Denmark: Wind Becomes Mainstream Technology Choice

With 270GW of wind installations worldwide, wind has clearly entered the mainstream. Over 70% of top owners view wind as a key part of a diversified generation portfolio strategy, while 85% of these owners seek to add value throughout the development value chain all the way to O&M; demonstrating that wind is now seen as a core generation technology.

The goal of many within the industry is for wind to be the most cost-competitive electricity source, free of subsidies and preferential treatment, since these are anathema to long-term sustainable industry growth. However the transition from a subsidised to an unsubsidised industry at a time of reduced economic growth and some balance sheet pressure in Western markets is affecting the investment strategies and portfolio choices of asset owners.

As financial constraints lead to the prioritization of returns, capital recycling, and balance sheet restoration; MAKE has observed a marked rise of co-ownership strategies, an increase in secondary asset trading, and new financial owners being drawn into the sector. A predominant favour towards onshore investments continues to be the trend but a small core of offshore specialists has emerged, who have the experience and skills to develop and operate assets in this environment.

Utilities and IPPs are seeking co-ownership opportunities, with partnerships with financial investors viewed as extremely mutually beneficial.  As a result, MAKE has observed an increase in the trading of assets between 2011 and 2012 and is on track to reach over 6GW in 2013, equivalent to nearly 16% of MAKE’s expectation for grid-connected installations in 2013.

Global ownership of wind power assets continues to shift significantly east, owing to the high levels of installations in the China market. China will constitute 40% of the global market from 2013 to 2020, enabling Chinese owners to
control the top rankings for installed wind capacity. Asset divestitures by Western owners and slow growth in traditional Western markets will accelerate Chinese dominance.

However, recent policy driven anomalies have led to a near 9GW annual growth in the US and Europe, while China’s annual growth decreased over 2GW. Western companies climbed up the rankings for capacity additions in 2012, claiming five of the top 10 positions versus only three in the previous year. US market growth provided the majority of this boost.

MAKE expects an 85% drop in the US in 2013, which will affect owners who are dependent on the US market for growth significantly. New capacity in Europe is also expected to fall, which, when combined with the US outlook, will change the composition of the ranking for annual additions dramatically.

MAKE’s 2013 Global Wind Power Asset Ownership report is a 60-page report containing over 60 charts, tables and graphs providing in-depth analysis of global wind power asset ownership. Key topics covered include growth strategies of leading asset owners, ownership structures of wind companies, finance availability, finance models, asset co-ownership, asset sales and rankings of global and regional asset owners.

The goal of many within the industry is for wind to be the most cost-competitive electricity source, free of subsidies and preferential treatment, since these are anathema to long-term sustainable industry growth. However the transition from a subsidised to an unsubsidised industry at a time of reduced economic growth and some balance sheet pressure in Western markets is affecting the investment strategies and portfolio choices of asset owners.

As financial constraints lead to the prioritization of returns, capital recycling, and balance sheet restoration; MAKE has observed a marked rise of co-ownership strategies, an increase in secondary asset trading, and new financial owners being drawn into the sector. A predominant favour towards onshore investments continues to be the trend but a small core of offshore specialists has emerged, who have the experience and skills to develop and operate assets in this environment.

Utilities and IPPs are seeking co-ownership opportunities, with partnerships with financial investors viewed as extremely mutually beneficial. As a result, MAKE has observed an increase in the trading of assets between 2011 and 2012 and is on track to reach over 6GW in 2013, equivalent to nearly 16% of MAKE’s expectation for grid-connected installations in 2013.

Global ownership of wind power assets continues to shift significantly east, owing to the high levels of installations in the China market. China will constitute 40% of the global market from 2013 to 2020, enabling Chinese owners to

control the top rankings for installed wind capacity. Asset divestitures by Western owners and slow growth in traditional Western markets will accelerate Chinese dominance.

However, recent policy driven anomalies have led to a near 9GW annual growth in the US and Europe, while China’s annual growth decreased over 2GW. Western companies climbed up the rankings for capacity additions in 2012, claiming five of the top 10 positions versus only three in the previous year. US market growth provided the majority of this boost.

MAKE expects an 85% drop in the US in 2013, which will affect owners who are dependent on the US market for growth significantly. New capacity in Europe is also expected to fall, which, when combined with the US outlook, will change the composition of the ranking for annual additions dramatically.

MAKE’s 2013 Global Wind Power Asset Ownership report is a 60-page report containing over 60 charts, tables and graphs providing in-depth analysis of global wind power asset ownership. Key topics covered include growth strategies of leading asset owners, ownership structures of wind companies, finance availability, finance models, asset co-ownership, asset sales and rankings of global and regional asset owners.

[mappress]

Press release, October 9, 2013; Image: consultmake