GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...

 
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
GWEC | GLOBAL WIND REPORT 2021

                                 GLOBAL WIND ENERGY COUNCIL
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
Leading Sponsor

Supporting Sponsor

Associate Sponsors

                     GWEC.NET
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
Table of Contents
Foreword                                                   2
Introduction                                               5
Wind energy’s role on the road to net zero                 8
Enabling technology: Power-to-X
and green hydrogen                                       19
Market status 2020                                       43
Markets to watch                                         55
Market outlook 2021-2025                                 67
Appendix                                                 73

       GLOBAL WIND ENERGY COUNCIL

Global Wind Energy Council              Lead Authors                                           Valuable review and commentary                            Published
Rue Belliard 51-53                      Joyce Lee, Feng Zhao                                   for this report was received from:                        25 March 2021
1000 Brussels, Belgium                                                                         •Silvia Piana and Francesca Manni
                                        Contributors                                              (Enel Green Power)                                     Design
T. +32 490 56 81 39
                                        Alastair Dutton, Ben Backwell, Ramón Fiestas, Liming   •“Sustainability in the wind energy industry” section:   lemonbox
info@gwec.net
                                        Qiao, Naveen Balachandran, Shuxin Lim, Wanliang           Karl Zammit-Maempel (COP26 Climate Champions)          www.lemonbox.co.uk
www.gwec.net
                                        Liang, Emerson Clarke, Anjali Lathigara,               •Industry reviewer (requested anonymity)
                                        Dana R. Younger

GWEC | GLOBAL WIND REPORT 2021                                                                                                                                                1
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
Foreword

                                                      Word from the Chairman                                                          drive a higher system value than
                                                                                                                                      fossil fuel-based options time and
                                                                                                                                      again. They are cleaner, safer,
                                                      At this point last year, the global       of us. As renewable energy grows,     cheaper, more labor-intensive and
                                                      disruption of COVID-19 was only           wind energy will become the           use less water.
                                                      just beginning to take shape. I           backbone of energy systems in
                                                      sincerely hope that 2021 will see         many parts of the world, requiring    Experience also shows that the
                                                      the world overcoming the                  us to move beyond the focus on        benefits of historic green recovery
                                                      pandemic. Until then however, to          simply increasing wind energy         measures have exceeded the level
                                                      paraphrase Albert Einstein, “In the       capacity to instead instigating new   of investment by far. Analysis from
                                                      middle of difficulty lies                 collaborations with stakeholders      IRENA shows that every dollar
                                                      opportunity.” Right now, we are in        across the global energy system       spent on Sustainable Energy
                         Morten Dyrholm               the midst of a rare period of             to uncover more powerful policies     Transformation will deliver a payoff
               Chairman, Global Wind Energy Council   opportunity: to build back better,        and unlock greater investments to     between $3-7. It’s now up to us to
                                                      to create more resilient societies,       fuel the Sustainable Energy           take this evidence forward to drive
                                                      and to get serious about                  Transition. This entails expanding    change.
                                                      combating climate change.                 our reach to cover key issues such
                                                                                                as grid build-out, storage, market    The system value approach also
                                                      The indications look promising.           redesign and accelerating the         requires us to look inwards and
                                                      Recovery and stimulus measures are        deployment of renewable energy        evaluate our own sustainability
                                                      getting greener. The number of            to new sectors.                       ambitions. Are we doing enough
                                                      countries, cities and companies                                                 to decarbonise our own
                                                      striving for net zero is on the rise.     Succeeding in our task entails        operations, to promote diversity
                                                      COP26 could become the climate            shifting the focus of both policy     and inclusion, to improve health
                                                      summit that will yield tangible action,   makers and the private sector         and safety, or to nurture
                                                      leaving the work of persuasion and        from cost to value. Adopting a        circularity? Many of us have the
                                                      promises firmly in the past.              system value lens means looking       power and autonomy to drive
                                                                                                beyond the size of recovery           progress in our own organisations.
                                                      I venture a bet here: 2021 will           packages, investment needs or
                                                      mark our entry into the decade of         the cost of energy. It requires a     GWEC will continue to support
                                                      renewables. The stage is set for          holistic view, whereby we build       our industry with every step of this
                                                      global commitment to the                  robust frameworks that support        transformational journey. 2021 will
                                                      Sustainable Energy Transition, the        solutions that maximise positive      be a pivotal year for our planet’s
                                                      only road that can lead us to net         impacts while discouraging            future. I’m looking forward to it.
                                                      zero by 2050.                             negative impacts. Renewables will     Source of the return on investment: IRENA, Transforming
                                                                                                be part of the solutions as plenty    the energy system, 2019, https://www.irena.org/-/
                                                                                                                                      media/Files/IRENA/Agency/Publication/2019/Sep/
                                                      We have an important task ahead           of data proves that renewables        IRENA_Transforming_the_energy_system_2019.pdf

2                                                                                                                                                                                GWEC.NET
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
Foreword

Welcome to the Global Wind Report 2021
When we look back, in years to         the year when a real breakthrough     has increased, particularly driven
come, at this 2021 edition of the      was made in the energy transition,    by the growing concern, anger
Global Wind Report, we hope we         and a new, accelerated path of        and activism of young people,
will see it as marking a true          growth was established as             progress on the ground is still far
inflection point.                      countries and regions started to      from the level needed to get the
                                       implement their plans to reach net    world on a trajectory that will
If we are successful as a society,     zero CO2 emissions in earnest.        restrict global average
we will remember 2021 as the year                                            temperature increases to no more
when the world finally turned the      That, then, is the hope. And that’s   than 1.5°C.
corner in confronting the climate      why the Global Wind Energy                                                          Ben Backwell
crisis by adopting a decisive path     Council has produced this special     As an example, global annual          CEO, Global Wind Energy Council
of collective action at the COP26      report in the run up to COP26,        installations of renewable energy
meeting in Glasgow.                    which will focus on the role of       are probably below half the level
                                                                             needed to get to an IPCC-
                                                                             compatible scenario. For wind
We need to be installing around 180 GW per year                              energy, this means that while we
                                                                             installed a record 82 GW of new
to get to where we need to be. Every year we fall                            wind capacity in 2020, we need
                                                                             to be installing around 180 GW
     short, the mountain to climb gets higher.                               per year to get to where we need
                                                                             to be. Every year we fall short,
                                                                             the mountain to climb gets
                                                                             higher.
We will also remember 2021 as the      renewable energy and wind
year when we started to heal the       power in particular in the world’s    The danger is that governments
scars left by the novel Coronavirus    net zero objectives, as well as the   increase their long-term ambitions
pandemic, and started to rebuild our   rapid transition to renewable         around reaching net zero in 2050
economies and communities in a         energy that oil and gas companies     (or 2060 in the case of China),
more sustainable and humane way.       will need to make to in order to      while shorter term targets are left
                                       survive and play their role in the    vague or missed: in effect, kicking
And for the wind industry, we will     transition.                           the problem into the “long grass”
remember this year as not only                                               for future administrations and,
marking the biggest year ever in       The report pulls no punches. For      eventually, creating a situation
terms of new installation, but also    while the world’s sense of urgency    where it really is too late.

