MAKE Consulting: 10 Surprises for Global Wind Power Industry in 2013 (Denmark)

Moving through these final stages of what has been a challenging period for the global economy, the wind power industry is looking forward to better times and renewed demand. The path back to profitability and growth, however, is not without its challenges and the industry is expected to undergo some significant changes in the process.

MAKE Consulting expects 2013 to bring with it many new developments and highlights below its “10 Surprises for 2013”.  These are potential changes or events for 2013 in the industry that are in some cases potentially disruptive in a positive or negative way as well as controversial but which have a 50% chance or more of being correct.  Thinking around these will continue to be a focus for MAKE Consulting Research activities:

1.       Positive Policy Momentum in the US – After over 4 years of poor and reactive energy policy, the US moves aggressively to regain leadership of the green movement. A  Long term PTC extension with sunset provision is enacted in the fall of 2013.

2.       Impetus for long term Renewables targets in Europe returns – Driven by ever more persuasive global warming findings and with the EU economic crisis starting to recede, EU leaders finally turn their attention to renewing even longer term commitments to Renewables with wind and solar being the centrepiece of green electricity. Binding long-term targets to 2030 are drawn up for approval in 2014/15.  These include the first steps for a European super-grid to be put in place to reduce regional market imbalances and boost prospects for offshore wind.

3.       Major M&A finally takes place in the manufacturing sector involving a major EU OEM.

4.       Fossil fuel prices rise sharply – Tensions in the Middle East and North Africa rise to a boil as concerns over Iran’s nuclear capability and simmering extremism across Northern Africa break fragile peace across the region, leading to a rise in fossil fuel prices across the globe.

5.       Local content requirements are extended – In spite of the WTO ruling on Ontario’s local content requirement, local content requirements continue to proliferate in emerging markets with governments attempting to capture value of greening power supply.  This is turn stimulates innovation in supply chain strategies to optimize supply chain efficiency and cost of market access.

6.       Relaxation of capital adequacy requirements – Continued European and US Banking weakness leads to a relaxation of Basel III capital adequacy requirements, leading to a recovery in Project Finance markets and reinvigorating IPPs/Utilities ability to build new wind assets.

7.       Ban on fracking – Heightened environmentalism in Europe results in a ban on EU fracking, forcing asset owners to reappraise their long term generation mix strategies.

8.       China introduces grid-operator and provincial quotas – Continued reform and rising concerns on pollution cause China to introduce grid-operator and provincial renewable quota targets, helping the China domestic market to rebound.

9.       Transmission delays slow projects in Latin America – The slow build-out of transmission in Brazil and Mexico pushes back projects in both countries by up to 3 years.

10.   PMDD turbines to improve cost position – Decline of rare earth metal prices continues and identification of heavy rare earth oxide substitutes enables permanent magnet generator direct drive (PMDD) turbines to gain superior cost position over geared turbines – but mostly in MMW segment (3MW+).

As the Global Wind Power Industry is on the cusp of recovery, the key to success will lie in strong and well-founded decisions that are supported by accurate and trust-worthy outlooks. MAKE Consulting’s intelligence services are aimed at providing the industry with best-in-class outlooks and a multi-faceted view that is essential for developing successful business strategies. MAKE Consulting’s new and improved research portfolio will now be enhanced with sharper analytics and deeper insights with a wider scope.

MAKE Consulting’s intelligence publications will contain greater and more detailed regional analysis that takes a closer look at new and emerging markets. New topics such as Global Levelized Cost of Energy (LCOE), Global Wind Power Logistics and Transport Analysis, Global Wind Power Assets IRR Screen, Global Wind Power Supply Chain Raw Materials & Commodities and Global Wind Policy, Electricity Demand & Generation Mix Forecasts will provide a broader understanding of the industry.

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Press release, February 5, 2013