Chapter4, Ksiązki, WIND ENERGY - THE FACTS

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WIND ENERGY - THE FACTS
PART IV
INDUSTRY AND
MARKETS
Acknowledgements
Part IV was compiled by Angelika Pullen of the Global
Wind Energy Council (GWEC); Keith Hays of Emerging
Energy Research; Gesine Knolle of EWEA.
We would like to thank all the peer reviewers for
their valuable advice and for the tremendous effort
that they put into the revision of Part IV.
Part IV was carefully reviewed by the following
experts:
Ana Estanquiero
INETI
Birger T. Madsen
BTM
Peter Madigan
BWEA
Frans van Hulle
EWEA
Peter Raftery
Airtricity
Isabel Blanco
UAH
Alberto Ceña
Aeeolica
Paz Nachón López
Acciona
Anna Pasławska
Polish Wind Energy Association
Charles Dugué
ENR
Guillaume DUCLOS
ENR
PART IV
INTRODUCTION
Europe is steadily moving away from conventional power
sources and towards renewable energy technologies,
a trend driven by the world’s most signiﬁ cant piece
of renewable energy legislation to date: the 2001 EU
Renewable Electricity Directive. The move towards
renewables has been further underpinned by the
European Council’s 2007 decision to establish a bind-
ing target of 20 per cent of EU energy from renewable
sources by 2020.
Thermal power generation now stands at about
430 GW and, combined with large hydro and nuclear,
has traditionally served as the backbone of Europe’s
power production. In recent years, however, renewable
energy, and speciﬁ cally wind energy, have become
mainstream sources of power. Between 2000 and
2007, wind energy capacity in Europe more than
quadrupled, from 13 GW to 57 GW. The 2007 total of
57 GW represents over 5 per cent of all power
generation capacity in Europe and 30 per cent of all
new power capacity installed since 2000. The bulk of
European wind energy capacity has been concentrated
in three countries, Germany, Spain and Denmark,
which are now home to 72 per cent of all capacity
in Europe.
Wind’s spectacular European growth has attracted
a broad range of players across the value chain, from
local engineering ﬁ rms to global vertically integrated
utilities. There is strong competition, with about a
dozen key suppliers vying for market share. However,
the leading suppliers consolidated their dominant posi-
tion in 2003–2004. Recent supply chain pressure has
been a key competitive driver in wind turbine supply,
and the relationships between turbine manufacturers
and their component suppliers have become increas-
ingly crucial. As more and more players look to develop,
own or operate wind farms, wind power markets now
include dozens of multinational players, illustrating the
industry’s increase in size and its geographic expan-
sion. Between 2005 and 2006, the industry also saw
more participation by utilities.
If wind energy investment has been tremendous in
the past, there is no sign that the speed of develop-
ment will decrease. Europe’s top 15 wind utilities and
independent power producers (IPPs) have announced
that pipelines of over 18 GW will be installed between
2007 and 2010, translating into well over €25 billion
worth of investments in wind plants. Overall, the
European wind market is expected to grow at a rate of
over 7–9 GW every year until 2010.
The growth of the European wind energy sector has
also recently been mirrored in other continents, most
notably in China, India and the US. In 2007, over
11 GW of new wind capacity was installed outside
Europe, bringing the global total up to 94 GW. In terms
of economic value, the global wind market was worth
about €25 billion in 2007 in terms of new generating
equipment.
Both in Europe and further aﬁ eld, however, wind
energy expansion is facing a number of barriers, both
administrative and in terms of grid access. These
barriers are created when administrative or ﬁ nancial
procedures are opaque or inconsistent. They can also
occur in relation to grid connections, and often pose
serious obstacles to investment in wind energy, as
well as preventing it from achieving competitiveness
with other power-generating technologies.
IV.1
WIND IN THE EUROPEAN POWER MARKET
Renewable Energy Policies in Europe
The strong development of wind power can con-
tinue in the coming years, as long as the clear com-
mitment of the European Union and its Member
States to wind power development continues to
strengthen, backed up by effective policies.
Therefore, the adoption of the Renewable Energy
Directive in December 2008 represents an historical
moment for the further development of wind power in
Europe. The directive is a breakthrough piece of leg-
islation that will enable wind power and other renew-
ables to push past barriers and conﬁ rms Europe as
the leader of the energy revolution the world needs.
Under the terms of the directive, for the ﬁ rst time
each Member State has a legally binding renewables
target for 2020 and by June 2010 each Member State
will have drawn up a National Action Plan (NAP)
detailing plans to meet their 2020 targets.
Key aspects of the directive are:
1. Legally binding national targets and indicative
trajectory: the 20% overall EU renewables target is
broken down into differentiated, legally binding
national targets. The Member States are given an
‘indicative trajectory’ to follow in the run-up to 2020.
By 2011–12, they should be 20 per cent of the way
towards the target; by 2013–14, 30 per cent; by
2015–16, 45 per cent and by 2017–18, 65 per
cent – all compared to 2005. In terms of electricity
consumption, renewables should provide about 35
per cent of the EU’s power by 2020. By 2020, wind
energy is set to contribute the most – nearly 35 per
cent of all the power coming from renewables.
2. National Action Plans (NAPs): the directive legally
obliges each EU Member State to ensure that its
2020 target is met and to outline the ‘appropriate
measures’ it will take do so, by drafting a National
Renewable Energy Action Plan (NAP) to be submit-
ted by 30 June 2010 to the European Commission.