GWEC | GLOBAL WIND REPORT 2021                                                                                                                                  3
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
Foreword

               For this reason, GWEC has been          a true “Climate Emergency”           move rapidly from being buzz-
               strongly advocating for a re-set in     approach to administrative           phrases to new sectors, industries
               our everyday approach to the            procedures and institutions.         and technological advances.
               energy transition.
                                                       Thirdly, we are calling on           And this brings me to my final
               Firstly, we need to create a sense of   governments to move to rapidly       point. To achieve this re-set, and
               urgency by being honest about           ensure that the social costs of      the wider dream which I have
               where we are right now and the          emitting carbon are paid, and that   described, we are all going to
               gap between aspirations and             polluting energy use is pushed off   have to work together.
               progress on the ground. We need         the system. The experience of the
               to explain to policymakers and          last decade shows that once          This means governments,
               regulators that reaching net zero       governments make clear signals,      communities and industry getting
               depends on the actions that we          the investment community will take   together and finding rapid
               take now.                               the decisions which are necessary.   solutions to planning and
                                                                                            permitting bottlenecks. It means
                                                                                            technologies such as wind, solar,
                                                                                            storage and next-gen transmission
                Red tape and antiquated planning and permitting                             and distribution working together
                systems are slowing down the Energy Transition all                          to ensure that the transition can be
                                                                                            made as seamlessly and efficiently
                over the world. So GWEC is advocating for policy                            as possible. It means renewables
               makers to take a true “Climate Emergency” approach                           working together with completely
                                                                                            different technologies which have
                   to administrative procedures and institutions.                           their own unique challenges and
                                                                                            trajectories.

                                                                                            It also means working together to
               Secondly, we need to propose            And fourthly, we are going to have   evolve the highly skilled and
               immediate and practical solutions. In   to find new allies, partners and     diverse workforce that will carry
               contrast to a decade ago, there is      customers, as the challenge of       out a true paradigm shift in how
               plenty of investment looking to flow    transitioning to renewable energy    society organises its energy
               into wind and renewables projects,      becomes more about helping           economy.
               but red tape and antiquated             harder-to-transform sectors such
               planning and permitting systems are     as heavy industry, chemicals,        This, then, is our challenge and
               slowing down the Energy Transition      transport and agriculture to         invitation to you all.
               all over the world. So GWEC is          decarbonise. The terms “Power-
               advocating for policy makers to take    to-X” and “Sector Coupling” will

4                                                                                                                      GWEC.NET
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
INTRODUCTION

GWEC | GLOBAL WIND REPORT 2021   5
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
Introduction

                                               2020 - A record year for the wind industry
                                               2020 was the best year in history      total of 74 GW of new onshore            cancelled due to COVID-19, the
                                               for the global wind industry           wind capacity last year, or 76%          sector bounced back with vigour
                                               showing year-over-year (YoY)           more than the previous year. Due         in the second half of the year as
                                               growth of 53%. Installing more than    to the slow recovery of onshore          key mature and emerging wind
                                               93 GW wind power in a                  installations in Germany last year,      markets began to overcome the
                                               challenging year with disruption to    Europe saw only a 0.6% YoY               impacts of the pandemic.
                                               both the global supply chain and       growth in new onshore wind               According to GWEC Market
                                               project construction has               installations. Developing markets        Intelligence, nearly 30 GW of new
                                               demonstrated the incredible            in Africa and the Middle East            wind power capacity was awarded
                           Feng Zhao           resilience of the wind industry.       reported 8.2 GW onshore                  globally through auctions in the
                     Head of Strategy and                                             installations last year, almost the      second half of 2020, which is a
                   Market Intelligence, GWEC
                                               Market status                          same as in 2019.                         slight increase compared to the 28
                                               The 93 GW of new installations                                                  GW awarded during H2 2019.
                                               brings global cumulative wind          In the offshore market, 6.1 GW was       Although only 1 GW offshore wind
                                               power capacity up to 743 GW. In        commissioned worldwide last              capacity was awarded through
                                               the onshore market, 86.9 GW was        year, making 2020 the second-best        auctions worldwide, more than 7
                                               installed, an increase of 59%          year ever. China installed half of all   GW of offshore wind auctions/
                                               compared to 2019. China and the        new global offshore wind capacity        tenders were launched in 2020.
                                               US remained the world’s largest        in a record year. Steady growth          This surge in new capacity to be
                                               markets for new onshore additions,     was recorded in Europe with the          auctioned is a clear signal that the
                                               and the world’s two major              Netherlands taking the lead              industry is back on track and that
                                               economies together increased           followed by Belgium, the UK,             the global pipeline of wind power
                                               their market share by 15% to 76%,      Germany and Portugal. The                projects continues to grow.
                                               driven by the Feed-in Tariff (FiT)     remaining new offshore wind
                                               cut-off in China and the scheduled     installations in 2020 were shared        Through technology innovations
                                               phase-out of the full-rate             by the US and South Korea. Total         and economies of scale, 2020 saw
                                               Production Tax Credit (PTC) in the     offshore wind capacity has now           wind power continue to build its
                                               US, respectively.                      passed 35 GW, representing 4.8%          competitive advantage throughout
                                                                                      of total global cumulative wind          the world. Last summer, a
                                               On the regional level, 2020 was        capacity.                                consortium of Shell and Eneco won
                                               also record year for onshore                                                    the third zero-subsidy offshore
                                               installations in Asia Pacific, North   Market dynamics                          wind tender in the Netherlands. In
                                               America and Latin America. The         While the first half of 2020 saw         Latin America, as wind power
                                               three regions combined installed a     auctions being postponed or              already had very competitive

6                                                                                                                                                         GWEC.NET
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
Introduction

prices, private auctions or bilateral   systematic and radical energy          incentive schemes. Nevertheless,
PPAs have already emerged as an         transition from fossil fuels to        the market outlook for our forecast
alternative mechanism to                renewable energy and low-carbon        period remains positive. GWEC
government auctions to drive            solutions is imperative. The current   Market Intelligence expects that
growth. According to                    crisis offers a unique window of       over 469 GW of new onshore and
BloombergNEF, 6.5 GW wind               opportunity to put the world on a      offshore wind capacity will be
power was signed through                sustainable trajectory and meet        added in the next five years - that
corporate PPAs globally last year,      our international climate goals, but   is nearly 94 GW of new
29% lower than the previous year.       we must act now - or miss the          installations annually until 2025,
Considering the fact that               opportunity. Although reaching net     based on present policies and
                                                                               pipelines. We hope and expect that
                                                                               governments will significantly
   Although reaching net zero will require bold                                increase their ambitions and
                                                                               targets following COP26, and for
 actions by a large number of sectors and actors,                              that reason we are upwardly
                                                                               revising our forecasts for the
wind power is placed to be one of the cornerstones                             GWR2022.
of green recovery and to play an important role in
                                                                               The CAGR for onshore wind in the
     accelerating the global energy transition.                                next five years is 0.3% and GWEC
                                                                               expects annual installation of 79.8
                                                                               GW. In total, 399 GW is likely to be
COVID-19 disruptions across the         zero will require bold actions by a    built in 2021-2025. The CAGR for
world have caused revenues to           large number of sectors and            offshore wind in the next five years
plummet for many corporates, the        actors, wind power is placed to be     is 31.5%. The level of annual
level of commitment to sustainable      one of the cornerstones of green       installations is likely to quadruple
green energy remains impressive.        recovery and to play an important      by 2025 from 6.1 GW in 2020,
                                        role in accelerating the global        bringing offshore’s market share in
Last year also witnessed                energy transition.                     global new installations from
governments of countries such as                                               today’s 6.5% to 21% by 2025. In
China, Japan and South Korea            Market Outlook                         total, more than 70 GW offshore is
making net zero/carbon neutrality       After an unusual 2020, global wind     expected to be added worldwide
commitments, and similar                market growth is likely to slow        in 2021-2025.
commitments were also made by           down in the near-term primarily
major corporates including oil and      due to an expected drop in
gas companies. To reach the net         onshore installations in China and
zero targets, completing a              the US following the expiry of

