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Forecast overview

Annual net wind capacity additions are expected to reach 65 GW in 2020, 8% more than in 2019. Covid‑19 measures led to onshore construction activity slowing down from February to April due to supply chain disruptions and logistical challenges in many countries, but the offshore wind sector has been only mildly affected by delays caused by the Covid‑19 crisis due to long project lead times. For 2021, the forecast assumes a further acceleration of wind additions to 68 GW (7.3 GW offshore), driven by delayed onshore projects becoming operational as key countries in Europe and the United States have passed regulations providing flexibility for commissioning deadlines.

In 2022, global annual installations return to the 2019 level due to the phase-out of incentives in major markets in the People’s Republic of China (“China”) and United States, which is partly offset by faster expansion in Europe. The share of offshore capacity in total wind additions reaches almost 15% in 2022 – 50% higher than in 2019 – thanks to acceleration in key European markets and large capacity becoming operational in nascent markets such as France, Korea and Viet Nam while the Chinese market slows. The United States is expected to join the ranks of the largest offshore markets after 2022.

Annual global wind additions in 2023-25 could range from 65 GW in the main case and 100 GW in the accelerated case. Accelerating deployment will require the enhancement of policy support schemes, more investment in grids, eradication of social acceptance and permitting challenges, faster expansion of corporate PPAs and alleviation of regulatory uncertainties and off-taker risks in emerging markets. The share of offshore wind in total wind additions is expected to have increased further by 2025, reaching 20% as deployment in new markets gains momentum.

Onshore wind capacity additions are expected to reach 60 GW in 2020, 11% more than in 2019. Onshore wind developers and equipment manufacturers adopted to the “new normal” under Covid‑19 measures and accelerated construction activity in May after a slowdown in the first quarter of this year. As a result, the forecast has been revised upwards 26% from the May update.

China is most responsible for the revision, accounting for almost half of global onshore wind capacity growth this year (the highest since 2015) because developers are rushing to complete projects before the phase-out of subsidies. Additions in the United States also jump by over 30% this year, almost making up for the slowdown in Europe, whose contribution to global growth is at an historic low.

Onshore wind net capacity additions by country or region, 2015-2022

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Onshore wind capacity additions are expected to further accelerate in 2021 thanks to the commissioning of delayed projects in Europe (mostly in France, Germany, Sweden and the Netherlands), and to faster growth in India and Latin America. For 2022 additions, the forecast assumes a slowdown in global deployment, mainly due to lower additions in China and the United States caused by planned changes in support policies, which will be only partly offset by growing expansion in Europe. Delayed auctions in Brazil, Chile and Argentina this year – due to lower-than-expected demand and macroeconomic uncertainties – also negatively impact 2022 additions. 

Offshore wind capacity additions are forecast to reach 5.3 GW in 2020, 13% less than 2019 growth. The forecast remains unchanged from the May update, as the offshore wind industry has been largely shielded from the Covid‑19 crisis. For the first time, China accounts for over half of global offshore wind expansion, while European countries provide the remainder.

Additions are expected to reach a record 7.3 GW in 2021, led by China as developers meet the FiT commissioning deadline, while the first large-scale commercial offshore wind project becomes operational in Chinese Taipei. In 2022, despite slowdown in China, offshore capacity is expected to increase further thanks to higher deployment in the United Kingdom and France, and in other markets in Asia. With an extensive slate of projects supported by auctions, the United States is anticipated to become one of the largest offshore markets in 2024.

Offshore wind net capacity additions by country or region, 2016-2022

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Support policies and continuous cost reductions are expected to be the main drivers of wind deployment in the next five years. Globally, 40% of all wind capacity forecast to come online during 2020-25 is supported by administratively set tariffs (FiTs or a floating FIP), followed by 35% supported by auctions scheme. Competitive auctions dominate growth in all regions except China and the United States.

In the United States, the main stimulants are corporate PPAs, tax credits and renewable portfolio standards (RPSs), and other revenue sources (wholesale prices, green certificates, etc.). In China, administratively set tariffs are expected to support almost all wind additions until 2025, and after 2020, tariffs for new onshore wind are set at provincial power benchmark prices. Globally, the transition from administratively set to competitively set remuneration policies is expected to accelerate in the next five years as costs continue to decline and the wind industry expands. 

Actual and forecast onshore wind costs, 2016-2025

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Main remuneration schemes supporting forecast wind capacity additions 2020-2025

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The cost of electricity generated from onshore wind continues to decrease, with the global average falling to USD 53/MWh in 2019. Thanks to advancements in turbine design, capacity factors are rising, making projects bankable even in areas with low wind speeds. The average LCOE for new onshore wind is expected to decline 15% during 2020-25 – a slower pace than in previous years – because larger shares of investment are going to more expensive markets in Europe instead of China. In addition, wind farms are increasingly been built at lower-wind-speed sites.

