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Western European Wind Power Markets
Frost & Sullivan, Aug 2007, Pages: 76
Tail Wind in the West European Wind Power Market: Government Initiatives Help the Burgeoning Market along its Way
European investors were waiting for just the kind of support the governments are currently providing them with to be a part of the wind power market. The slew of government subsidies and incentives have encouraged mass participation in the market, with venture capitalists, private equity players as well as banks and energy giants tossing their hats in the ring. What started as a German Government initiative has become a pan-European trend, as various member states of the European Union (EU) are offering a range of financial incentives including investment grants and premium tariffs. These measures were necessitated by governments’ eagerness to allay the effects of skyrocketing oil prices, meet the stringent environmental regulations and ensure energy security.
The 2001 EU directive on renewable energy requires each member state to achieve a set percentage of renewable energy in their power supply by 2010. For electricity supply, the overall European target is for 21 per cent. 'These ambitious targets push for even stronger support mechanisms and funding programmes that include incentives such as soft loans, tax benefits and subsidies such as feed in tariffs and green certificates,' says the analyst of this research service. 'In addition, member states have established direct investment mechanisms through grants and schemes that have strengthened the manufacturing base of the wind industry.'
Winds of Change Blow through the Capital-heavy Market
The wind power market has a long way to go before it catches up with the more established fossil-fired generation market in terms of capacity of plants and market penetration. This is partly due to the inadequate supply of essential components, rising installation costs and over-dependence on subsidies. The huge gap in demand-supply of essential materials is driving up material costs, thereby threatening manufacturers’ margins. However, manufacturers can offset this issue to a certain extent by repowering or upgrading their plants for capacity addition and thereby, boosting production.
'Long-term government incentives and installation rebate supports are expected to help wind power participants meet the heavy capital required for production and installation,' notes the analyst. 'Such offers of help from the governments have helped the market achieve a cumulative installed capacity of 47,660 MW in 2006, and an average growth of 18.3 per cent across Western Europe.'
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Onshore wind farming
- Offshore wind farming
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