GWEC | GLOBAL WIND REPORT 2021                                                                                                       7
GWEC | GLOBAL WIND REPORT 2021 - Global Wind Energy ...
WIND ENERGY’S ROLE ON THE
    ROAD TO NET ZERO

8                               GWEC.NET
Wind energy’s role on the road to net zero

1. Wind energy’s role on the road to net zero
Like a high-resolution satellite                                  of businesses, investors, cities,                       according to the IEA, including                                                  offshore oil and gas for the first
image, 2020 offered a sharpened                                   regions and universities.1                              falls of 8% and 7% for oil and coal                                              time.4
reality of the state of our planet. The                                                                                   demand, respectively.2 Credit
COVID-19 pandemic brought                                         It is worth looking back at a long                      agencies are now expecting                                                       From the EU to large Japanese
greater recognition to the                                        year in which the global wind                           global oil demand to continue                                                    trading houses to the world’s largest
consequences of human                                             industry demonstrated its                               declining steadily over the next                                                 investment funds and development
development on the natural world,                                 resilience and its role in green                        decade; in its most conservative                                                 finance institutions, there are calls to
and of the cascading knock-on                                     recovery. But the events of 2020                        outlook, BP forecasts peak oil                                                   phase out coal and the financing of
effects an event can wield on our                                 also defined the outlines of what                       demand as soon as 2025.3 Last                                                    new coal plants. Although coal
economies, livelihoods and security.                              lies ahead: the role of wind energy                     year, capex committed to offshore                                                reduction still lags in parts of
                                                                  in a carbon-neutral world.                              wind overtook investment in                                                      Eastern Europe, in 2020 renewables
As policymakers chart the way out
                                                                                                                                                                          2100 Warming projections
of the pandemic, and emissions                                    The pandemic accelerates shifts in
                                                                                                                          2100 Warming
                                                                                                                             Emissions     projections
                                                                                                                                       and expected warming basedon pledges and current policies
show signs of returning to pre-                                   the global energy matrix
                                                                                                                          Emissions and expected warming based on pledges and current policies
pandemic levels in the world’s                                    The pandemic cast a long shadow
fastest growing economies, there is                               across the world, posing a                                                                              200

                                                                                                                          Global greenhouse gas emissions GtCO2e / year
unprecedented agreement that                                      challenge to economies and to the
climate change is the true global                                 global wind industry as never                                                                                                                                             Warming projected
                                                                                                                                                                                                                                            by 2100
emergency. The concept of a                                       before. Its impacts reverberated                                                                        150
runaway threat crippling the entire                               throughout the wind supply chain,                                                                                                                                         Baseline
                                                                                                                                                                                                                                            4.1 – 4.8 C
                                                                                                                                                                                                                                                      O

world is now not only credible, but                               disrupting manufacturing and
relatable. This has prompted the                                  export flows. From the US to South                                                                      100
UN to underscore the call for                                     Africa, projects were hit by delays.
urgent action to reach net zero                                                                                                                                                                                                             Current policies
                                                                                                                                                                                                                                            2.7 – 3.1 C
                                                                                                                                                                                                                                                      O

greenhouse gas (GHG) emissions                                    While some impacts were
                                                                                                                                                                           50                                                               Pledges & Targets
by 2050 – a call which has since                                  temporary, the pandemic also                                                                                                                                              2.3 – 2.6 C
                                                                                                                                                                                                                                                      O

been echoed by more than 120                                      accelerated energy shifts already                                                                             Historical                                                  Optimistic
                                                                                                                                                                                                                                            net zero targets
countries representing over half of                               in motion. Global energy demand                                                                                                                                           2.1 C
                                                                                                                                                                                                                                                 O

                                                                                                                                                                            0
global GDP, alongside thousands                                   declined by roughly 5% in 2020,                                                                                                                                           2 C consistent
                                                                                                                                                                                                                                             O

                                                                                                                                                                                                                                            1.6 – 1.7 C
                                                                                                                                                                                                                                                      O

                                                                                                                                                                                                                                            1.5 C consistent
                                                                                                                                                                                                                                                 O

1. https://unfccc.int/climate-action/race-to-zero-campaign; https://eciu.net/analysis/briefings/net-zero/net-zero-the-
                                                                                                                                                                                                                                            1.3 C
                                                                                                                                                                                                                                                 O

    scorecard#:~:text=Net%20zero%20economies,(World%20Bank%2C%202018)
2. https://www.iea.org/reports/world-energy-outlook-2020                                                                                                                  -50
3. https://www.carbonbrief.org/analysis-world-has-already-passed-peak-oil-bp-figures-reveal                                                                                 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
4. https://www.tradewindsnews.com/offshore/-51bn-in-wind-farm-capital-spending-outstrips-oil-and-gas-for-first-
    time/2-1-955552                                                                                                       Source: Climate Action Tracker, December 2020.

GWEC | GLOBAL WIND REPORT 2021                                                                                                                                                                                                                                  9
Wind energy’s role on the road to net zero

