Market and Industry Outlooks
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Wind energy converts the kinetic energy created by air in motion into electrical energy via wind turbines. When wind hits the blades of a turbine, it causes them to rotate and turn the rotor connected to them. This transforms kinetic energy into rotational energy used to power a generator. Electricity produced by the generator can be used immediately when connected to an electrical grid or stored for later use.
The size of the turbine and its blades determine how much electricity can be harvested from the wind. Energy output is proportional to the dimensions of the rotor and to the cube of the wind speed. The faster the wind speed, the more power generated.
Wind-turbine capacity has increased over the years. Turbines built in 1985 had a typical rated capacity of 0.05 megawatts (MW) and a rotor diameter of 49 feet. Today’s wind power projects have turbine capacities of about 2 MW onshore and 3–5 MW offshore.
Wind power is one of the fastest-growing forms of renewable technologies thanks to technology innovations and economies of scale. The global wind power market has nearly quadrupled in size over the past decade and established itself as one of the most cost-competitive and resilient power sources across the world. Wind is now the largest source of renewable power in the United States.
2020 was an especially exciting year for the wind energy industry, with a 52% year-over-year increase of new wind purchases. Governments, companies, and investors around the globe are seeing tremendous results from installing wind turbines, particularly in the developing offshore turbine sector. This record growth was driven by a surge of installations in China and the US – the world’s two largest wind power markets–who together installed 75% of the new installations in 2020 and account for over half of the world’s total wind power capacity.
Total global wind power capacity is now up to 743 GW, helping the world to avoid over 1.1 billion tons of CO2 annually, which is equivalent to the annual carbon emissions of the entire South American continent.
While 2020 was the best year in history for the global wind industry, 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 scenarios established by international energy bodies such as IRENA and the IEA, the world needs to install 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 meet net-zero goals by 2050.
The outlook for new wind installations is looking promising for several regions, as indicated in future estimates:
2021 | 2022 | 2023 | 2024 | 2025 | |
---|---|---|---|---|---|
Asia Pacific | 38.5 GW | 43.7 GW | 47.7 GW | 50.3 GW | 53.5 GW |
Europe | 15.9 GW | 14.1 GW | 15.6 GW | 14.9 GW | 16 GW |
Africa & the Middle East | 2 GW | 2.7 GW | 3.2 GW | 3.9 GW | 4.3 GW |
North America | 14.7 GW | 8.3 GW | 6.5 GW | 10.5 GW | 10.6 GW |
Latin America | 5.3 GW | 4.6 GW | 4.4 GW | 4 GW | 4 GW |
Total | 76.3 GW | 73.4 GW | 77.4 GW | 83.7 GW | 88.3 GW |
2021 | 2022 | 2023 | 2024 | 2025 | |
---|---|---|---|---|---|
Asia Pacific | 8.3 GW | 4.5 GW | 5.5 GW | 7 GW | 10.1 GW |
Europe | 2.9 GW | 3.2 GW | 6.5 GW | 3.9 GW | 10.3 GW |
North America | 0 GW | 0 GW | 1.1 GW | 3.5 GW | 3.6 GW |
Total | 11.2 GW | 7.7 GW | 13.1 GW | 14.3 GW | 23.9 GW |
Wind energy doesn’t pollute the environment like coal, natural gas, or oil, which all create harmful byproducts like particulate matter, nitrogen oxides, and sulfur dioxide. Once established, wind turbines don’t require burning any fossil fuels to operate, or produce harmful emissions that cause acid rain, smog, or greenhouse gases. Wind is also a naturally-occurring resource that will never run out, so there are no supply concerns.
While wind farms or individual turbines require an upfront investment, once up and running, these farms produce one of the lowest-priced forms of energy available today—with wind power costing 1-2 cents per kilowatt-hour after the production tax credit. Even more enticing, electricity from wind farms is sold at a fixed price over a long period (e.g. 20+ years) and its fuel is free, which eliminates the price uncertainty that fuel costs add to traditional sources of energy.
According to the Wind Vision Report, wind has the potential to support more than 600,000 jobs in manufacturing, installation, maintenance, and supporting services by 2050, increasing employment opportunities for Americans.
Additionally, new wind projects account for annual investments of over $10 billion in the U.S. economy, making the U.S. highly competitive in the clean energy economy while lessening the country’s dependence on imported energy sources.
It can be difficult to predict how much electricity a wind turbine will generate over time, as it depends on the weather. Wind speeds may be too low to turn the turbine’s rotor. This means wind turbines need to be complemented by energy storage technology and/or other green energy sources.
Areas with the highest level of wind production that are ideal for wind turbines are often far from cities, where electricity is needed most. This requires transmission lines to be built, linking the two disparate areas. However, building just a few already-proposed transmission lines could significantly reduce the costs of expanding wind energy in the future.
Even though the cost of wind power has decreased dramatically in the past several decades, wind projects must be able to compete economically with the lowest-cost source of electricity, and some locations may not be windy enough to be cost-competitive.
Additionally, wind power development projects also might not be the most profitable use of land—alternative uses may be more highly valued than electricity generation.
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Private asset management company focusing on portfolio management in green energy and renewables…..
Private asset management company focusing on portfolio management in green energy and renewables…..
Private asset management company focusing on portfolio management in green energy and renewables…..