2020 was the best year in history for the global wind industry with 93 GW of new capacity installed – a 53 per cent year-on-year increase – but a new report published by the Global Wind Energy Council (GWEC) warns that this growth is not sufficient to ensure the world achieves net zero by 2050. According to the Global Wind Report 2021, GWEC’s 16th annual flagship report, the world needs to be installing wind power three times faster over the next decade in order to stay on a net zero pathway and avoid the worst impacts of climate change.
The 93 GW of new installations brings global cumulative wind power capacity up to 743 GW. In the onshore market, 86.9 GW was installed, an increase of 59% compared to 2019. China and the US remained the world’s largest markets for new onshore additions, and the world’s two major economies together increased their market share by 15% to 76%, driven by the Feed-in Tariff (FiT) cut-off in China and the scheduled phase-out of the full-rate Production Tax Credit (PTC) in the US, respectively.
On the regional level, 2020 was also record year for onshore installations in Asia Pacific, North America and Latin America. The three regions combined installed a total of 74 GW of new onshore wind capacity last year, or 76% more than the previous year. Due to the slow recovery of onshore installations in Germany last year, Europe saw only a 0.6% YoY growth in new onshore wind installations. Developing markets in Africa and the Middle East reported 8.2 GW onshoreinstallations last year, almost the same as in 2019.
In the offshore market, 6.1 GW was commissioned worldwide last year, making 2020 the second-best year ever. China installed half of all new global offshore wind capacity in a record year. Steady growth was recorded in Europe with the Netherlands taking the lead followed by Belgium, the UK, Germany and Portugal. The remaining new offshore wind installations in 2020 were shared by the US and South Korea. Total offshore wind capacity has now passed 35 GW, representing 4.8% of total global cumulative wind capacity.
While the first half of 2020 saw auctions being postponed or cancelled due to COVID-19, the sector bounced back with vigour in the second half of the year as key mature and emerging wind markets began to overcome the impacts of the pandemic. According to GWEC Market Intelligence, nearly 30 GW of new wind power capacity was awarded globally through auctions in the second half of 2020, which is a slight increase compared to the 28 GW awarded during H2 2019.
Although only 1 GW offshore wind capacity was awarded through auctions worldwide, more than 7 GW of offshore wind auctions/ tenders were launched in 2020. This surge in new capacity to be auctioned is a clear signal that the industry is back on track and that the global pipeline of wind power projects continues to grow.
Through technology innovations and economies of scale, 2020 saw wind power continue to build its competitive advantage throughout the world. Last summer, a consortium of Shell and Eneco won the third zero-subsidy offshore wind tender in the Netherlands. In Latin America, as wind power already had very competitive prices, private auctions or bilateral PPAs have already emerged as an alternative mechanism to government auctions to drive growth. According to BloombergNEF, 6.5 GW wind power was signed through corporate PPAs globally last year, 29% lower than the previous year. Considering the fact that COVID-19 disruptions across the world have caused revenues to plummet for many corporates, the level of commitment to sustainable green energy remains impressive.
Last year also witnessed governments of countries such as China, Japan and South Korea making net zero/carbon neutrality commitments, and similar commitments were also made by major corporates including oil and gas companies. To reach the net zero targets, completing a systematic and radical energy transition from fossil fuels to renewable energy and low-carbon solutions is imperative. The current crisis offers a unique window of opportunity to put the world on a sustainable trajectory and meet our international climate goals, but we must act now – or miss the opportunity. Although reaching net zero will require bold actions by a large number of sectors and actors, wind power is placed to be one of the cornerstones of green recovery and to play an important role in accelerating the global energy transition.
After an unusual 2020, global wind market growth is likely to slow down in the near-term primarily due to an expected drop in onshore installations in China and the US following the expiry of incentive schemes. Nevertheless, the market outlook for our forecast period remains positive. GWEC Market Intelligence expects that over 469 GW of new onshore and offshore wind capacity will be added in the next five years – that is nearly 94 GW of new installations annually until 2025, based on present policies and pipelines. GWEC hopes and expects that governments will significantly increase their ambitions and targets following COP26, and for that reason they are upwardly revising their forecasts for the GWR2022.
The CAGR for onshore wind in the next five years is 0.3% and GWEC expects annual installation of 79.8 GW. In total, 399 GW is likely to be built in 2021-2025. The CAGR for offshore wind in the next five years is 31.5%. The level of annual installations is likely to quadruple by 2025 from 6.1 GW in 2020, bringing offshore’s market share in global new installations from today’s 6.5% to 21% by 2025. In total, more than 70 GW offshore is expected to be added worldwide in 2021-2025.
Global wind power growth must triple over next decade to achieve net zero
As the clean energy technology with the most decarbonisation potential per MW, the report shows that the current rate of wind power deployment will not be enough to achieve carbon neutrality by the middle of this century, and urgent action must be taken by policymakers now to scale up wind power at the necessary pace.
According to the scenarios that have been established by international energy bodies such as IRENA and the IEA, the world needs to be installing a minimum of 180 GW of new wind energy every year to limit global warming to well below 2 °C above pre-industrial levels, and will need to install up to 280 GW annually to maintain a pathway compliant with meeting net zero by 2050. This means that the industry and policymakers need to work collaboratively and act fast to accelerate deployment.
GWEC is calling on policymakers to take a true ‘climate emergency’ approach to allow a faster ramp up including:
- Eliminating red tape and reforming administrative structures in order to speed up and streamline licensing and permitting for projects
- Carry out a massive increase in investments in grid, ports and other infrastructure needed to allow the ramp up in installations
- Re-vamp energy markets to ensure that they account for the true social costs of polluting fossil fuels and facilitate a rapid transition to a system based on renewable energy.