acquisitions of firms in the floating wind and artificial intelligence sectors. This is in addition to deals for development platforms as they seek scale.

7) Wind-and-hydrogen goes mainstream: In 2019, wind-and-hydrogen was a ‘breakout star’ as it went from a niche interest to a mainstream talking point in the industry, with firms like Orsted nailing their colours to the mast. This year, we expect to see more wind-and-hydrogen projects coming forward, including in the North Sea, that will see the ‘hydrogen revolution’ really take off.

8) Corporates shouting about net zero: In December, the European Council formally backed the European Union’s proposed goal to be a climate-neutral continent by 2050, and we expect ‘net zero’ to be an even bigger corporate talking point this year. In practise, this will mean that more corporates focus on buying renewable energy and occupying low-emission buildings, and more visible leaders in the wind sector.

9) Non-co-located hybrid projects: Understandably, discussion about hybrid wind, solar and storage projects tends to focus on co-located developments.

In 2020, we expect discussion to move on and make non-co-located hybrids more viable, in a move that would mimic the growth of virtual power purchase agreement structures in the PPAs market. This is a part of the sector that we think is crying out for some pilot projects and established legal structures.

10) Momentum picks up in Africa: We see huge activity in emerging markets in Latin America and Southeast Asia. However, we expect 2020 to be the year when momentum picks up in Africa, where there’s a wind project pipeline of over 18GW and a need for huge new projects following the commissioning of the 310MW Lake Turkana in Kenya last year. From Senegal and South Africa to Egypt to Ethiopia, this could be a great year.

What do you think we missed? No doubt we could have written more on energy storage, electric vehicles or the profit squeeze for companies in the offshore wind. We could have looked at the return to activity in Spain or bubbling discontent in Norway. If you think we’ve got something wrong or missed something crucial, we’d love to hear.

Let us know and all the best for a prosperous 2020.

NEWS IN BRIEF

SUZLON SET TO OFFER BANKS 68% REDUCTION

Indian turbine maker Suzlon is looking to restructure $1.6bn of outstanding debt into around $510m of new debt, which would force banks to take a 68% discount. Lenders have previously offered to take a 50% reduction. Read more

ØRSTED TO PAY £4.5M FOR 2019 BLACKOUT

Ørsted is set to pay a £4.5m 'voluntary contribution' to UK energy regulator Ofgem's redress fund because of the role that its 1.2GW Hornsea 1 offshore wind farm played in a huge blackout in the UK last summer.

IBERDROLA SECURES 371MW BRAZILIAN LOAN

Iberdrola has secured a $323m loan from Brazilian development bank BNDES to build 371MW of wind projects in Brazil. Read more

MING YANG TO BUILD 1.3GW CHINESE HYBRID

Chinese turbine maker Ming Yang is set to build a 1.3GW wind, solar and storage project near the city of Tong Liao in China's Inner Mongolia province. The project is set to include 1GW of wind, 300MW of solar and a 320MW lithium-ion battery storage system.

ISRAEL GREEN LIGHTS HUNDREDS OF TURBINES

The Israeli government has backed plans to develop hundreds of wind turbines in northern Israel as it seeks to go coal-free by the end of 2025. Read more

ESTONIA KICKS OFF 1GW APPROVALS PROCESS

The Estonian government has started the construction approvals process for a 1GW offshore wind farm by the state-owned Eesti Energia.

Predicting the future is a mug's game. We all know that. But we can't help it so stick a handle on us, pour coffee in our head, and call us a mug.

At the start of each year, we make ten predictions about trends and stories that we expect to shape wind in the next 12 months. We’ll look back at these at the end of 2020 to see how many we got right. Buckle up...

1) Hope emerges in Germany: The growing crisis in Germany was a big story in 2019, and we expect to see more insolvencies, more restructuring and more consolidation – with all eyes on the usually media-shy Enercon.

The fact that the latest onshore tender was oversubscribed gives some hope that the market is stabilising, but further progress will rely on the government showing it supports wind. We’ve not seen much so far but let’s be optimistic.

2) Chinese auctions squeeze sector: We have seen the impact of competitive auctions on profit margins and development activity in Germany and India, and a similar situation is now playing out in China.

We expect this to suppress development and force many large Chinese turbine makers to restructure. In addition, government backing for renewables seems to be dwindling, which will hit wind’s global growth stats in 2020 and beyond.

3) Climate culture wars in US and Australia: Australia’s devastating wildfires have reminded us of the culture wars between progressives and populists in which wind can be caught up. We expect this and other disasters to fuel the demand for further investment in renewables globally in the coming years.