                          generated more electricity in the                               These are no longer just market              optimistic scenarios, we will miss                       Cost reduction from larger
                          EU than fossil fuels for the first time,                        trends, at least in the sense of             our Paris targets.                                       turbines, innovations in installation/
                          powered by 14.7GW of new wind                                   cyclical movements. It is clearer than                                                                O&M and reduced investor risk
                          plants reaching grid connection.                                ever that the era of fossil fuels is over,   Wind energy’s role in                                    will further drive deployment: Out
                                                                                          and the global energy transition is          achieving net zero                                       to 2030, IRENA expects average
                          2020 also saw milestone                                         here to stay. 2020 presented a               One year on from the beginning                           LCOE of onshore wind to continue
                          commitments to carbon neutrality,                               once-in-a-generation opportunity to          of the pandemic, the wind                                declining by 25% from 2018 levels,
                          with the EU, Japan, South Korea,                                reset human development. The                 industry has demonstrated                                while offshore wind LCOE will
                          Canada and South Africa each                                    question is whether we can turn              incredible resilience. In Q2 2020,                       shrink 55% from 2018.7
                          pledging to reach net zero by 2050.                             the newfound sense of optimism               GWEC Market Intelligence was
                          Combined with China’s net zero by                               and urgency into accelerated                 predicting a 20-30% reduction to                         But accelerated growth of wind and
                          2060 target and the US intention to                             implementation and deliver the               the end-of-year forecast. But the                        renewable energy is required to
                          reach net zero by 2050 under the                                transition in time. 2021 must be the         industry more than bounced                               “bend the curve” and put us on a
                          Biden administration, countries                                 time to turn long-horizon net zero           back to deliver a record year of                         trajectory which can limit global
                          which have adopted or considered                                roadmaps into actions, via concrete          growth with 93 GW, largely                               warming to “well below” 2°C, as set
                          net zero targets now represent                                  policy interventions, interim target-        spurred by installations in China.                       out in the Paris Agreement. Current
                          two-thirds of the global economy                                setting and robust delivery plans.           Investment in offshore wind                              policies are propelling us towards a
                          and 63% of global GHG emissions.5                               Otherwise, even in the most                  surpassed 2019 levels to reach                           2.9°C pathway by 2100. If all
                                                                                                                                       US$303 billion in 2020, partly due                       pledges and NDCs as of December
                                                                                                                                       to the sector’s longer project                           2020 were implemented, we might
     Annual wind installations must increase dramatically to reach net zero by 2050                                                    development timelines which are                          reach 2.1°C and will miss a net zero
     New global wind installations (GW)                                                                                                more resilient to the pandemic                           by 2050 target.
               New global wind installations (GW)                                                                                      impacts.6
                  Total New Wind Installations Required Under IEA’s NZE2050 Scenario
                                                                                                                                                                                                With a few exceptions, the
                  Offshore Wind
                                                                                                       CAGR +12%             280       While jobs have been lost and                            energy sector, which makes up
                  Onshore Wind                                                                                                         projects delayed, the global wind                        around three-quarters of global
                                                                                                                                       industry defied expectations and is                      GHG emissions, is characterised
                                                     CAGR +17%
                                                                                                                                       set to continue growing at a steady                      by long investment and
                                                                               160                                                     pace. Before 2025, the industry will                     development timelines – an
                                                                                                                                       exceed 1TW in global cumulative                          accelerated pace for change
                                                                                                                                       installations of onshore and                             must be set now. Every year we
                                     88
                           93                                                                                                          offshore wind, according to GWEC                         fall short of the dramatic action
                60
                                                                                                                                       Market Intelligence.                                     needed to change our pathway
                                                                                                                                       5. http://www3.weforum.org/docs/WEF_Net_Zero_Challenge_The_Supply_Chain_Opportunity_2021.pdf; https://
                                                                                                                                           climateactiontracker.org/publications/global-update-paris-agreement-turning-point/
               2019      2020*     2021*      2022       2023      2024       2025     2026       2027      2028      2029   2030      6. https://webcache.googleusercontent.com/search?q=cache:SJo8SyYNV5cJ:https://www.windpowermonthly.com/
                                                                                                                                           article/1704954/offshore-wind-spending-reaches-record-high-2020+&cd=1&hl=en&ct=clnk&gl=uk
     Source: GWEC Market Intelligence; IEA World Energy Outlook (2020), volume in 2022-2024 and 2026-2029 are estimates                7. https://www.irena.org/publications/2020/Apr/Global-Renewables-Outlook-2020
                                                Average annual installations of 180 GW over this decade

10                                                                                                                                                                                                                                       GWEC.NET
Wind energy’s role on the road to net zero

deepens the decarbonisation
cuts required in years to come,         Wind energy in long-term                      Share of wind energy (%) in total global electricity mix versus global
                                                                                      energy-related CO2 emissions
                                        energy scenarios
and locks in the devastating                                                               50%

burdens of climate change for           GWEC Market Intelligence analysed                                                                          BNEF ’Climate Scenario (2050)’
future generations.                     different long term energy scenarios               40%
                                                                                                        IRENA ’1.5 - S’ (2050)                IRENA ’TES (2050)’
                                        (LTES) to map the role of wind energy in
                                                                                           30%
To have a chance of meeting the         the global energy transition and,
                                                                                                                                                                             Shell ’Sky 1.5 (2050)’
                                        eventually, carbon neutrality. Selection of                  BP ’Net Zero (2050)’                                                                                 IEA ’SDS (2030)’
Paris targets, fossil fuel-based                                                           20%
                                        LTES was based on compatibility with                                      BP ’Rapid (2050)’           Equinor ’Rebalance (2050)’                                        Trendline
capacity needs to be phased out         Paris Agreement targets for a 1.5°C
concurrent to an increasingly steep     pathway by end-of-century and the recent
                                                                                           10%
                                                                                                                                                               DNV GL (2050)
                                                                                                                                                                                                   Current status (2019)
expansion of renewables and             UN goal to reach net zero emissions by               0
related infrastructure. For wind,       2050. Not all scenarios extended to 2050                 -2      0        2    4      6      8     10     12     14     16      18     20     22     24     26     28      30       32   34
annual deployment must surge to         (year of the forecast is indicated in                         Compatible with pathway ’1.5° C’
                                                                                                                                                                                                                   CO 2 (Gt/year)

around 180 GW, according to             parentheses on the graphs), and each                          Compatible with pathway ’well below 2° C’
                                                                                                      Non-compatible with pathway ’well below 2° C’
IRENA’s Transforming Energy             depends on a unique set of system                        Note: (20XX) indicates the year of projected scenario

Scenario. Under the IEA’s Net Zero      transformations, technology innovations                  Sources: BNEF New Energy Outlook 2020; IRENA Global Renewables Outlook 2020; IEA World Energy Outlook 2020
                                                                                                 (Sustainable Development Scenario); BP Energy Outlook 2020; Equinor Energy Perspective 2020; DNV GL Energy

by 2050 scenario, annual run rates      and behavioural changes.                                 Transition Outlook 2020; IRENA World Energy Transitions Outlook preview 2021(Data of ‘Wind share in total glo
                                                                                                 electricity generation’ is an estimate, page no. 19); Shell-Energy Transformation Scenarios, February 2021.
                                                                                                 Further LTES are mapped out in the report: IRENA (2020), Global Renewables Outlook: Energy transformation 2050.

for wind would need to be even          Institutional and commercial LTES call for
steeper, reaching 160 GW by 2025                                                      Share of wind energy (%) in total global electricity mix versus
                                        higher shares of wind energy in the total
                                                                             10%      total electricity generation
and then 280 GW by 2030 – 3             power mix due to its stable generation
                                                                                           50%
times the volume built in 2020.         profile – 43% in the case of BNEF’s
                                        scenario and 35% in the case of IRENA’s                                                                BNEF ’Climate Scenario (2050)’
                                                                                           40%
Over the next 10 years, international   Transforming Energy Scenario – paired                                                                                                                      IRENA ’TES (2050)’
institutions are calling for profound   with widescale electrification measures for        30%
                                                                                                                                                       IRENA ’1.5- S’ (2050)

                                        system-wide decarbonisation. The general                      Trendline                               Shell ’Sky 1.5 (2050)’                                               BP ’Net Zero
system transformation to take place.                                                                                               Equinor ’Rebalance (2050)’                                                      (2050)’
                                        trendline reflects that wind energy must           20%
The UN Race for Zero has pegged         rise from today’s roughly 6% share of the
                                                                                                        IEA ’SDS (2030)’
                                                                                                                                                                                                       BP ’Rapid (2050)’
the tipping point in the clean power    global power mix to more than 30% by               10%
                                                                                                                                                                                                        DNV GL (2050)

sector as reaching a 60% renewable      2050, to achieve proximity to a pathway                                       Current status (2019)
energy share in the global power        well below 2°C.                                      0
                                                                                                 0                           50,000                         100,000                        150,000                           200,000
mix, including 30% from wind and
                                        LTES diverge when it comes to the scale                                                                                                          Total Global Electricity Generation (TWh)
solar power. Total annual global
                                        of electrification for a Paris-compliant                      Compatible with pathway ’1.5° C’
investment in clean power and           pathway. The scenarios with higher rates
                                                                                                      Compatible with pathway ’well below 2° C’
                                                                                                      Non-compatible with pathway ’well below 2° C’
enabling system infrastructure          of global electricity generation (BNEF,                  Note: (20XX) indicates the year of projected scenario

needs to rise from US$380 billion in    IRENA and BP) emphasise both higher
                                                                                                 Sources: BNEF New Energy Outlook 2020; IRENA Global Renewables Outlook 2020; IEA World Energy Outlook 2020
                                                                                                 (Sustainable Development Scenario); BP Energy Outlook 2020; Equinor Energy Perspective 2020; DNV GL Energy
                                                                                                 Transition Outlook 2020; IRENA World Energy Transitions Outlook preview 2021(Data of ‘Wind share in total glo
2020 to $1.6 trillion by 2030,          shares of wind and renewable energy                      electricity generation’ is an estimate, page no. 19); Shell-Energy Transformation Scenarios, February 2021.
                                                                                                 Further LTES are mapped out in the report: IRENA (2020), Global Renewables Outlook: Energy transformation 2050.

according to the IEA.

