The Renewables Landscape: Wind at the Threshold

Introduction
Utility companies have largely fallen behind the curve on renewable generation and are now increasingly applying global strategies to leverage major renewable growth opportunities at a time of record valuations in the sector. The Renewables Landscape – Wind at the Threshold is a report that analyses the current wind power generation landscape across key European and world markets.

Report Highlights
Highlights
The renewable energy industry is growing rapidly on the back of technological advancements, political will and subsidies, with the majority of new capacity now coming from outside of Europe. Crucially, record investment and growth has been underpinned by extremely consistent and predictable, albeit low, wind turbine power generation performances.

Utilities’ wind asset ownership remains a modest part of their overall mix whereas institutional investors and IPPs own a significant share of the world's wind assets. Heightened M&A activity and organic new build is keeping EU wind energy ownership in a state of flux at a time when the industry is restructuring to overcome significant challenges.

Policies have had a major impact on the speed and extent of renewable energy development, despite many design and implementation problems. Of particular importance is the proposed 2020 EC ‘target-and-trade’ system which intends to support renewable power in the EU but which could instead undermine existing European wind power installations.
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TABLE OF CONTENTS
DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
SOURCES 1
ANALYSIS 2
Historically, large hydro has been the only commercially mature renewable technology; however, today, wind is at the threshold 2
The renewable energy industry is growing rapidly on the back of technological advancements, political will and subsidies 2
Wind power has become one of the broadest-based renewables technologies, with installations in more than 70 countries 4
Global installed wind capacity is experiencing significant growth, with the majority of new capacity now outside Europe 5
The growth of global wind energy generation has outpaced that of total global energy generation 10-fold 7
Wind is often considered an unreliable generation technology, yet wind turbine load factors have been very consistent, albeit low 8
While wind energy may be variable, it need not be unpredictable 9
In a market that is increasingly characterized by the rise of the portfolio investor, utilities with renewable energy targets are building wind portfolios through acquisitions 10
Among the major European utilities, the top 25 wind asset owners account for 20% of the total global installed wind capacity 10
The rise of the portfolio investor: institutional investors and IPPs own a significant percentage of the total installed wind capacity 11
Booming demand means that the global wind energy industry must now overcome significant challenges 12
Supply chain shortages have sparked industry restructuring 13
Policies have had a major impact upon the speed and extent of renewable energy development, despite many design and implementation problems 14
At present, at least 64 countries have a national target for renewable energy supply, including all 27 EU countries 14
The RES-E directive sparked the adaptation of legal frameworks in all EU countries, and several countries outside Europe 15
The EC intends to support the 2020 targets via a harmonized 'target-and-trade' system 15
Countries with an existing share of final energy supply that meets or exceeds the draft directive's 'interim trajectory' will benefit most 16
The directive is designed to support renewable power in the EU, but could, instead, undermine existing local support schemes 17
Utilities have fallen behind the curve on renewable generation and are now tasked with applying successful strategies to tap major global growth opportunities 19
Utilities have fallen behind the curve on renewable generation and are only now beginning to catch up 19
Strong global growth will continue on the back of technology maturity, policy incentives and heightened investor appetite 19
Utilities have rapidly introduced global wind generation strategies by growing wind portfolios, mostly through acquisition 20
APPENDIX 21
Ask the analyst 21
Datamonitor consulting 21
Disclaimer 21
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LIST OF FIGURES
Figure 1: Global renewable electricity capacity reached 207GW in 2006 2
Figure 2: in 2006, the world's total renewable installed capacity accounted for less than one third of the total large hydro capacity and less than 5% of the world's total power generation capacity 3
Figure 3: Global installed wind power capacity increased by an estimated 21GW in 2007 4
Figure 4: Germany led the way in total installed wind energy capacity in 2007 5
Figure 5: The US led the way in new installed wind energy capacity in 2007 6
Figure 6: European wind generation accounted for just 3% (98TWh) of the total energy generated in 2007 (3,444TWh) 7
Figure 7: EU wind energy generation has grown inline with capacity, suggesting consistent wind patterns throughout the EU wind fleet 8
Figure 8: From 2003 to 2005, load factors across the world's wind fleets remained largely in the 18%?25% range, and never exceeded a 4.5 standard deviation 9
Figure 9: Despite heightened green credentials, utilities' installed wind capacity remains a modest part of their overall generation mix 10
Figure 10: A combination of heightened M&A activity and organic new build is keeping European wind energy ownership in a state of flux 11
Figure 11: The challenges facing the industry are borne from five main causes 12
Figure 12: The EU's national targets for renewables' share of electricity production typically ranges from 5%-30%, but reaches 3.6% in Hungary and 78% Austria. 14
Figure 13: No less than 60 countries (37 developed and transition countries and 23 developing countries) have some form of policy to promote renewable power generation 15
Figure 14: Using 2005 as a baseline, each Member State will be required to increase their share of final energy supply. 17
Figure 15: Onshore and offshore wind will experience varying degrees of growth over different time frames 19
Figure 16: Utilities can access three main types of entry strategies to scale their wind portfolios globally 20
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