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Central and Eastern European Wind Power Markets
Frost & Sullivan, Dec 2008, Pages: 56
The following study covers the development and dynamics of the wind energy industry in Central and Eastern Europe (CEE). Political will and administrative procedures are dramatically changing as the need for energy security, and the ambitious European Union renewable energy targets drive the wind energy market in the CEE region. Nevertheless, sluggish policy developments, effects of the global financial crisis, in addition to supply bottlenecks and grid connection problems slow down the momentum, thereby exposing the markets largest shortfalls, and highest potential. Wind energy boasts of increased attention in the region also due to looming power crises forecasted in many largest CEE countries, such as Turkey and Poland.
Research Overview
This Frost & Sullivan research service titled Central and Eastern European Wind Power Markets provides insights, market forecasts and analysis of major market forces influencing the wind energy industry in the central and eastern European region. In this research, Frost & Sullivan's expert analysts thoroughly examine the following: government policy-making as well as other drivers and restraints affecting the market, industry structure and key wind developers to provide a deeper understanding of all the factors shaping the future of this market.
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Market Overview
Sizeable Potential of Wind Energy in Central and Eastern Europe to be realised as Renewable Energy Rises in Popularity
Political will and administrative procedures are dramatically changing as the need for energy security, and the ambitious European Union renewable energy targets drive the wind energy market in Central and Eastern Europe (CEE). Nevertheless, sluggish policy developments and effects of the global financial crisis, in addition to supply bottlenecks and grid connection problems, are slowing down the momentum, thereby exposing the market’s biggest shortfalls and highest potential. Wind energy boasts of increased attention in the region, also due to the looming power crisis forecasted for many of the larger CEE countries such as Turkey and Poland.
“The main factor propelling the growth of wind energy in the CEE region is the EU law, requiring distribution companies to give priority to renewable energy generators over conventional energy sources, in addition to national government-initiated support mechanisms,” notes the analyst of this research. “This is the strongest guarantee that renewable energy is connected to the grid and further utilised.” Therefore, the stability of this regulation, in addition to necessary national support mechanisms, introduces the certainty needed for market growth and long-term investments. Recent dramatic increases in installed capacity growth rates demonstrate the strongest market potential for such a large cluster of countries. Supported by the expanded number of adequate policies and incentives necessary for the market to develop and grow properly, the region is forecasted to experience a compound annual growth rate (CAGR) of 27.6 per cent between 2007 and 2014.
Market Participants to Reinforce Government Backing and Focus on Proactive, Growth-Conducive Policies
Despite recent positive changes, governmental policies and legislation are often not sufficient for renewable energy, including wind, to compete with power generation from conventional energy sources. Market leaders such as Germany, Spain and the United Kingdom are expected to push the wind industry forward, while smaller CEE countries with zero or minuscule installed capacity will lag behind. In light of the recent financial crisis, the wind industry is poised to slow down as demand for components drops. Investments are also set to fall due to the lack of available funding. “Some countries, such as Turkey, Bulgaria, Estonia and the Czech Republic have strong governmentally-initiated policies that support the growth of wind energy, while in other countries such as Lithuania, Latvia or Slovakia, there is a lack of political will to drive the industry forward,” says the analyst. “Moreover, even though wind energy has differing growth rates in each country, market penetration in the entire region is still low.”
As such, further attention has to be given to governmental policies in order to better adapt to market dynamics and in order to increase pro-active policies that are growth-conducive. In response to the financial crisis, the wind industry in the CEE region is largely dependent on the global market’s dynamics, especially those of Western Europe. “It is important to note that approved projects that have received the funding and are in construction should be driven toward completion, despite the probable delays,” remarks the analyst. “Therefore, the global economic slowdown will negatively affect the entire supply chain.” Together with EU pressure, key market participants should lobby for national renewable energy policies to be streamlined and clear to make further investments worthwhile for the industry in each country. In response to the recent global economic slowdown, pressure due to supply bottlenecks will decrease, creating more competition in the market. Frost & Sullivan identifies this trend as a change for the better because prices will fall and costs will eventually be reduced, spurring a healthy rebound. “Many countries that have reformed previous renewable energy legislation recently are not coincidentally leading the way in terms of growth rates; Turkey, Bulgaria, and the Czech Republic are some CEE countries that amended renewable energy laws within the past two to three years in order to provide more incentives and support policies for the wind energy sector,” concludes the analyst. “Subsequently, these countries are experiencing stronger growth that will prove most opportune for the long-term development of this market.”
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following countries in this research:
- Turkey
- Poland
- Bulgaria
- Hungary
- Czech Republic
- Others (including Lithuania, Latvia, Slovakia, Romania and Estonia)
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