MAKE: Grid Congestion in China Impacts 2014-2016 Global Outlook

MAKE identifies several market dynamics since the analysis in Q3/2014 that in aggregate result in a 0.4% downgrade in the ten-year outlook for grid-connected capacity. Adjustments in China, the Middle East and Africa have influenced a net downgrade, but the outlook for installed capacity is maintained with a slight upgrade of 0.2%. Demand has been front-loaded in several markets in order to capitalize on expiring incentives.

MAKE’s Q4/2014 Global Wind Power Market Outlook Update presents how grid congestion in China impacts the 2014 to 2016 grid-connected forecast significantly, as a rush to complete projects ahead of an anticipated cut in the FIT will result in installations out-pacing available grid capacity. Thus, a contrasting outlook as grid-connected capacity is reduced over ten years while installed capacity increases.

2014 grid-connected installations are reduced by 7.9% from last quarter, with MAKE expecting 2014 grid-connected installations of 44.7GW. Grid congestion in China, exacerbated by slow progress in development of new transmission lines, alone results in a 2.5GW cut. The widening grid gap in China is expected to lower YoY growth in installed capacity from 2018 and impact global market size in the back end of the forecast.

Firm orders are down 12% YoY in Q3/2014, but a robust order backlog supports short-term market dynamics. Global firm order volume in Q3 increases in every region expect for North America. North America sees a 37% drop YoY, as order backlog has nearly fulfilled forecast expectations in the US and Canada. Net capacity in North America stays the same from Q3. Projects in the US continue to shift into 2015 setting up what will amount to the market’s third largest year of growth.

The ten-year outlook in Europe is increased by 3.3%, as net upgrades are made in both onshore and offshore markets due to improved policy certainty in key markets.

MAKE has evaluated progress toward government ambitions in the Middle East and Africa and has adjusted several market forecasts due to development delay and policy uncertainty. Despite a 10% downgrade over ten years, this region retains the leading global share of emerging growth.

The Q4/2014 Global Wind Power Market Outlook Update includes a detailed market forecast update for more than 50 key and emerging markets for wind power from 2014 to 2023. The forecast data includes a split of expected onshore and offshore development, and analysis of the latest order and pricing trends.

[mappress mapid=”14597″]

Press release; Image: SUSPLAN (Illustration)