Over 2023-25, average annual wind additions could range from 65 GW in the main case to 90 GW in the accelerated case. Although they are becoming more cost-competitive, wind projects increasingly face permitting and social acceptance challenges in addition to policy uncertainties. Faster wind capacity growth in the accelerated case would be possible with:

  • Higher targets and a robust policy framework under China’s new 14th Five-Year Plan and the continuation of provincial auctions.
  • Rapid expansion of competitive auctions and elimination of social acceptance and permitting challenges in Europe.
  • Extension of tax incentives, faster expansion of corporate PPAs, and timely implementation of RPSs and of offshore wind auctions and procurements in the United States.
  • Resolution of grid connection, land acquisition and DISCOMs financial health problems in India.
  • Additional auction capacity and bilateral contracts in Latin America thanks to faster demand recovery.
  • Policies to address regulatory uncertainties, off-taker risks and grid connection challenges in the ASEAN region and Africa.
  • Faster development of electrical grids to reduce bottlenecks when integrating wind capacity into power systems.

Global wind annual net capacity additions, 2020-2025

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Faster net capacity growth of onshore wind also hinges on policies for repowering and refurbishment, especially in Europe and the United States. By 2025, over 180 GW of global wind capacity is expected to be at least 15 years old: 86 GW in Europe, 39 GW in the United States and 30 GW in China. Repowering old turbines with new technology usually results in higher capacity and generation from fewer turbines, while taking advantage of existing grid infrastructure and land. If supporting policies are introduced in a timely manner, repowering may provide an additional boost to onshore wind additions and mitigate the adverse effects of first-generation wind turbine retirement.

China

China’s wind capacity additions are expected to increase over 20% in 2020, consistent with last year, as onshore projects that qualified for FiTs before 2019 need to be commissioned by the end of this year. China installed 30% less onshore wind capacity in the first half of this year than in 2019 due to construction and supply chain delays related to Covid‑19, but since June, construction activity has regained momentum.

Although remuneration will be reduced for projects that miss the 2020 deadline, they can still come online next year. A deployment rush is therefore expected in the last quarter of 2020, but some onshore projects are forecast to miss the deadline and become operational in 2021. For offshore wind, record capacity is expected to come online next year, in line with phaseout of the generous FiT. 

China quarterly wind deployment, 2018-2020

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China annual wind capacity additions 2018-2022 and average annual additions 2023-2025

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In 2021 and 2022, wind capacity additions are expected to decline with the phaseout of subsidies. Deployment will be stimulated by wind auctions in some provinces and by projects accepting 20-year contracts at provincial power prices set administratively for all power generating technologies. The economic attractiveness of these projects is lower, however, especially in provinces closer to demand centres where generation costs are higher due to limited wind resource availability and relatively expensive land.

In addition, grid integration remains a challenge despite recent measures to reduce curtailment. In the absence of subsidies, the return on investment for wind projects is expected to decrease, and higher curtailment risks could reduce their bankability further.

In the accelerated case, wind additions average over 29 GW per year after 2022, assuming that provincial auctions continue and the 14th Five-Year Plan proposes a new policy framework to support further wind development. In addition, faster drops in turbine costs for low/medium-speed turbines could accelerate deployment, especially in the Eastern provinces.

United States

2020 will be the strongest year of onshore wind deployment in the United States since 2012 as projects qualifying for the full PTC add 12 GW, an over 30% increase from 2019. The Covid‑19 crisis caused little to no market slowdown, with a record 4.3 GW of new capacity added in the first two quarters of this year. The US Treasury’s extension of PTC Safe Harbour provisions will mitigate any lingering construction challenges and delays related to Covid‑19.

The pace of additions is expected to decrease in 2021 and 2022 due to the PTC phase-down and a possible decline in the availability of tax equity, with both factors making projects less profitable. Project sponsors’ revenues have fallen significantly with the economic slowdown, making it more difficult for them to monetise tax credits for developers (AWEA, 2020). Lower revenues and scarcity of capital have produced fewer projects in advanced development, the longest consecutive decline since 2016, and will result in a more than 40% decrease in additions from 2021 to 2023.

US wind project development status, 2017-2022

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US wind capacity additions 2018-2022 and average annual additions 2023-2025

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The PTC phaseout schedule also affects additions beyond 2022, although a small peak is forecast for 2024, driven by the final PTC commissioning deadline for projects that qualified in 2020. Beyond tax incentives, state-level incentives such as RPSs and corporate power purchase agreements are expected to encourage onshore wind growth.

State RPSs represent a growth opportunity but also present challenges. The largest markets (Texas, Iowa and Oklahoma) have met their state-mandated targets and can still export across state lines, but segmented regional grids and RPS requirements to procure power from a regional power pool necessitate faster development of nascent and new markets. States with low installed wind capacity have ample potential but could encounter barriers, including public opposition and land constraints. Smaller plant sizes and relatively low capacity factors (compared with mature wind markets) result in higher generation costs, even as the price of wind power continues to decline.

In the accelerated case, additional capacity expansion results from lower prices and greater corporate PPA and RPS demand, especially in states where wind capacity is currently limited. IEA forecasts have excluded an additional extension of the PTC, which could lead to higher deployment than in the accelerated case.