GWEC | GLOBAL WIND REPORT 2021                                                                                                                                                                                                         11
Wind energy’s role on the road to net zero

      combined with green hydrogen and                                                      degree of structural and behavioural changes             The backdrop of most energy                                   health cost savings attached to
      Power-to-X solutions to meet final energy                                             to reduce energy demand.                                 transition scenarios combines                                 wind energy. Meanwhile,
      consumption needs.                                                                                                                             large-scale renewable energy                                  initiatives like the UN-linked
                                                                                            As of the end of 2020, 127 countries covering
                                                                                                                                                     generation, widescale electrification                         Ocean Panel and Ocean
      Outside of electrification rates, LTES are                                            63% of global GHG emissions have
                                                                                                                                                     (particularly in the power, industry                          Renewable Energy Action
      aligned in calling for a rapid acceleration of                                        expressed or are considering net zero goals.
      wind energy deployment alongside                                                      This balance of measures in these LTES can               and short-distance transport                                  Coalition have highlighted
      improvements in energy efficiency, demand-                                            be instructive for national long-term energy             sectors) and energy efficiency                                offshore wind as a vital technology
      side flexibility and sector coupling for a clean,                                     planners, particularly as they align policies            measures. A mix of innovative                                 which will provide 10% of the
      resilient and secure energy system. This                                              with net zero targets. The backdrop of major             technologies, from green hydrogen                             needed carbon mitigation by
      convergence of different policies is reflected                                        LTES comprises large-scale renewable                     to digitalisation and storage                                 2050 for a 1.5°C pathway.11
      in the graph below, where most scenarios                                              energy penetration for onshore wind,                     solutions, will be required to enable
      which are 1.5°C-compatible and closer to net                                          offshore wind and solar energy, widescale                high rates of renewables                                      But in practical terms, the scale of
      zero by 2050 call for at least a 60% share of                                         electrification, energy efficiency measures              penetration, adequate security and                            build envisioned by 2030 means
      renewable energy in the total primary energy                                          and the deployment of technological                      flexibility of the power system and                           that actions to set the global wind
      supply. Scenarios are also aligning around a                                          innovations like Power-to-X and green
                                                                                                                                                     decarbonisation of hard-to-abate                              industry on this path need to be
      bandwidth of 500-650 EJ/year, requiring a                                             hydrogen for storage and system flexibility.
                                                                                                                                                     sectors. These scenarios require                              taken now, given the time required
                                                                                                                                                     decarbonisation of molecules, not                             for policy commitments to
       Share of renewable energy (%) in total primary energy supply                                                                                  just electrons.                                               materialise, project development,
                                                                                                                                                                                                                   financing decisions and more.
                  80%                                                                                                                                Can we more than treble the                                   Increasing capacity for wind and
                                                                                  IRENA ’1.5- S’ (2050)
                  70%
                                 IRENA ’TES (2050)’                     BNEF ’Climate Scenario (2050)’
                                                                                                                                                     volume of wind energy projects                                renewables will also require
                  60%                                                                                                                                being installed worldwide over                                urgent forward-planning of
                          IPCC ’Below 1.5° C (2050)’                                BP ’Net Zero (2050)’
                  50%                                           IEA ’SDS (2030)’
                                                                                                                                                     the next 10 years? Onshore wind                               infrastructure and grid buildout, as
                                                                               BP ’Rapid (2050)’                                                     is already a mature and                                       well as investment in storage
                  40%
                                                                      DNV GL (2050)                                   Shell ’Sky 1.5 (2050)’         mainstream energy source which                                technologies and demand-side
                  30%
                                                       Equinor ’Rebalance (2050)’
                                                                                                                                                     is cost-competitive with new coal/                            management.
                  20%                                                                                                                                gas plants and, in many markets,
                                                                              Current status (2018)
                  10%                                                                                                                                undercuts the operating costs of                              Even a concentrated sprint of action
                     0                                                                                                                               fully depreciated conventional                                in the run-up to COP26 in November
                         400                    500                      600                       700                      800                900   generation assets.10 There is                                 2021 will not be enough to win the
                      Compatible with pathway ’1.5° C’
                                                                                                                                    TPES (EJ/year)   expanding recognition of the                                  race to net zero. To bend the curve,
                      Compatible with pathway ’well below 2° C’                                                                                      economic growth, job creation,                                policymakers must adopt the
                      Non-compatible with pathway ’well below 2° C’
                  Note: (20XX) indicates the year of projected scenario
                                                                                                                                                     water consumption savings and                                 principle of continuous improvement
                  Sources: BNEF New Energy Outlook 2020; IRENA Global Renewables Outlook 2020; IEA World Energy Outlook 2020
                  (Sustainable Development Scenario); BP Energy Outlook 2020; Equinor Energy Perspective 2020; DNV GL Energy                                                                                       in line with the “ratchet mechanism”
                  Transition Outlook 2020; IRENA World Energy Transitions Outlook preview 2021(Data of ‘Wind share in total glo
                  electricity generation’ is an estimate, page no. 19); Shell-Energy Transformation Scenarios, February 2021.
                  Further LTES are mapped out in the report: IRENA (2020), Global Renewables Outlook: Energy transformation 2050.
                                                                                                                                                     10. https://www.irena.org/publications/2020/Jun/Renewable-   of the Paris Agreement, and continue
                                                                                                                                                          Power-Costs-in-2019
                                                                                                                                                     11. https://oceanpanel.org/sites/default/files/2019-10/
                                                                                                                                                                                                                   to push for higher ambitions at
                                                                                                                                                          HLP_Report_Ocean_Solution_Climate_Change_final.pdf       regular intervals.

