Wind investors seek clarity in Europe

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Ilaria Valtimora
February 16, 2018
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Wind investors seek clarity in Europe

Last year was a record-breaker for wind installations in Europe.

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 years. This is up 25% on the 2016 figure, according to industry association WindEurope.

Its annual statistics report released this week also showed that Germany, the UK and France all had record years in terms of installations. That could mean onshore wind in Europe looks brighter than ever, but we won’t be cracking out the Prosecco.

Almost 70% of this new capacity was completed in Germany (6.6GW) and the UK (4.3GW). But neither will be able to sustain this rate of growth in 2018 and beyond. Both are coming off the back of construction booms caused by changes to key subsidies.

For example, firms in Germany completed 5.3GW of onshore wind farms in 2017, compared to 4.2GW in 2016. But this boom is 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.

And, 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.

Other nations in Europe are unlikely to compensate when activity in Germany and the UK slips way back. France looks promising, and the government is looking to cut the red tape that holds back development activity, but it’s not a panacea for the whole market.

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 select few countries.

It is a cliché to say it, but what developers and investors need is certainty. They need more European governments to commit to renewable energy plans for after 2020, as this will give them the confidence they need to take long-term investment decisions. We are seeing the need for subsidies fall, but political support to get companies to invest.

This would also enable grid operators to plan upgrades needed to cope with more wind farms on the grid. These businesses also won’t invest if the market’s direction isn’t clear.

We could take time to celebrate last year’s results – but we think it makes more sense to focus on what happens next.

Last year was a record-breaker for wind installations in Europe.

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 years. This is up 25% on the 2016 figure, according to industry association WindEurope.

Its annual statistics report released this week also showed that Germany, the UK and France all had record years in terms of installations. That could mean onshore wind in Europe looks brighter than ever, but we won’t be cracking out the Prosecco.

Almost 70% of this new capacity was completed in Germany (6.6GW) and the UK (4.3GW). But neither will be able to sustain this rate of growth in 2018 and beyond. Both are coming off the back of construction booms caused by changes to key subsidies.

For example, firms in Germany completed 5.3GW of onshore wind farms in 2017, compared to 4.2GW in 2016. But this boom is 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.

And, 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.

Other nations in Europe are unlikely to compensate when activity in Germany and the UK slips way back. France looks promising, and the government is looking to cut the red tape that holds back development activity, but it’s not a panacea for the whole market.

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 select few countries.

It is a cliché to say it, but what developers and investors need is certainty. They need more European governments to commit to renewable energy plans for after 2020, as this will give them the confidence they need to take long-term investment decisions. We are seeing the need for subsidies fall, but political support to get companies to invest.

This would also enable grid operators to plan upgrades needed to cope with more wind farms on the grid. These businesses also won’t invest if the market’s direction isn’t clear.

We could take time to celebrate last year’s results – but we think it makes more sense to focus on what happens next.

Last year was a record-breaker for wind installations in Europe.

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 years. This is up 25% on the 2016 figure, according to industry association WindEurope.

Its annual statistics report released this week also showed that Germany, the UK and France all had record years in terms of installations. That could mean onshore wind in Europe looks brighter than ever, but we won’t be cracking out the Prosecco.

Almost 70% of this new capacity was completed in Germany (6.6GW) and the UK (4.3GW). But neither will be able to sustain this rate of growth in 2018 and beyond. Both are coming off the back of construction booms caused by changes to key subsidies.

For example, firms in Germany completed 5.3GW of onshore wind farms in 2017, compared to 4.2GW in 2016. But this boom is 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.

And, 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.

Other nations in Europe are unlikely to compensate when activity in Germany and the UK slips way back. France looks promising, and the government is looking to cut the red tape that holds back development activity, but it’s not a panacea for the whole market.

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 select few countries.

It is a cliché to say it, but what developers and investors need is certainty. They need more European governments to commit to renewable energy plans for after 2020, as this will give them the confidence they need to take long-term investment decisions. We are seeing the need for subsidies fall, but political support to get companies to invest.

This would also enable grid operators to plan upgrades needed to cope with more wind farms on the grid. These businesses also won’t invest if the market’s direction isn’t clear.

We could take time to celebrate last year’s results – but we think it makes more sense to focus on what happens next.

Last year was a record-breaker for wind installations in Europe.

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 years. This is up 25% on the 2016 figure, according to industry association WindEurope.

Its annual statistics report released this week also showed that Germany, the UK and France all had record years in terms of installations. That could mean onshore wind in Europe looks brighter than ever, but we won’t be cracking out the Prosecco.

Almost 70% of this new capacity was completed in Germany (6.6GW) and the UK (4.3GW). But neither will be able to sustain this rate of growth in 2018 and beyond. Both are coming off the back of construction booms caused by changes to key subsidies.

For example, firms in Germany completed 5.3GW of onshore wind farms in 2017, compared to 4.2GW in 2016. But this boom is 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.

And, 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.

Other nations in Europe are unlikely to compensate when activity in Germany and the UK slips way back. France looks promising, and the government is looking to cut the red tape that holds back development activity, but it’s not a panacea for the whole market.

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 select few countries.

It is a cliché to say it, but what developers and investors need is certainty. They need more European governments to commit to renewable energy plans for after 2020, as this will give them the confidence they need to take long-term investment decisions. We are seeing the need for subsidies fall, but political support to get companies to invest.

This would also enable grid operators to plan upgrades needed to cope with more wind farms on the grid. These businesses also won’t invest if the market’s direction isn’t clear.

We could take time to celebrate last year’s results – but we think it makes more sense to focus on what happens next.

Last year was a record-breaker for wind installations in Europe.

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 years. This is up 25% on the 2016 figure, according to industry association WindEurope.

Its annual statistics report released this week also showed that Germany, the UK and France all had record years in terms of installations. That could mean onshore wind in Europe looks brighter than ever, but we won’t be cracking out the Prosecco.

Almost 70% of this new capacity was completed in Germany (6.6GW) and the UK (4.3GW). But neither will be able to sustain this rate of growth in 2018 and beyond. Both are coming off the back of construction booms caused by changes to key subsidies.

For example, firms in Germany completed 5.3GW of onshore wind farms in 2017, compared to 4.2GW in 2016. But this boom is 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.

And, 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.

Other nations in Europe are unlikely to compensate when activity in Germany and the UK slips way back. France looks promising, and the government is looking to cut the red tape that holds back development activity, but it’s not a panacea for the whole market.

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 select few countries.

It is a cliché to say it, but what developers and investors need is certainty. They need more European governments to commit to renewable energy plans for after 2020, as this will give them the confidence they need to take long-term investment decisions. We are seeing the need for subsidies fall, but political support to get companies to invest.

This would also enable grid operators to plan upgrades needed to cope with more wind farms on the grid. These businesses also won’t invest if the market’s direction isn’t clear.

We could take time to celebrate last year’s results – but we think it makes more sense to focus on what happens next.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.