The NAPs will set out how each EU country is to
meet its overall national target, including elements
such as sectoral targets for shares of renewable
energy for transport, electricity and heating/
Europe’s electricity market is made up of rigid struc-
tures that do not take the environmental advantages
of wind energy into account. New entrants face a
number of barriers: they have to compete with conven-
tional plants that were built decades ago and which
are operated and maintained by government funds
through former state-owned utilities in a monopoly
market. In addition, incumbent electricity players tend
to be powerful vertically integrated companies. New
technologies experience obstacles when entering the
market and often struggle to gain grid access and
obtain fair and transparent connection costs.
The EU has acknowledged these problems, and
set up a speciﬁ c legal framework for renewable
energies, including wind, which seeks to overcome
such barriers.
The ﬁ rst step in this direction was the European
Commission’s (EC) 1997 White Paper on renewable
sources of energy, which set a target for 40,000 MW
of wind power to be installed in the EU by 2010. In the
event, this target was reached in 2005, ﬁ ve years
ahead of schedule. Part of the White Paper target was
to increase electricity production from renewable
energy sources by 338 TWh between 1995 and 2010.
In 2001, the EU passed what was until recently the
world’s most signiﬁ cant piece of legislation for elec-
tricity produced by renewable energies, including wind:
EC Directive 2001/77/EC on the promotion of elec-
tricity produced from renewable energy sources in the
internal electricity market. This directive has been
tremendously successful in promoting renewables,
particularly wind energy, and it is the key factor
explaining the success of renewables worldwide. Its
purpose was ‘to promote an increase in the contribu-
tion of renewable energy sources to electricity produc-
tion in the internal market for electricity and to create
a basis for a future Community framework thereof’.
Thanks to this directive, Europe has become the
world leader in renewable energy technology.
WIND ENERGY - THE FACTS -
WIND IN THE EUROPEAN POWER MARKET
263
cooling and how they will tackle administrative and
grid barriers. The NAPs will have to follow a binding
template to be provided by the European Commis-
sion in June 2009; if the Commission considers an
NAP to be inadequate, it will consider initiating
infringement proceedings against that particular
Member State. If they fall signiﬁ cantly short of their
interim trajectory over any two-year period, Member
States will have to submit an amended NAP stating
how they will make up for the shortfall.
3. Priority access to the electricity grid: the directive
requires that EU countries take ‘the appropriate
steps to develop transmission and distribution grid
infrastructure, intelligent networks, storage facili-
ties and the electricity system … to accommodate
the further development’ of renewable electricity,
as well as ‘appropriate steps’ to accelerate autho-
risation procedures for grid infrastructure and to
coordinate approval of grid infrastructure with
administrative and planning procedures.
measures are taken in order to minimise the curtail-
ment of renewable electricity.
Europe can go a long way towards an energy mix
that is superior to the business-as-usual scenario,
offering greater energy independence, lower energy
costs, reduced fuel price risk, improved competitive-
ness and more technology exports. Over the coming
years, wind energy will play a major role in reaching
this superior energy mix.
The EU Energy Mix
While thermal generation totalling over 430 GW, com-
bined with large hydro and nuclear, has long served as
the backbone of Europe’s power production, Europe is
steadily making the transition away from conventional
power sources and towards renewable energy techno-
logies. Between 2000 and 2007, the total EU power
capacity increased by 200 GW to reach 775GW by the
end of 2007. The most notable change in the capacity is
the near doubling of gas capacity to 164 GW, but wind
energy also more than quadrupled, from 13 GW to 57 GW.
The addition of ten new Member States in May 2004
put another 112 GW into the EU generation mix,
including 80 GW of coal, 12 GW of large hydro, 12 GW
of natural gas, 6.5 GW of nuclear and 186 MW of wind
power (see Figure IV.1.1).
Changes in net installed capacity for the various elec-
tricity generating technologies are shown in Figure IV.6.2.
The ﬁ gures include the EU-10 (ten new Member States)
from 2005 and EU-12 (the EU-10 plus Romania and
Bulgaria) from 2007. The growth of natural gas and wind
power has taken place at the expense of fuel oil, coal
and nuclear power. In 2007, 21.2 GW of new capacity
was installed in the EU-27, of which 10.7 GW was gas
(50 per cent) and 8.6 GW was wind power (40 per cent).
Gas and wind power also lead in terms of new capa-
city if decommissioning of old capacity is taken into
account. Net installation of power capacity in the EU
totalled 98 GW between 2000 and 2007. Gas and wind
power accounted for 77 GW and 47 GW respectively
Assuming that the reliability and safety of the grid is
maintained, EU countries must ensure that transmission
system operators and distribution system operators
guarantee the transmission and distribution of renew-
able electricity and provide for either priority access or
guaranteed access to the grid system. According to the
agreement, ‘priority access’ to the grid provides an
assurance given to connected generators of renewable
electricity that they will be able to sell and transmit their
electricity in accordance with connection rules at all
times, whenever the source is available.
When the renewable electricity is integrated into
the spot market, ‘guaranteed access’ ensures that all
electricity sold and supported gets access to the grid,
allowing the use of a maximum of renewable electric-
ity from installations connected to the grid.
Furthermore, priority during dispatch (which was
also the case in the 2001 directive) is a requirement
for renewables, and EU countries must now also ensure
that appropriate grid and market related operational
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