12                                                                                                                                                                                                                                            GWEC.NET
Wind energy’s role on the road to net zero

Working together to accelerate          nationally significant and critical     retirement of conventional assets       and avoiding the risk of stranded
wind energy deployment                  infrastructure, with improvements       and redirecting subsidies into          assets.
In every major institutional            to streamline permitting and            worker training funds and
scenario for energy system              simplify license applications;          diversity strategies for workforce      The challenge will be deploying
transformation, the wind market                                                 development.                            capital into bankable wind projects
must rapidly expand over the next     l	Investingin long-term grid and                                                 at a sufficient rhythm to accelerate
decade. The industry must be            transmission planning and             Policy and regulation provide the         annual installations to the near-200
resoundingly clear that this growth     infrastructure;                       signals to the private sector for         GW level. In 2020, there were more
will not happen spontaneously and                                             action and investment, allowing for       credit rating downgrades for
requires urgent policy                l	Safeguarding existing and            economical decision-making.               emerging markets and developing
interventions worldwide.                awarded wind projects, and            Making benefits and                       countries than in all previous
                                        avoiding retroactive changes to       consequences clear to                     economic crises over the last 40
A “climate emergency”                   approved remuneration                 businesses, via “pull” signals like       years.13 For emerging economies,
approach to act now                     schemes;                              targets and “push” signals like           the pandemic has raised the

                                                                                                                                                                                        Photo Credit: Equinor
As with wartime-era measures, the                                             taxes, will allow business to             spectre of higher financing costs,
experience in 2020 demonstrated       l	Enabling  open-access regulation     reorganise in line with a carbon-         due to increased fiscal pressure on
the mandate for governments to          for a bilateral market of             neutral pathway.                          the balance sheets of public
act in a crisis and free up             renewable energy;                                                               utilities and grid operators, as well
bandwidth for public institutions.                                            The last year has demonstrated            as higher regulatory, currency and
As we freewheel forwards on an        l	Creatingpolicy frameworks for        that investment in the wind               counterparty risks.
“off-track” pathway to 2050,            repowering of older wind plants       industry is plentiful. The pandemic
governments should similarly react      in mature wind markets;               has tipped the scales,                    Greater coordination is needed
to convene resources to radically                                             irreversibly, for private                 to de-risk climate and renewable
scale up the deployment of            l	Acceleratingnet zero                 investment in clean energy. In the        energy finance in emerging
renewable energy. Among other           commitments, carbon budgets,          first half of 2020 alone, while overall   economies. Temporary debt
measures, this could entail:            carbon pricing and science-           investment in power generation            suspension by actors like the G20
                                        based approaches among                slumped, offshore wind financing          and IMF will not be enough.
l	Committing  to ambitious             government bodies, and sense-         quadrupled compared to the same           Governments should work
  capacity targets for wind energy      checking reliance on CO2              period in 2019, reaching US$35            together with multilateral
  which increase over time;             removal technologies in net zero      billion.12 Retail and institutional       development banks (MDBs),
                                        plans; and                            investors increasingly view clean         development finance institutions
l	Granting “must-run” status,                                                energy as a safe harbour. Major           (DFIs) and the financial sector to
  priority dispatch and priority      l	Creating  frameworks for a just      utilities like Engie, Enel Green          create financing mechanisms
  grid connection to wind and           transition, including ending          Power, Iberdrola, TEPCO and               12.https://www.theguardian.com/environment/2020/jul/13/
  renewable projects;                   direct and indirect subsidies for     KEPCO have been future-proofing               offshore-wind-energy-investment-quadruples-despite-
                                                                                                                            covid-19-slump
                                        fossil fuel plants, providing fair    their balance sheets by increasing        13. h
                                                                                                                             ttps://www.bu.edu/gdp/files/2020/11/DRGR-report-
l	Categorising   wind projects as      compensation for early                investment in clean energy assets             Jan-2021.pdf

GWEC | GLOBAL WIND REPORT 2021                                                                                                                                                     13
Wind energy’s role on the road to net zero

                                                            which build on the strong                Such mechanisms could be                private financial flows to climate
                                                            economics of wind energy, record-        developed with an “emergency”           change mitigation solutions like
                                                            low global interest rates and the        or “rapid response” approach to         wind energy.
                                                            availability of low-cost funding for     quickly move to supporting
                                                            renewables and storage capacity.14       emerging economies and redirect         From hydrocarbons to electrons
                                                                                                                                             The central logic of the road to net
                                                                                                                                             zero will be to electrify everything
      Case Study: Optimising wind plant performance                                                                                          we can in line with a cost-optimal
      Provided by: WindESCo                                                                                                                  clean energy transition. Widescale
      Optimisation is playing an increasingly important role in the      WindESCo solution required no hardware be installed at the site     direct electrification can leverage
      growth of wind energy and enabling energy transition. WindESCo     and provides analytics beyond existing asset monitoring             existing technologies, with wind
      provides solutions to help owners and operators maximize their     platforms. Throughout the process the two companies worked          and renewable energy dispatched
      assets’ performance, energy production and reliability to unlock   closely to determine optimised parameters, verify that they were    to power homes, industry, short-
      hidden value and promote a carbon-free energy future.              implemented correctly, and calculate the gains in energy output.    distance transport and the
      WindESCo’s mission is ensuring that every turbine produces its                                                                         infrastructure of our cities. With
                                                                         After collecting enough data, the WindESCo team performed
      maximum energy output and operates reliably beyond its
                                                                         analytics consisting of proprietary SCADA data checks. Three        more stable generation profiles,
      intended lifetime, a critical step on the journey to Net Zero.
                                                                         checks came out as requiring further investigation. Working with    offshore wind, hybrid projects and
      About the Project                                                  UPC Renewables, WindESCo determined that addressing Static          virtual renewable power plants can
      WindESCo was engaged by UPC Renewables to optimize 79 MW           Yaw Misalignment would provide the best short-term value. Two       provide strong complementarity to
      of in-warranty turbines under an OEM full-service agreement        additional recommendations were identified for further              the continuous power demands of
      (FSA). The Sidrap Wind Farm, located in Indonesia, is operated     improvement.                                                        the industry and buildings sectors.
      by UPC Renewables, the leading independent power producer          Out of 30 turbines, WindESCo determined that 27 were
      (IPP) in Asia-Pacific. Globally, UPC has 4,500 MW of installed     experiencing greater than 2° of static yaw misalignment and         Electrification will itself compound
      capacity.                                                          needed correction. The company worked with UPC Renewables           the demand for green power, as the
      In 2019, UPC Renewables’ new 30 tower wind plant was               to implement recommendations, and to confirm the                    market incentives to decarbonise
      generating less-than-expected revenues compared to pre-            recommended offsets were implemented correctly.                     (e.g. carbon caps and border
      construction estimates. The wind plant was not meeting its P50                                                                         adjustment taxes) and to electrify
      projection and turbines were failing their power curve tests. No   Measurable Results                                                  (e.g. electric vehicle subsidies and
      solution was being offered by the OEM to address the issues and    In just a few months, WindESCo was able to optimize plant output,   electrification of industrial
      increase production.                                               an endeavor that would have taken over a year with other            processes, such as heat generation
                                                                         technologies. The insights gained through WindESCo’s solutions      for petrochemical cracking) will
      Scalable Solutions                                                 directly resulted in a 2% increase in AEP for the project.          aggregate the demand for data
      UPC Renewables sought a cost-effective, scalable solution that     The impact to the bottom line? An increase of $5,700/MW/Yr for a    analytics, cloud-based storage and
      would provide immediate ROI. WindESCo offers a                     total benefit of $450,000/Yr. All without invalidating UPC          machine communication.
      comprehensive wind farm AEP improvement software which             Renewables’ FSA and Warranty with the OEM.
      leverages SCADA data to increase AEP between 1–7%. The                                                                                 14. h
                                                                                                                                                  ttps://www.weforum.org/agenda/2021/01/
                                                                                                                                                 how-to-accelerate-the-energy-transition-in-developing-
                                                                                                                                                 economies

14                                                                                                                                                                                      GWEC.NET
Wind energy’s role on the road to net zero