The US offshore wind market is expected to emerge during 2023‑25, with over 5 GW becoming operational as projects in New Jersey, New York, Massachusetts and Rhode Island are commissioned. The US Bureau of Ocean Energy Management is scheduled to announce its decision regarding the 800‑MW Vineyard Wind farm by the end of 2020, a last major step for the project to advance.

Along with federal permitting approvals, challenges to offshore wind projects in the United States include a lack of local policy clarity, insufficient transmission and harbour infrastructure, relatively high costs and social disapproval. Still, with a large amount of capacity already awarded, the United States is forecast to install more offshore wind capacity in 2024 than any other country in the world.

US offshore wind tenders by state

State

Tenders

Tendered capacity (MW)

Awarded capacity (MW)

Award year

Awarded (levelised)

New York

2*

4 200

1 700

2019

USD 83.6/MWh

New Jersey

2*

3 600

1 100

2019

 

USD 98.1/MWh w/ 2% escalator

(USD 116.82/MWh)

Massachusetts

2

1 604

1 604

2018/19

Tender 1: USD 65-74/MWh w/ 2.5% escalator (USD 89/MWh)

Tender 2: USD 58.47/MWh

Connecticut

1

804

804

2019

TBA**

Rhode Island

1

400

400

2018

USD 98.4/MWh

*Includes open 2020 tender. **PPA pricing currently under review. Sources: NYSERDA (2019), Launching New York’s Offshore Wind Industry: Phase 1 Report; State of New Jersey (2019), “In the Matter of the Board of Public Utilities Offshore Wind Solicitation for 1,100 MW – Evaluation of the Offshore Wind Applications”; Commonwealth of Massachusetts (2020), “Petition of NSTAR Electric Company, d/b/a Eversource Energy for approval by the Department of Public Utilities of two long-term contracts for procurement of Offshore Wind Energy Generation”; Yankee Institute for Public Policy (2020), Connecticut’s offshore wind deals may drive up electricity costs for consumers; ecoRI News (2019), Revolution Wind offshore power contract approved.

Five states are attempting to mitigate the risks by including offshore wind in their comprehensive energy plans: they organised eight offshore wind tenders totalling over 10 GW through 2020, and awarded prices are beginning to match those of European offshore wind auctions over the same period. The success of these tenders has led to the planning of tenders for an additional over 10 GW of capacity, impacting growth beyond the forecast period.

India

India’s wind capacity additions are expected to drop almost 60% from the 2019 level in 2020, falling to only 1 GW – the smallest increase since 2009. In the first half of 2020, India added only 0.3 GW of wind capacity (one-quarter the capacity added in the first half of 2019), as supply chain disruptions and lockdowns halted construction and delayed project commissioning.

Historically, the majority of annual construction activity in India has taken place in the first half of the year, before the monsoon season starts. Although this forecast expects construction activity to accelerate in the second half of 2020, some projects will finish construction in 2021, leading to a strong rebound.

India wind auction results, 2017-2020

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India annual wind capacity additions 2017-2022 and average annual additions 2023-2025

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Expansion is expected to remain below the 2021 level in 2022, as challenges faced by India’s wind sector persist. In 2020, the financial condition of DISCOMs deteriorated further and wind auctions continued to be undersubscribed. After having been postponed several times, only one wind auction took place during the first eight months of 2020, with only 40% of the announced 2.5 GW successfully allocated with average contract prices 6% higher than last year.

Wind auction undersubscriptions result from relatively high project risks due to revenue uncertainty, land acquisition challenges, weak grid infrastructure and low tariff ceilings in the auctions. The removal of tariff ceilings, announced in March, may increase participation, enabling developers to fully incorporate perceived project risks into their bids. Plus, the recent introduction of hybrid auctions could raise competition and spur higher participation, as developers can distribute project risks among various technologies.

Given the various challenges, annual wind capacity additions are expected to remain at the 2022 level (3.5 GW) during 2023‑25. In the accelerated case, however, average annual additions could double with higher allocations in wind auctions accompanied by accelerated grid expansion and policies facilitating land acquisition. Providing DISCOMs a sustainable solution to their financial challenges would also reduce off-taker risks, and the introduction of comprehensive, transparent and investor-friendly rules for signing private PPAs and enabling open grid access could spur higher investment independent from the auction system. 

Japan

The Japanese wind market has started to expand significantly over the past few years and is set to accelerate further in 2020. The country’s generous FiT has prompted development of a large collection of onshore wind projects slated for completion by 2025. While Japan’s offshore wind market is still at an early stage of development, several FiT-supported projects will start construction in 2020 and the first offshore turbines are expected to become operational at the end of 2022. 

Japan cumulative wind capacity, 2019-2025

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Japan annual wind capacity additions 2018-2022

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The growth trend is expected to continue beyond 2022 as more FiT projects reach completion, causing Japan’s total wind capacity to double by 2025. Given longer development timelines and the large FiT project pipeline, the impact of Japan’s transition to a FIP in 2022 will be limited during the forecast period.

