Global Wind Energy Industry Overview Report
Introduction
Energy sources from wind use the kinetic energy created by air in motion to produce electricity through the various turbines offered in the market. The amount of energy produced majorly depends on the size of the turbine and the lengths of its blades which is directly associated with the wind speed. Wind and solar energy are currently the fastest-growing renewable technologies globally due to falling costs, targeted policy support, and the wider acceptance of global markets of the competitiveness of renewables compared to traditional fossil fuels.
Global wind generation capacity has increased by around 75% in the past 20 years with onshore wind projects leading the way with an installed capacity of 698GW in 2020 with offshore following with 34GW and offering tremendous potential for growth in the future.
Wind Energy Analysis
As seen in Figure 1, Figure 2, and Figure 3, onshore has seen a stable improvement of technology due to turbine price drop, turbine technology progress, and the increase of supply chain competition. A global weighted- average cost of electricity (LCOE) has seen a fall of 56% since 2010 from EUR 0.078/kWh to EUR 0.034/kWh in 2020 with a predicted average reaching EUR 0.035/kWh in 2030 and EUR 0.022/kWh in 2050. Average capacity factors rose from 27% to 36% with steady increasing projections reaching a capacity of 52% by 2050. The total CAPEX had a decline of 31% resulting in a 2020 cost of EUR 1192/kW with projected cost reaching a low EUR 946/kW in 2030 and EUR 726/kW in 2050.
On the other hand, larger turbines, longer blades with higher hub heights, and access to higher winds saw offshore wind farms move further from the shore which resulted in a capacity factor increase of 8% from 2010 to 2020 with projections suggesting a capacity of 47% and 52% for years 2030 and 2050. Also, as seen in Figure 2, a reduction of 48% of LCOE in the years 2010-2020 is evidence suggesting the implementation of more offshore farms around the globe with projections in 2030 and 2050 reaching LCOE of EUR 0.062/kWh and EUR 0.044/kWh respectively.
- Figure 1: Past, current, and future Onshore and Offshore CAPEX costs © Structures Insider
- Figure 2: Past, current, and future Onshore and Offshore LCOE costs © Structures Insider
- Figure 3: Past, current, and future Onshore and Offshore capacity factor © Structures Insider
Wind energy technical aspect
Turbine efficiency and manufacturing costs improved immensely over the last decade with the current offshore turbine MIH Vestas having a specific power of 450 W/m2, the most powerful wind turbine of the present. Nevertheless, the choice of turbine suitability depends on the project specifics. For example, high-specific power turbines are more suitable for regions with high average wind speeds.
Therefore, to reach the same capacity factor (yearly average power production/rated power production) the appropriate turbine-specific power should be chosen by giving the most focus on average wind speeds. Studies predict that the capacity density of offshore turbines will reach values of 5.36 MW/km2 with onshore farms in Europe having an average space density of 19.8 (6.2-46.9) MW/km2.
A variation of offshore foundation types is present mainly depending on the water depth, soil conditions, and the size of the turbine. 77% of offshore wind farms completed in 2016 suggest steel monopiles as the option of choice. The latest technology of floating foundations has the potential to decrease CAPEX cost by 65% in scenarios simulated from 2027 to 2040. Moreover, floating substructures have the prospect of exploring locations with deep waters that offer a great opportunity to capitalize on wind energy.
Wind Energy Sources of finance
Banks have issued more debt capital for wind projects, considering wind as a mature technology where risks can be accurately priced compared to other renewable energies that are not yet proven. The finance of wind projects divides into corporate and project finance. Since 2016, European onshore projects have seen 57% of their financing come from project finance and 43% from corporate finance. However, offshore projects, due to their size and higher risks, have been completely dominated by project finance, leading to project ownership by a Special Purpose Company (SPC).
The debt ratio of wind projects has increased in the latest years to 75-90% suggesting that shareholders and banks find it a safe investment. As seen in Figure 4, global average annual onshore wind power investments will more than double from 2018 until 2030 (EUR 128 billion/year) and more than triple over the years till 2050 (EUR 186 billion/year).
Figure 4: Annual Investments of Onshore and Offshore Predicted till 2050 © Structures Insider
Environmental Impacts
Wind power life cycle emissions result from the manufacture, construction, maintenance, and decommissioning processes of wind turbines. A typical turbine contains 89.1% of steel, 5.8% fiberglass, 1.6% copper, 1.3% concrete, and other main materials making it a high carbon emission intense product. Due to the large quantity of steel required, tower manufacturing responds to around 51% of the emissions of gCO2/kWh of all components produced.
Researchers have found that manufacturing/extraction of raw materials and installation stages account for around 90% of the total life cycle emissions of onshore and offshore wind farms. Transport activities contribute to 5.6% of carbon emissions, while maintenance accounts for 3.5%. The percentage may vary offshore due to the higher maintenance requirements and access to the construction site.
Studies estimated carbon emissions of 15 and 12 gCO2e/kWh for onshore and offshore wind farms respectively. Further studies by (Wang et. al, 2019), found that the annual life cycle GHG emissions of a 2MW turbine for a 20-year lifetime offshore and onshore is 75904.84tCO2e and 33278.19tCO2e respectively.
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Source: Vietnam Insider