For the wind industry, the                  Current applications range from            Complementary technologies for           forecasts global weighted average
advancement of cyber-physical               intelligent factory cranes to remote       energy flexibility                       capacity factors for onshore wind
networks will enable smarter and            monitoring of wind turbines by             With higher capacity factors             will increase to 32-58% by 2050
more efficient grids, greater               autonomous devices. A pilot project        compared to other renewable              and to 43-60% by 2050 for offshore
transparency in how we consume              for predictive analytics has already       energy sources, onshore and              wind.16 The world’s first floating
and stronger civic engagement. The          enabled wind turbines to supply the        particularly offshore wind               wind farm, the Hywind Scotland
expansion of an “Internet of Things”        Danish system operator with                provide greater energy                   project in the North Sea, already
will mean more assets along the             balancing reserves at the end of           reliability to emerging markets          achieved 56% capacity factors in
value chain will become connected           2020, paving the way for more              where power demand is growing,           its first two years of operation.17
devices to be monitored in real-time        flexible grid systems with large-          especially if aggregated over large
and optimised for performance.              scale renewables integration.15            geographical areas. IRENA                Large-scale wind penetration will
                                                                                                                                require balancing and storage
                                                                                                                                technologies to maintain a cost-
  Case study: Advanced monitoring systems to bring down costs
  Provided by: Bonfiglioli
                                                                                                                                effective and secure transition.
                                                                                                                                Hybrid renewable tenders with
  Bonfiglioli’s products are continuously optimised to            the operating conditions of the main components of            wind, solar and battery elements
  improve wind turbine performance for both offshore and          products and any malfunction is obtained through              are now picking up around the
  onshore applications, with a strong focus on size and           algorithms that take into account fundamental aspects
                                                                                                                                world, from India’s Round-the-
  weight optimisation. With a market share of over 35% in         such as speed, temperature, relative humidity, operating
  wind turbine yaw and pitch drives and supplies to leading       torque and operating vibrations along the entire spectrum
                                                                                                                                Clock tenders to Germany’s
  worldwide wind turbine OEMs, Bonfiglioli is a leader in         of frequencies. This allows the operating conditions of       “innovation auctions”. But storage
  advanced solutions for the wind industry. Its team of           critical components to be constantly monitored in real time   technologies will need to be
  experts creates, designs and produces advanced                  and to prevent unexpected downtimes by optimising             competitive and scalable to
  solutions to deliver tailor-made solutions, predominantly       maintenance interventions, particularly relevant for          disincentivise support of
  led by a constant focus on LCOE reduction from both a           offshore wind applications where early fault detection is     polluting and inflexible energy
  direct and indirect standpoint.                                 critical.                                                     systems.
   LCOE indirect reduction is sought after through an             Already well accustomed to working with APQP
  evolving condition monitoring system that enables               methodology, specialising in APQP4Wind represents a           This will be particularly critical for
  customers to maximise productivity and return on                distinctive element for the next generation of Wind           accelerating renewables in
  investment. Product reliability is undoubtedly an important     products at the highest levels of quality, with a             markets with weaker grids, which
  parameter, but so is the ability to constantly check the        standardised approach.                                        already face challenges in voltage
  health of the system and to plan maintenance operations.                                                                      and disruptions from extreme
                                                                  With a unique global footprint, Bonfiglioli can guarantee
  Bonfiglioli provides an IOT range that includes sensors on
                                                                  the manufacture of local components to ensure a flexible
  the gearbox and motor and an edge computer capable of
                                                                  and reactive supply chain. Ultimately a strong and global     15. h ttps://en.energinet.dk/About-our-news/News/2020/12/16/
  conveying data and information to the customer’s and/or                                                                           Milestone-Wind-turbines-can-balance-the-electricity-grid
                                                                  operation set up guarantees the right focus towards
  Bonfiglioli’s cloud, when a wireless connection is available.                                                                 16. https://irena.org/-/media/Files/IRENA/Agency/
                                                                  adopting a common culture regarding the Lean concept at           Publication/2019/Oct/IRENA_Future_of_wind_2019_summ_
  All information relating to the RUL (Residual Useful Life),     global level.                                                     EN.PDF
                                                                                                                                17. h ttps://www.equinor.com/en/news/2019-11-28-hywind-
                                                                                                                                    scotland-data.html

GWEC | GLOBAL WIND REPORT 2021                                                                                                                                                                  15
weather events. Cost-effective          barriers in production costs,                                 and supply chain logistics.
     storage solutions will be needed        transport, demand and                                         Concurrently, the scaling-up of
     for grid resilience. Batteries are      competitiveness in the transport                              renewable energy capacity in
     increasingly affordable for short-      sector. At least 13 countries have a                          proximity to hydrogen plants will
     duration application; since 2010,       national hydrogen strategy in                                 support hydrogen’s pathway to
     prices have declined by two-thirds      place, and dozens more are                                    cost-competitiveness.
     for stationary application (such as     considering one or have
     grid management) and by 90% for         supported hydrogen projects.                                  Pushing carbon-intensive assets
     lithium-ion batteries in electric                                                                     off the grid
     vehicles.18                             Back in 2016, the Electricity                                 Looking ahead to COP26, one of the
                                             Generating Authority of Thailand                              key set-pieces for the international
     System transformation will also         announced its 22 MW Lam                                       negotiations will be the agreement
     require long-duration storage           Takhong wind project with a 1 MW                              of an effective global carbon tax
     solutions (see: Enabling                electrolyser to provide 10 hours of                           mechanism. This will provide a
     technology: Power-to-X and green        clean energy supply to a local                                crucial “push” factor to fossil
     hydrogen). A recent study of            building. Now, there are numerous                             fuels-dependent markets, going
     California’s grid decarbonisation       examples of green hydrogen                                    beyond current carbon trading
     found that it would require up to 55    projects under development, from                              schemes which allow entities to pay
     GW of long-duration storage by          NortH2 in Europe to Saudi Arabia’s                            to continue emitting carbon. It will
     2045 - more than 150 times the          Neom city.                                                    also send a strong signal on the
     state’s current storage capacity.19                                                                   urgency of emissions reductions –
                                             According to IRENA, around 95%                                while net emissions continue to rise
     For the hard-to-abate sectors, such     of hydrogen production today is                               annually, the UN has stated that
     as steel production, chemicals,         based on methane gas and coal.20                              emissions need to rapidly decline
     aviation, maritime shipping and         Future deployment of hydrogen                                 by 7.6% annually from 2020 to 2030
     other forms of long-haul transport,     must prioritise green hydrogen.                               to meet Paris Agreement targets.21
     there are higher barriers to            Its production is already
     electrification. Investment in          technically viable, and will                                  Case studies provide evidence for
     energy carrier technology will be       require investment, learning                                  the effectiveness of carbon pricing,
     required, including in an efficient,    curves and further deployment to                              from the UK’s “carbon price floor”
     versatile and scalable storage          reduce the costs of electrolysers                             for fossil fuels generators to the
     solution like green hydrogen.
                                             18. https://www.iea.org/news/a-rapid-rise-in-battery-innovation-is-playing-a-key-role-in-clean-energy-transitions
     Green hydrogen is increasingly a        19. https://static1.squarespace.com/static/5b96538250a54f9cd7751faa/t/5fcf9815caa95a391e73d053/1607440419530/
     jewel in the crown of national                LDES_CA_12.08.2020.pdf
                                             20. fi le:///C:/Users/joyce/Downloads/IRENA_Green_hydrogen_cost_2020.pdf
     climate action policies, after          21. https://unfccc.int/news/cut-global-emissions-by-76-percent-every-year-for-next-decade-to-meet-15degc-paris-target-
     decades of failing to take off due to         un-report