In addition, the government is expected to award 1.5 GW through an offshore wind tender next year, supporting capacity growth beyond 2022. Additional growth in the accelerated case is highly dependent on faster construction of FiT projects and offshore tender implementation, given Japan’s limited experience in the wind industry.

ASEAN

ASEAN countries are expected to install 0.3 GW of wind capacity in 2020, 57% less than in 2019. Supply chain issues and construction delays due to the Covid‑19 crisis and discontinuation of the FiT scheme in Thailand in 2018 are the main reasons for this decline. Viet Nam is expected to lead capacity growth from 2020 to 2022 (1.7 GW in total) as the FiT for onshore and offshore wind installations is planned to be extended to 2023. 

ASEAN total installed wind capacity, 2017-2025

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ASEAN annual wind capacity additions 2018-2022 and average annual additions 2023-2025

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Additions are expected to decrease after 2023 due to a planned policy transition from FiTs to auctions in Viet Nam. In Thailand and Indonesia, wind deployment remains stalled by the limited availability of suitable land and a lack of supporting policies. In the Philippines, capacity addition increases are anticipated from 2022 owing to the RPS scheme introduced this year. However, implementation of the scheme remains a forecast uncertainty.

Although ASEAN offshore wind potential is vast, relatively high costs still prevent regional governments from supporting this technology. ASEAN annual capacity additions over 2023-25 range from 1.1 GW in the main case to 3.2 GW in the accelerated case, with almost half the growth happening in Viet Nam. Introducing support policies to provide stable, long-term remuneration for wind generators and reduce risks could significantly raise investment in the region in the accelerated case, boosting total wind capacity to 16 GW by 2025 – a more than sixfold increase.

Australia

Australia’s wind capacity additions are expected to increase 35% to 2 GW in 2020, driven in part by the country’s Large-scale Renewable Energy Target (LRET) that has given wind projects revenue from the large-scale generation certificate (LGC) market. However, certificate prices in the spot market fell from over AUD 80/MWh in January 2018 to AUD 50/MWh in August 2019 because the number of accredited wind and PV projects will exceed the LRET this year (AEMC, 2019).

The forecast therefore expects wind additions to decline in both 2021 and 2022 as a result of lower returns. Furthermore, potential connection delays and curtailment issues are raising project risks significantly, an element in the fact that no projects reached financial close in Q2 2020.

Beyond 2022, corporate PPAs and merchant projects are expected to promote wind expansion in the absence of a new LRET and declining certificate prices. However, lower corporate electricity demand due to the Covid‑19 crisis remains a forecast uncertainty for 2023-25. Given Australia’s ample resources, average annual wind additions could return to 1.5 GW during 2023-25 in the accelerated case, aided by planned grid upgrades and commissioning of the New South Wales Central-West Orana Renewable Energy Zone, a renewable infrastructure project forecast to deliver up to 3 GW of additional renewable capacity.

AEMO wind curtailment data, 2017-2020

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Australia wind capacity additions 2018-2022 and average additions 2023-2025

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Europe

Europe’s wind capacity additions in 2020 are expected to decline by 18% compared with 2019. The contraction results from slowdowns in offshore wind pipelines in the United Kingdom, Germany and Denmark; transitions to auctions for onshore wind in France and Italy; and sharp declines in Spain after a commissioning deadline boosted growth in 2019. These declines offset the growth seen in other markets such as the Netherlands, Norway and Poland.

Yet, expansion returns in 2021, driven by rebounds in onshore wind in France and Poland as new auctions there begin to yield growth and as a slate of offshore projects is commissioned in Denmark. Additions continue to increase in 2022 and remain stable around 18 GW in total over 2023-25.

For onshore, annual growth averages 14 GW per year over 2023-25, driven mostly by either new or continuing auction schemes to meet 2030 targets in many countries. Onshore growth is led by France, Germany and Spain. Also supporting the forecast are corporate PPAs in Sweden and Italy. For offshore wind, growth is forecast to average around 5 GW per year during 2023-25, led by the United Kingdom, the Netherlands, France and Germany. 

Europe annual wind capacity additions 2017-2022 and average annual additions for 2023-2025 by country

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Europe annual wind capacity additions 2017-2022 and average annual additions for 2023-2025 by sector

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However, grid constraints and permitting challenges stemming from local opposition and minimum distance requirements pose a downside risk to the onshore wind forecast. Should these issues be addressed, average annual growth between 2023‑25 could be 26% higher with increased capacity allocated to auction schemes and more demand for corporate offtake. Lifetime extensions for older wind turbines would also result in higher net capacity additions.

Germany

Germany’s wind capacity additions will continue to decline in 2020 due to the lull in offshore wind project development created during the policy transition from FiTs to competitive auctions. Conversely, onshore wind capacity is expected to increase slightly as projects from previously held auctions continue to be commissioned amid the lockdown measures.

