Demand for new wind power equipment is set to contract in the EMEA region in 2013 and 2014, in spite of an expected strong global market recovery in 2014 – the legacy of weak economic growth and political weakness across the region. However, consistent with the region’s leading market status, MAKE Consulting estimates that long term growth of the wind industry in Europe will be over two times GDP out until 2020.
Grid-connected wind installations in Europe, Middle East and Africa (EMEA) are expected to grow by 4.5% CAGR from 2012-2020. Growth however, is uneven across the region and is led by Northern Europe, Offshore and Emerging Markets. 7 of the top 10 global emerging markets are located in the EMEA region, underlining the region’s importance in driving growth.
Despite this, the geographical demand structure will change towards markets that warrant investment to achieve market access and thus have higher risk profiles: this will present challenges for the European wind power supply chain.
MAKE believes that the European Union (EU) 2020 renewable electricity production targets will be met with only 93% of its NREAP targets fulfilled, with Southern European and Offshore targets not being met, mostly due to weaker-than-expected electricity demand growth. The EU Offshore market is nevertheless still expected to be one of the brightest growth spots for growth.
Regulatory uncertainty appears to be moderating across EMEA and regulatory momentum is predominantly positive. However, policy uncertainty in recent months has put a dampener on demand. Improved long term policy visibility is required within the EU – particularly for offshore to keep momentum. As a result, market contraction in the EMEA region is likely to deepen further in 2014 despite global recovery and continued growth in offshore and Emerging Markets in the region.
Orders are picking up strongly in markets where MAKE expects growth – Northern Europe, Offshore and Africa & the Middle East, but it remains weak in Southern and Eastern Europe. MAKE expects the levelized cost of energy (LCOE) for wind to be at or below grid parity for most onshore markets between 2015–2020. This and 2030 renewable targets will form the basis for sustained long-term growth of the Industry.
[mappress]
Press release, August 20, 2013