Nowhere will this culture war be more evident that in the US election, where the 'windmill'-hating President Trump is bidding for a second term. We expect a fierce fight between Trump’s Republicans and the Green New Deal-loving Democrats over the best way to tackle the climate crisis. However, right now, we wouldn’t bet against Trump securing a second term, impeachment or not.

4) But PTC extension boosts US investors: After five years of key players in US wind saying another extension of the production tax credit isn’t needed, it must be nice to have got one anyway – at a 60% PTC rate for schemes where construction starts in 2020. This will prompt another spate of construction activity as investors seek to take advantage of their good fortune.

5) UK offshore pushes for 40GW clarity: Prime Minister Boris Johnson is set to increase the UK’s 2030 offshore wind target from 30GW to 40GW, based on his statements in the run-up to the December election, and he’s now under pressure to deliver. But we don’t expect the sector to get clarity quickly.

Brexit is looming, changes are due in his energy department, and he needs to work out how to achieve low prices and his plan for tougher local content rules. We think he’s likely to struggle to do both, which may further raise tensions with Scotland, where businesses are vocal about losing out.

6) M&A in floating wind and AI: Utilities and turbine makers are always on the lookout for the next technology play. In 2020, we expect to see more mergers and acquisitions of firms in the floating wind and artificial intelligence sectors. This is in addition to deals for development platforms as they seek scale.

7) Wind-and-hydrogen goes mainstream: In 2019, wind-and-hydrogen was a ‘breakout star’ as it went from a niche interest to a mainstream talking point in the industry, with firms like Orsted nailing their colours to the mast. This year, we expect to see more wind-and-hydrogen projects coming forward, including in the North Sea, that will see the ‘hydrogen revolution’ really take off.

8) Corporates shouting about net zero: In December, the European Council formally backed the European Union’s proposed goal to be a climate-neutral continent by 2050, and we expect ‘net zero’ to be an even bigger corporate talking point this year. In practise, this will mean that more corporates focus on buying renewable energy and occupying low-emission buildings, and more visible leaders in the wind sector.

9) Non-co-located hybrid projects: Understandably, discussion about hybrid wind, solar and storage projects tends to focus on co-located developments.

In 2020, we expect discussion to move on and make non-co-located hybrids more viable, in a move that would mimic the growth of virtual power purchase agreement structures in the PPAs market. This is a part of the sector that we think is crying out for some pilot projects and established legal structures.

10) Momentum picks up in Africa: We see huge activity in emerging markets in Latin America and Southeast Asia. However, we expect 2020 to be the year when momentum picks up in Africa, where there’s a wind project pipeline of over 18GW and a need for huge new projects following the commissioning of the 310MW Lake Turkana in Kenya last year. From Senegal and South Africa to Egypt to Ethiopia, this could be a great year.

What do you think we missed? No doubt we could have written more on energy storage, electric vehicles or the profit squeeze for companies in the offshore wind. We could have looked at the return to activity in Spain or bubbling discontent in Norway. If you think we’ve got something wrong or missed something crucial, we’d love to hear.

Let us know and all the best for a prosperous 2020.

NEWS IN BRIEF

SUZLON SET TO OFFER BANKS 68% REDUCTION

Indian turbine maker Suzlon is looking to restructure $1.6bn of outstanding debt into around $510m of new debt, which would force banks to take a 68% discount. Lenders have previously offered to take a 50% reduction. Read more

ØRSTED TO PAY £4.5M FOR 2019 BLACKOUT

Ørsted is set to pay a £4.5m 'voluntary contribution' to UK energy regulator Ofgem's redress fund because of the role that its 1.2GW Hornsea 1 offshore wind farm played in a huge blackout in the UK last summer.

IBERDROLA SECURES 371MW BRAZILIAN LOAN

Iberdrola has secured a $323m loan from Brazilian development bank BNDES to build 371MW of wind projects in Brazil. Read more

MING YANG TO BUILD 1.3GW CHINESE HYBRID

Chinese turbine maker Ming Yang is set to build a 1.3GW wind, solar and storage project near the city of Tong Liao in China's Inner Mongolia province. The project is set to include 1GW of wind, 300MW of solar and a 320MW lithium-ion battery storage system.

ISRAEL GREEN LIGHTS HUNDREDS OF TURBINES

The Israeli government has backed plans to develop hundreds of wind turbines in northern Israel as it seeks to go coal-free by the end of 2025. Read more

ESTONIA KICKS OFF 1GW APPROVALS PROCESS

The Estonian government has started the construction approvals process for a 1GW offshore wind farm by the state-owned Eesti Energia.

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