Over 800 MW of onshore wind capacity were installed in the first eight months of 2020 (Bundesnetzagentur, 2020), but the impact of the lockdown on construction timelines, coupled with the six-month extension of commissioning deadlines granted by the government, could push the commissioning of late-stage projects into 2021.

The pace at which early projects will be decommissioned remains a key uncertainty in the forecast of Germany’s net wind capacity growth. By 2021, 2 GW of wind projects will have reached the end of their 20-year support payments. Whether their operations are extended depends on the business case, which may be jeopardised by a weaker economic climate. Already in the first half of 2020, 84 MW have been taken offline (Deutsche Windguard, 2020), an amount that could rise further in the second half of the year.

Germany onshore wind auctions, 2018-2020

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Germany annual wind capacity additions 2018-2022 and average annual additions 2023-2025

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Growth in onshore wind capacity is expected to increase in 2021-22, and overall capacity expansion accelerates slightly during 2023‑25 as new offshore wind projects are commissioned. Competitive auctions to support new 2030 targets for both onshore wind (71 GW) and offshore wind (20 GW) are the main driver for growth. However, undersubscription in onshore auctions remains a risk due to ongoing permitting challenges. Since 2017, 10.5 GW of onshore wind have been on offer in auctions, but only 6.6 GW were awarded because administrative complexity and local opposition created long permitting wait times.

Germany’s net onshore wind growth could be 25% higher during 2023-25 if policies address permitting and decommissioning challenges. The Investment Acceleration Act proposes allowing construction to continue during any litigation processes, while a new draft of the EEG (EEG 2021) was introduced to provide financial incentives for local communities to accept new projects and to remove restrictions on new constructions in northern Germany while also creating a quota for new-builds in the south.

While the decommissioning of 12 GW of onshore wind turbines remains a risk for net growth over the forecast period, the new EEG 2021 proposes extending payments to projects reaching the end of their support scheme term. This would avoid decommissioning and instead encourage refurbishment and repowering. 

Spain

Spain’s onshore wind capacity is expected to increase 1.2 GW in 2020. This is less than growth in 2019, when additions rose to above 2 GW for the first time since 2009. Although the spike in 2019 was created by commissioning deadlines for competitive auctions held in 2016 and 2017, only half of the awarded 4.6 GW had been commissioned before the 1Q 2020 deadline, and uncertainty over when the remaining projects will commission threatens growth in 2020. Long lead times – stemming from permitting and financing challenges, Covid‑19 construction halts, and limited grid access – could delay projects originally scheduled for 2020. By the end of the first half of 2020, only 500 MW of the remaining 2.4 GW had been commissioned.

Additions are expected to rebound in 2021 and 2022 as remaining projects under construction are completed and the first projects with corporate PPAs are commissioned. Beyond 2022, growth is expected to increase to 1 GW annually with the resumption of competitive auctions, but the amount of capacity that will be awarded is a key forecast uncertainty.

A new auction regime was approved in October 2020 to reach 2030 targets, but details regarding tender design and the timeline had yet to be announced at the time of writing. The design of the new auctions will strongly influence the amount of wind capacity awarded, with the latest announcements indicating that projects will be awarded on a MWh-basis with auctions opening  in the second half of 2020. This forecast therefore assumes 1 GW will be awarded per year starting in 2021 and begin to be commissioned in 2023.

Average annual growth between 2023 and 2025 could be more than twice as high if more capacity is earmarked for onshore wind in the new auctions and the recent regulatory reforms regarding permitting dramatically reduce project lead times. More attractive economics for corporate PPAs post-2022 would also boost growth if power demand increases and electricity prices rise. 

France annual wind capacity additions 2017-2022 and average annual additions 2023-2025

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Spain annual wind capacity additions 2017-2022 and average annual additions 2023-2025

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France

France is expected to add just under 1 GW of onshore wind capacity in 2020, one-third less than last year. Among projects coming online this year are the ones awarded in the 2018 auction and under the former FiT and FIP schemes. Annual onshore wind additions are expected to accelerate in 2021 and 2022, with 1.8 GW awarded in various auction rounds since 2018. Furthermore, the multiannual energy plan (the PPE) has scheduled tenders for 1.9 GW of onshore wind capacity per year until 2024, supporting the forecast for 2023-25.

Having been awarded in 2012 and renegotiated in 2018, France’s first large-scale (480‑MW) offshore wind project (Saint-Nazaire) closed financing this year and is expected to come online in 2022, while another 2.9 GW of auctioned projects are scheduled for commissioning during 2022-25. Although offshore wind is expected to make up one‑fifth of wind capacity additions over the entire forecast period, meeting the government’s 2.4‑GW offshore wind target by 2023 will depend on the resolution of social acceptance challenges and timely project commissioning. 

The Netherlands

The Netherlands will add over 1 GW of new wind capacity in 2020, with over 50% coming from offshore wind projects auctioned in 2016. Onshore wind additions are expected to continue to be strong in 2021 and 2022 as the remaining 1 GW of the 1.5 GW auctioned in 2016 and 2017 is commissioned. However, long project lead times due to land rights, social acceptance and grid constraint challenges hamper faster onshore wind deployment over the forecast period. A new 2019 rule requiring projects to prove local grid capacity could facilitate deployment.