16                                                                                                                                                    GWEC.NET
Wind energy’s role on the road to net zero

reformed Emissions Trading            Potential pinch points on growth
Scheme (ETS) in the EU. China’s       in the decade ahead                           A dramatic scale-up of wind energy will require
newly launched national ETS will
be an important step on its road to
                                      Looking beyond the urgent policy
                                      interventions needed in the next
                                                                               international cooperation on grid infrastructure and cross-
carbon neutrality and is set to       few years, there are several other          border interconnection, sustainable land and ocean
become the world’s largest            challenges on the horizon.
emissions management scheme,                                                   management, technical standards, supply chain regulation,
with more than 2,200 power            Addressing structural barriers                      environmental protection and more.
generators participating.             in the Global South
                                      The energy transition will adopt a
There are several challenges          different rhythm and form in every      sub-Saharan Africa and South            2019, according to GWEC Market
around gaining consensus on a         country. But many countries share       Asia.24 The economics of renewable      Intelligence. The top six turbine
global carbon tax, relating to        similar challenges in market            energy, especially for utility-scale    suppliers now control nearly
carbon inequities between             design, where investment in wind        wind projects, are tougher in areas     three-quarters of the global market.
developing and developed              energy is available but policy          with limited customers on the grid.     More than half of the turbines
countries, tax at the point of        conditions undermine the viability                                              installed in 2019 were in the
consumption versus production,        of projects. Wind and solar energy      While decentralised renewable           Asia-Pacific region, strengthening
allocation of revenues and            already became the cheapest             solutions have been the least-cost      the existing export hubs of China
appropriate pricing strategies.       energy options for two-thirds of the    response to date, an equitable          and India, and giving rise to new
According to the IMF, a scheme        global population by the end of the     energy transition will require          suppliers as East Asia and South
needs to begin with initially low     last decade – for these areas, the      systemic change. Expanding              East Asia markets build their
prices (US$6-20/ton) and then         issues centre on clearing market        renewable energy in areas lacking       offshore wind capacity.
rapidly increase on an annual basis   barriers to get projects through the    power calls for long-term political
to reach US$40-150/ton by 2050.22     development pipeline to grid            economy planning, strong                Similar market consolidation is seen
                                      connection.23                           regulation of the power sector,         in the gearbox segment, where less
At the same time, there is mounting                                           innovative financing models to          than half of suppliers operational
agreement that fossil fuels are       For the rest of the world, primarily    incentivise private investment in       eight years ago remain active. In
immensely under-priced when it        countries in the Global South,          renewables and redirection of           blades, the number of independent
comes to the costs of production,     renewable energy uptake faces           fossil fuels subsidies to electricity   and SME suppliers has dwindled
air pollution, global warming and     structural barriers, such as            networks and clean energy assets.       due to inability to compete on cost,
environmental impact. A global        energy access shortfalls and
carbon tax can provide a              affordability gaps in the power         An evolving global supply chain         22. https://www.imf.org/-/media/Files/Publications/
                                                                                                                            WEO/2020/October/English/ch3.ashx
significant lever to adequately       sector. Worldwide, 770 million          As the wind market expands to new       23. h  ttps://www.bloomberg.com/news/articles/2019-08-27/
price emissions, incentivise          people still lack electricity access,   markets, the supply chain continues           solar-wind-provide-cheapest-power-for-two-thirds-of-
                                                                                                                            globe-map
renewables uptake and redirect        and this is set to shrink only          to evolve. The number of wind           24. h  ttps://www.iea.org/reports/sdg7-data-and-
revenues into green funds for         moderately to 430 million people        turbine suppliers has declined from           projections/access-to-electricity; https://www.irena.
                                                                                                                            org/newsroom/articles/2019/Dec/SDG-7-Win-Win-for-
societal benefit.                     by 2030, with concentration in          63 OEMs in 2013 to 33 OEMs in                 Ending-Energy-Poverty-and-Protecting-the-Climate

GWEC | GLOBAL WIND REPORT 2021                                                                                                                                                      17
Wind energy’s role on the road to net zero

                                                  R&D investment and market               recognition of common aims and           major energy transition scenarios,
                                                  coverage. As a result, 10 blade         mutual benefits. Take grid:              wind energy has a responsibility to
                                                  producers account for 80% of the        Integrated electricity systems are       chart a clear path through the
                                                  total global blade supply today.        not only a means for countries with      choppy waters ahead. This will
                                                                                          low resource potential or system         require a unified voice on issues of
                                                  The heightened competition for          flexibility to gain access to clean      global significance, from carbon
                                                  terrain, rare earths and technology     energy; they are also a potential        pricing to market design, from just
                                                  ahead raises the risk of price          revenue stream for countries with        transition to circular economy. This
                                                  volatility and trade tensions. This     significant resource, where the          also means strong representation in
                                                  can slow down cost reduction and        dividends from cross-border              the evolving debate on the nature
                                                  learning curves for the wind            power trading can be re-invested         of energy security.
                                                  industry, while inflating project       for social value creation, such as in
                                                  capex. Concurrently, tariffs and        public health or education. The EU       Wind energy will power the road to
                                                  protectionism are now heating up        currently has at least 82                net zero, but to get there by
                                                  around sectors like battery             interconnectors across 22 borders,       mid-century requires credible and
                                                  manufacturing – which need to           and grid integration is also strong      intensified efforts in the run-up to
                                                  grow at pace to support the energy      in regions like Central America.25 In    COP26 and ahead of the next
                                                  transition.                             other regions where clean energy         deadline of NDCs in 2025. As a
                                                                                          demand is on the rise, like South        priority in the near term, the wind
                                                  What does political agreement           East Asia, interconnection is still in   industry must work in tandem with
                                                  on net zero look like?                  the feasibility stage.                   its collaborators in the energy
                                                  A dramatic scale-up of wind                                                      transition to increase national
                                                  energy will require international       It remains to be seen whether the        ambitions for renewables and raise
                                                  cooperation on grid infrastructure      global expansion of renewable            awareness of their cross-cutting
                                                  and cross-border interconnection,       energy will result in greater self-      benefits for economies and people.
                                                  sustainable land and ocean              sufficiency and trust-building among
                                                  management, technical standards,        states or heightened vulnerabilities     2021 has begun with lofty
                                                  supply chain regulation,                and competition. The former could        expectations, marking the start of
                                                  environmental protection and            unite a global alliance around the       the UN Decade of Action and the
                                                  more. While the COP process             ideals of carbon neutrality, while the   Decade of Ocean Science for
                                                  provides a framework for                latter could yield a realpolitik of      Sustainable Development. It also
                                                  cooperation, much of the                transactional cooperation which          marks the beginning of the decade
                                                  multilateral alignment required for     slows down the transition.               which will determine whether we
                                                  the energy transition lies outside                                               can reach net zero by 2050.
                                                  the scope of existing mechanisms.       Conclusion
                                                                                                                                   25. h
                                                                                                                                        ttps://ec.europa.eu/energy/sites/ener/files/
                                                                                          As a mainstream energy source in             documents/2nd_report_ic_with_neighbouring_
                                                  The fuel for this cooperation will be   many parts of the world and in all           countries_b5.pdf

18                                                                                                                                                                            GWEC.NET
You can also read