Renewable Bulk Power Sources: World Markets for Large Wind Turbines

Report Highlights

• Conventional fossil fueled, nuclear and large hydro plants still provide 98% of world electricity supplies.
• Large wind turbine factories are now operating in all but a handful of western European countries, in North America, Asia, Australia and Latin America.
• A frantic pace of development projects will resume in the U.S. in 2003 ahead of the expiration date of the Production Tax Credit (12-31-03).
• Before 2010, large wind turbines will account for a quarter of all new bulk power production capacity installed annually worldwide.
• The majority of Kyoto CDM projects seem destined to go to China.

INTRODUCTION

STUDY GOALS AND OBJECTIVES

BCC's goal in conducting this series of reports on markets for renewable energy technologies was to determine the technical, infrastructure, and market status of the world renewable energy production equipment industry and to assess the market growth potentials over a five-year period from 2002 to 2007. This timely report focuses on world markets, technologies, regulations, legislation, incentives, carbon funds, and forecasts for utility-scale wind turbines.

A chief goal of this study was to characterize and quantify the world markets for large wind turbines on global, national, and local bases. Extensive efforts were expended to fully characterize the political, economic, environmental, and regulatory conditions at each level of geographic detail, including consideration of both onshore and offshore applications. These influential factors were taken into account when developing 5-year forecasts for the evolving large wind turbine markets.

The environment for large wind turbines is fully characterized to include local and national legislation and financial incentives, the pertinent regulatory regimes, and the environmental factors that are influencing a sustaining surge in interest and investment in renewables.

The renewables industry is not evolving in a vacuum. This study considers the market position of conventional large power plants, i.e., coal, combined cycle gas turbines, large hydro and nuclear, in the context of the world market for bulk power. This exercise was performed in order to contrast the forecast for large wind turbine market growth with the cost of power and the expected capacity growth for other bulk power sources, both renewable and conventional.

Finally, this study was executed to examine the market impacts and financial implications of environmentally driven political actions such as the Kyoto Protocol and the Clean Air Act.

REASONS FOR DOING THIS STUDY

For whatever reasons — and there are many ¾ the renewable energy technologies industry has finally struggled its way into the realm of Big . Large wind turbines climbed into the $1 billion a year realm in the mid-1990s and surpassed $6 billion in 2001. The photovoltaics (PV) market reached $1 billion annually in 2000.

These two premier renewable technologies are being joined by several established technologies running on biomass gasifiers and waste gases, run of the river potential energy, geothermal energy and ocean energy conversion (OEC) technologies.

Several of these applications are demonstrating dramatic growth patterns. This BCC series was designed to pinpoint where those growth scenarios are most concentrated and which technologies they involve, to quantify their current and future shipments of equipment and to place a dollar value on those shipments.

The focuse of this report is Large Wind Turbines. This report examines the forces driving the rapid growth of renewables markets, including regulatory and financial incentive schemes that governments, private organizations and international organizations have put into place to foster renewables industries. The impact the Kyoto Protocol is having on market development is examined from the viewpoint of political decisions and the growth in renewables funding in order to reduce the level of greenhouse gas emissions.

The quickly expanding market for renewables has now become large enough so that it has begun to impinge on the market share of conventional power generation technologies such as coal and gas fueled power plants, standalone diesel powered generators, and large hydropower. This report quantifies the pace of penetration of Large Wind Turbine power production capacity into the global market for bulk power.

This report was prepared in a manner that compares and contrasts what can be expected as the world begins its shift from power generation based on consumption of limited and polluting resources to power extraction from seemingly endless and clean sources of energy. This shift is altering the flow of money from established power production industries to alternative sources of energy. Answers were sought as to the pace of this shift, its magnitude, and the implications for the fiscal evolution of the Large Wind Turbine industry and its players.

CONTRIBUTIONS OF THE STUDY AND FOR WHOM

This study covers the world markets for large wind turbines. We present the industry economic status; technological descriptions and issues; political implications; environmental influences; market factors and potential; and project shipments of units, capacities and dollar values from 2002 to 2007. We quantify the market development on global, regional, national, state and provincial bases in the time frame covered by the report.

This study is of interest to equipment manufacturers, project developers, equipment integrators, distributors, contractors, government regulators, government funding and energy agencies, international development banks and agencies, investment bankers and underwriters, national and state clean energy fund administrators, green power marketers, component manufacturers, engineering firms, utilities, cooperatives, insurance underwriters, and energy services companies.

SCOPE AND FORMAT

The scope of this study encompasses world markets for large wind turbines. BCC analyzes large wind turbine technology, assesses the status of the world market at various levels of geographic detail, examines the evolution of the technology and the industrial infrastructure and their impact on future markets, and presents forecasts of market evolution and growth over the next five years. Technological issues including the latest trends toward large offshore wind farms are discussed.

Other influential factors such as Green Power programs, green tags/certificates, Social Benefit Funds, Clean Energy Funds, Renewable Portfolio Standards, the Kyoto Protocol and the Clean Development Mechanism, World Bank/IDF funds, environmental mandates, and zoning issues are also examined.

BCC analyzes the industry on a worldwide basis, from the perspectives of manufacturing, product and market evolution, technologies consumption and resource magnitude. We examine government support programs and legislation and advocacy activities of renewable energy industry organizations in major regions of the world.

The report evaluates market opportunities for large wind turbines in terms of the regulatory practices of nations, provinces, states and through international agreements; the financial incentives and barriers to uptake of large wind turbine technologies; and the capability of a given area of the world to utilize large wind turbines.

METHODOLOGY

BCC presents an analysis, by each renewable energy power production technology, of the capacity shipped in 2002 and projected shipments through the year 2007. The market values are in constant 2002 U.S. dollars and, where appropriate, in terms of units and installed capacities.

The forecasts that were generated cover world, regional, national and, where appropriate, provincial and state markets.

INFORMATION SOURCES

BCC surveyed numerous companies, consultants, and government branches to obtain data and background information for this study. Included were manufacturers of large wind turbines, balance of plant component manufacturers, wind project developers, utility executives, green power marketers, construction firms, meteorologists, resource prospectors, permitting specialists, farm cooperatives representatives, government regulators, wind industry consultants, clean energy fund managers, investment bankers, wind farm managers, and legislators. We also spoke with green power marketers and energy services company representatives. In addition, we compiled data from financial and trade information, government sources and technical societies, and online news services.

AUTHOR'S CREDENTIALS

Michael Kujawa is a market analyst and renewable energy consultant. He has authored a number of reports on markets for distributed generation technologies, U.S. power markets during deregulation, cogeneration equipment, fuel cells and photovoltaics. He has a background in aerospace technologies, marine operations simulation research and wind project development. Mr. Kujawa published a study of the wind regime over the south shore of Long Island, New York, in 1983, and has been acting in a consultant role to companies seeking to develop the wind resource on Long Island and surrounding waters for over two decades. He also recently acted as a development executive for a startup company engaged in the distributed generation on the East Coast, the Caribbean and South America.