Wind additions of more than 4 GW are anticipated during 2023‑25, with two-thirds coming from the Hollandse Kust (Noord) and Hollandse Kust Zuid III and IV offshore projects. For onshore wind, the new SDE++ support scheme is expected to stimulate growth. As capacity in the final SDE+ auction was too low to supplement the current project slate (at 90% less capacity than in the 2019 auctions), additional projects must be attracted through the SDE++ scheme to ensure growth.

Sweden annual wind capacity additions 2018-2022 and average annual additions 2023-2025

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Netherlands annual wind capacity additions 2018-2022 and average annual additions 2023-2025

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Sweden

Sweden is expected to add more than 1.3 GW of new wind capacity this year, consistent with 2019 additions, mostly through corporate PPAs. However, construction delays and supply chain disruptions resulted in lower-than-expected additions in the second quarter of 2020, despite continuous construction activity since the onset of the pandemic.

The forecast anticipates nearly 3 GW of wind growth in 2021 and 2022 as previously contracted projects are completed to meet their PPA obligations. Given the numerous projects currently under construction in Sweden, the country’s delays related to Covid‑19 and its high volume of turbine orders, 2021 is forecast to be a record year for additions. Growth beyond 2021 is contingent on a follow-up programme to the green-certificate scheme and the resolution of grid congestion issues.

Poland

Wind capacity in Poland is expected to increase 0.4 GW in 2020 – the first expansion since investments began to stall in 2017. Auctions held in 2018-19 and planned for 2020 are expected to spur approximately 3 GW of onshore wind expansion in 2020‑22.

Beyond 2022, however, the regulation stipulating that turbines must be constructed at a distance of more than ten times their height from residential and mixed-use buildings will make further growth of onshore wind challenging. Achieving faster growth in the accelerated case therefore hinges on the easing of turbine placement restrictions and the expansion of auctions. In addition, a stable regulatory environment that supplies a long-term national energy strategy and targets as well as auction schedules would provide longer-term visibility for developers, reduce risks and support investment.

Italy

Italy’s wind capacity additions are expected to be 55% lower than in 2019, falling to only 0.2 GW in 2020. Wind market activity has been curtailed since 2013 due to lack of a support scheme, but the new auction scheme introduced in 2019 is expected to change this trend during the forecast period. Wind developers won 90% of the 1 GW auctioned last year, at a rate of EUR 57/MWh in the first round and EUR 64.9/MWh in the second. Most of these projects are expected to come online in 2022.

To meet the National Energy and Climate Plan’s target to achieve almost 9 GW of additional wind capacity by 2030, the government plans to auction almost 5 GW of wind and PV capacity by the end of 2021. Annual installations are therefore expected to remain at 1 GW during 2023‑25 thanks to auctions and the development of corporate PPAs, but 1.7 GW could be achieved in the accelerated case with auction expansions and the facilitation of permitting process. In addition, 5.8 GW of wind capacity will have been operating for more than 15 years by 2025, calling attention to repowering potential. 

Denmark

With no offshore projects scheduled for 2020, Danish wind power capacity additions are forecast to be less than half the 2019 level, when growth from offshore wind had produced the highest additions since 2013. Having stalled in 2019, onshore wind capacity growth is bound to take off again in 2020. Several projects awarded in the first two rounds of technology-neutral tenders will reach completion in 2020‑22. Commissioning of the 605‑MW Kriegers Flak offshore farm will lead to record growth in 2021, raising offshore wind capacity by 36%. 

Denmark net wind capacity additions 2016-2022 and average annual additions 2023-2025

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From 2023 onward, the tender scheme is expected to yield sustained onshore wind additions. This trend is underpinned by the government’s recent postponement of its 2030 target of cutting the number of turbines on land by more than half, as well as the introduction of citizen participation schemes to address local acceptance issues. Average annual additions between 2023 and 2025 could be more than 80% higher if future technology-neutral tenders allocate higher volumes and the commissioning of offshore projects can be accelerated, including two open-door wind projects that recently stalled due to sharply climbing costs from new EIA regulations. 

Brazil

Brazil is forecast to add over 1.3 GW of wind capacity in 2020 – over 30% more than 2019 owing to government auctions and projects developed in the unregulated market through bilateral contracts. The Covid‑19 crisis has had minimal impact on wind construction activity overall.

Despite the slight rise this year, onshore wind additions in 2019 and 2020 are significantly below historical levels due to low auction capacities in the last five years. For instance, awarded wind capacity declined from 10 GW per year during 2011-15 to 5 GW in 2016‑20.

Annual expansions of more than 1.5 GW are expected in 2021 and 2022, with over half of the growth contracted outside the government auction scheme. However, the number of free-market bilateral contracts and government auctions depends on future electricity demand, which is highly unpredictable because Brazil is expected to enter a deep recession due to Covid‑19 economic upheaval (OECD, 2020).

Brazil auctioned wind capacity, 2013-2019

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Brazil annual wind capacity additions 2018-2022 and average annual additions 2023-2025

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Considering macroeconomic uncertainties and postponement of the 2020 A-4 auction, Brazil’s annual average wind capacity growth during 2023-25 could range from 1 GW in the main case to 1.5 GW in the accelerated case. The accelerated case assumes higher wind capacity procured through the unregulated market and a larger amount of capacity auctioned in 2021 as electricity demand recovers.

Mexico

Mexico’s annual wind additions are expected to decline over 60% from 2019 to 2020 due to commissioning delays caused by regulatory uncertainty over renewable energy plants’ grid connections. Furthermore, public opposition has hampered wind project development in Mexico. In 2015, the Kabil I and II wind parks (30 MW each) were awarded and it was expected that they would be operational in 2018, but social acceptance challenges have pushed the commissioning date to the end of 2020. Limited grid connection availability, especially in central and southern Mexico, also continues to be a key obstacle to faster onshore wind deployment.

Mexico actual and forecast cumulative capacity, 2019-2025

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Mexico actual and forecast annual wind capacity additions, 2018-2022

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In 2021 and 2022, expansion will result from capacity awarded in previous Clean Energy Certificate (CEL) auctions. In the absence of new CEL auctions organised by the government, onshore wind deployment during 2023-25 will have to be encouraged by corporate PPAs and utilities buying wind power to meet their CEL requirements by 2024.

The cancellation of CEL auctions has created policy uncertainty, which threatens further renewable capacity development, and the lingering possibility of additional regulatory changes in 2021 is also undermining investor confidence. A decrease in average capacity additions is therefore forecast for 2023-25.

Mexico’s wind capacity could, however, be 20% higher in 2025 with greater regulatory certainty, faster grid connections, higher corporate demand and affordable financing.

Chile, Argentina and Colombia

Prompted by past auctions (in 2016 and 2017), Chile’s wind capacity additions will reach almost 600 MW in 2020 – a record level despite the Covid‑19 crisis. Furthermore, a peak in additions is expected in 2021, followed by a slowdown in 2022 as projects acquired in the last auction (of 2017) are commissioned. 

Argentina annual wind capacity additions 2017-2022 and average annual additions 2023-2025

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Chile annual wind capacity additions 2017-2022 and average annual additions 2023-2025

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Capacity additions in Chile are expected to regain momentum after 2022, as a 2.7‑TWh technology-neutral electricity auction is expected in the first half of 2021 to meet the estimated demand of regulated clients in 2026. (According to the regulator, an additional 3.7 TWh will also be awarded to meet 2027 electricity demand.) The forecast expects that some wind projects from these auctions will be commissioned early to take advantage of high spot market prices. In addition, the government has also held an auction to allocate public land for renewable energy projects to address acquisition challenges. All together, these auctions are expected to lead to 2.3 GW of wind additions during 2023-25.

Argentina’s onshore wind capacity will expand almost 900 MW in 2020, slightly more than last year. Additions result from capacity previously auctioned under the RenovAR programme, despite Covid‑19-related delays that caused grid connection setbacks and temporarily halted construction. Wind additions are expected to lose speed in 2021 and 2022, as auction volumes fell from 1 GW in 2017 to only 128 MW in 2019.

The share of renewables in electricity demand needs to more than double to reach the government’s target of 20% by 2025. Argentina’s already-challenged macroeconomic environment was profoundly affected by the Covid‑19 crisis, so limited access to affordable financing and weak grid infrastructure threaten wind capacity growth in spite of the country’s excellent resource availability and cost-competitiveness.

The accelerated case therefore assumes that projects obtain financing sooner; transmission infrastructure improves; and the number of corporate PPAs increases quickly, allowing for almost 5 GW of total installed capacity by the end of the forecast period.

Colombia’s installed wind capacity is expected to start increasing in 2021, thanks to two auctions held in 2019. Together, the long-term renewable auction and the reliability charge auction will bring over 1.5 GW of additions online. However, the social consultation process as well as the delay of a new 500‑kV transmission line required to connect capacity in northern La Guajira may prevent some projects from being commissioned on time (i.e. by 2022).

In 2023 and beyond, Colombia’s capacity expansion is spurred by projects remaining from the 2019 auctions and from a third renewable auction expected in 2021.

Middle East and North Africa

Annual wind additions in the Middle East and North Africa (MENA) region are set to decline in 2020 relative to 2019. Lower growth results from lengthy auction processes and stalled utility-owned development, which delays projects under development. Growth in 2020 will be bolstered by the commissioning of late-stage IPP projects in Morocco and Jordan, developed under bilateral contracts with large consumers or the utility outside of dedicated auction schemes. However, construction delays stemming from the Covid‑19 crisis threaten the forecast.

MENA annual wind incremental growth by procurement type for selected countries 2020-2025

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MENA annual wind additions 2018-2022 and average annual additions 2023-2025

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Growth is forecast to rebound in 2021 and 2022 – exceeding the 2019 level – as projects from Morocco’s and Egypt’s competitive auctions are commissioned. Morocco’s robust project slate results from a shift in institutional responsibility for wind procurement, from the state utility to the Moroccan Agency for Sustainable Energy Development (MASEN), the country’s dedicated organisation for achieving national renewable energy targets. In 2019, MASEN helped 400 MW of stalled wind projects sign PPAs and opened the EPC tender for Africa’s first repowering project.

Average annual growth is expected to increase further to 1.2 GW during 2023‑25. Most of the expansion is in Egypt, stimulated by unsolicited bilateral IPP contracts between developers and the power utility. Over 2 GW are currently under development, as developers have been approaching the utility directly to negotiate contracts because other schemes have either been abandoned due to insufficient remuneration (under the FiT scheme) or have been slow to advance (IPP competitive bidding or state-owned projects). The increase is also supported by additional capacity from competitive auctions in Morocco as well as by newer markets such as Saudi Arabia and Oman implementing auctions for the first time.

Competitive auctions are also a key driver of onshore wind additions, accounting for 20% of the region’s growth during 2020-25. However, lengthy procedures, delayed and rescheduled requests for bids, and long implementation procedures are major threats to the forecast. For instance, almost four years elapsed between the announcement of a winner and the signing of the PPA in Egypt’s latest auction, and in Saudi Arabia, no project has yet emerged from the 400‑MW tender opened in 2017. Inadequate grid integration is also preventing faster onshore wind expansion in Jordan and Tunisia. The accelerated case demonstrates that average annual growth could be almost 70% higher if these challenges were addressed.

Sub-Saharan Africa

South Africa will add around 380 MW of new capacity in 2020, reversing the stalled growth of the past two years. This capacity was tendered in 2015 with PPAs signed in 2018, and the outstanding capacity from the tender (600 MW) is forecast to be connected in 2021 and 2022. As the 2020 technology-neutral emergency tender requires strict operating standards and project commissioning by 2022, it implicitly excludes wind projects because of their long developmental lead times and low capacity factors.

Capacity additions lose momentum again after 2022 due to policy uncertainty. A tender for 6.8 GW of renewable capacity was announced in September 2020 with an expected auction round scheduled for Q2 2021, so an additional 500 MW is forecast for 2025, taking previous auction volumes and timelines into account. Force majeure notices for curtailment (sent by Eskom to wind power producers during the Covid‑19 lockdown) add an additional investment risk, as compensation for future curtailment has yet to be agreed upon.

Additional expansion in the accelerated case, based on the government’s targets for new wind power procurement (1.6 GW per year beginning in 2022), assumes greater policy certainty and the mitigation of network availability and curtailment risks.

Sub-Saharan Africa wind capacity additions 2017-2022 and average annual additions 2023-2025

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Wind energy development has been slow in Kenya, Ethiopia and Tanzania due to a variety of risks, including financial exposure, land acquisition challenges and lack of critical infrastructure for power projects.

Kenya will add 100 MW of new wind capacity in 2020. The development required a new 17‑km transmission line to connect to the grid, exemplifying the type of network upgrades needed for large-scale wind projects. Additions are expected to increase during 2023 to 2025, as two projects with a combined capacity of 170 MW are to be commissioned. Both projects have been delayed by land disputes, even after their PPAs were signed (ESI Africa, 2017; Nigeria Electricity Hub, 2020). 

Sub-Saharan Africa selected forecast wind projects, 2020-25

Country

Project

Capacity (MW)

Forecast CoD

Ethiopia

Aysha Phase II

120

2021

Ethiopia

Assela

100

2021

Ethiopia

Aysha Phase I

60

2022

Ethiopia

Aysha Phase III

120

2022

Ethiopia

Adama Phase III

150

2022

Kenya

Kipeto

100

2020

Kenya

Meru Phase 1

80

2023

Kenya

Lamu County

90

2025

Tanzania

Rift Valley Mufindi

2.4

2020

Tanzania

Miombo Hewani

100

2022

Ethiopia is forecast to start commissioning projects totalling over 500 MW of new capacity between 2021 and 2022. This capacity has received multiple streams of financing from international organisations, including a new round of capital in 2020 (ReveNews, 2020). Land rights issues have led to delays, as resettlement negotiations were conducted only after financial close (The Reporter Ethiopia, 2018). Although Ethiopia’s government has identified areas for additional wind development through 2025, it has not announced a policy scheme to support the plan.

The first onshore wind project in Tanzania was commissioned this year, with another 120 MW expected during 2022‑25 thanks to a grant from the Government of Finland (Windlab, 2018). A tender launched in 2018 for 200 MW is still under review and is included in the accelerated case.

As potential for wind energy development in sub-Saharan Africa is strong, the accelerated case demonstrates over 30% more additional capacity than the main case. However, creating policy frameworks to engage local communities and raising investments in transmission infrastructure will be necessary to facilitate increased development and shorten project timelines. Ensuring early access to financing would also reduce projects’ risk exposure, encouraging greater investment.