In 2010, for the first time ever, more new wind power capacity was installed in developing countries and emerging economies than in the traditional wind markets of the OECD.
This puts an end to the assertion that wind power is a premium technology only for rich countries which cannot be deployed at scale in other markets. It is also testament to the inherent attractiveness of wind power for countries striving to diversify their energy mix, improve their security of supply in the face of rapidly growing demand, and relieve national budgets of the burden of expensive fossil fuel imports at volatile prices.
Asian wind power boom
The growth of wind power outside of the OECD has been primarily driven by the continuing boom in China, which is now the country with the largest installed wind power capacity in the world. The Chinese government has a clear commitment to developing the country’s massive wind resource, partly driven by the need to increase national power generation capacity to fuel a growing economy and to spur rural economic development.
Furthermore, the Chinese government is committed to slowing down the country’s increasing greenhouse gas emissions and to reduce air pollution. This political commitment was underpinned by favourable policies to boost wind power development, and this has led to exceptional growth in this sector. After four years of doubling its installed wind capacity from 2006 to 2009, a record capacity of 18.9 GW was added to the Chinese wind fleet in 2010, taking the total up to 42.3 GW.
Wind power now represents nearly a fifth of all yearly net power generation capacity additions in China, nearly on par with hydro. Beyond wind power’s environmental and energy security benefits, the Chinese government also recognizes the economic opportunity of building a strong domestic manufacturing base.
In 2009, out of the world’s top ten wind turbine manufacturers, three were Chinese, and annual domestic production capacity is now at least 30 GW. Chinese manufacturers are increasingly looking at international markets, and it is expected that Chinese wind turbines will soon be fully competing in the global marketplace.
A similar picture is emerging in India, albeit on a smaller scale. A rapidly growing economy and expanding population create a growing demand for power, and supply struggles to keep up with demand. Electricity shortages are common, and a significant part of the population has no access to electricity at all. In order to address this problem, the Indian government created a target of an additional 78.7 GW of generation capacity from 2007 to 2012, 10.5 GW of which will be new wind generation capacity.
The Indian Ministry of New and Renewable Energy estimates that there is a potential of 48.5 GW of wind power development, but industry experts estimate that a minimum of 100 GW could be realized in India. At the end of 2010, India had 13.1 GW of installed wind capacity, with 40 per cent operating in the southern state of Tamil Nadu.
As in China, India’s wind power development has spurred domestic manufacturing, and the Indian company Suzlon is now a global leader. Seventeen companies now manufacture wind power equipment in India, with a production capacity of 7.5 GW per year. Thanks to new market entrants, it is expected that this will rise to 17 GW or more by 2013, according to the World Institute for Sustainable Energy. Wind turbines and turbine blades made in India have been exported to the USA, Europe, Australia, China and Brazil.
While wind markets in the rest of Asia are only at the early stages of development, there is considerable potential and some promising signs are apparent. Across the region there are at least a dozen vibrant and rapidly growing economies in which wind energy could play a significant role, and there is increasing interest in the technology from policymakers and utility executives.
While wind energy in South Korea is still in its infancy, the Korean government recently introduced a Renewable Portfolio Standard scheme and set an ambitious target of developing 2.5 GW of offshore wind by 2020. Several Korean heavy manufacturers such as Samsung, Hyundai and Daewoo have started to include wind turbines in their portfolio in order to compete both domestically and in the international marketplace. In 2010, installed wind capacity increased by 30 MW to reach 379 MW.
In the Philippines, 33 MW of wind power are currently operating, but the technical potential is estimated at around 55 GW, over three times the country’s current total installed generation capacity, according to the United Nations Environment Programme’s Solar and Wind Resource Assessment (SWERA).
The government has set a target for 40 per cent of its electricity to be generated by renewable sources by 2020, up from the current 33 per cent. Both the Philippines government and the Asian Development Bank have set up funds to help with this process.
Vietnam has 18 MW of operating wind power capacity, but strong winds could support 642 GW of wind energy development, according to SWERA.
In addition, Vietnam has a fast-growing economy and a growing demand for electric power. The Vietnamese government is aiming for renewable power to provide about 5 per cent of the nation’s electricity by 2020. Investor interest in the Vietnamese wind market is considerable, and various wind power projects are reported to be in the pipeline.
Thailand’s growing affluence has led to a startling rise in per capita electricity consumption, which has grown by almost 25 per cent in the past five years. An estimated 30.2 GW of new generation capacity will be needed by 2021. The government has announced a target of increasing the share of renewable energy from 6.4 per cent in 2008 to 20 per cent in 2022, with an 800 MW target for wind capacity. According to SWERA, Thailand’s technical wind resource could support the development of 190 GW of wind power.
Prosperous Taiwan imports 98 per cent of its fuel needs, and has set a target for renewables to meet 10 per cent of its electricity by 2010, up from 5.8 per cent currently. Wind power is expected to meet 80 per cent of that, and a feed-in tariff was introduced in 2009. During 2010, Taiwan installed 83 MW of new wind power, bringing its total to 519 MW.
Indonesia is planning to build 255 MW of wind capacity by 2025.
In Pakistan, the far-reaching repercussions of the flood disaster of 2010 on infrastructure in general, and the power infrastructure specifically, have worsened the supply situation and led to an acute power shortage.
Most of the country’s power needs to date have been met by fossil fuels. To support the addition of renewable capacity, the Asian Development Bank set up a $510 million financing facility in 2006, and a feed-in tariff was introduced.
In addition, the United States Agency for International Development is co-funding a public-private partnership to develop a 150 MW wind project in the Gharo Corridor. The potential for wind power is estimated to be around 350 GW, according to both the Pakistani government and SWERA.
Other countries in the region have also set ambitious targets for wind power development, but this has not always been followed up by the introduction of effective policy frameworks. Bangladesh, for example, has set a target of reaching 5 per cent of its electricity coming from renewables by 2015; Mongolia plans to increase its share of renewable electricity from the current 3 per cent to 20–25 per cent by 2020; Sri Lanka wants to go from the current 5 per cent to reach 10 per cent by 2017 and 14.1 per cent by 2022.
Latin America realizing its potential
Latin America, a region of great cultural and economic diversity, has some of the world’s best available wind resources. Home to many growing economies with increasing electricity demand, this part of the world is considered prime territory for the significant deployment of wind power.
While beginnings have been modest, there are now concrete signs that the region is on the verge of developing a substantial wind power industry to complement its rich hydro and biomass (and potential solar) resources, most notably in Brazil and Mexico. The total installed capacity in the region grew by 50 per cent during 2010, and more than 2000 MW of wind power are now operating across the region.
Wind power is making the most progress in Brazil, the region’s largest economy. This country has many areas with tremendous potential for wind energy, combined with a growing electricity demand and solid industrial and grid infrastructure. As a country with a large share of hydropower, this combination forms an ideal basis for large-scale wind power development.
At the end of 2010, 930 MW of wind capacity were operating in Brazil, with a project pipeline of more than 4000 MW up to 2013, most of which were contracted in the 2009 and 2010 auctions. Two new auctions have already been announced for July 2011.
Since the December 2009 auction, seven major international manufacturers have committed to building production facilities in Brazil, most of which are already under construction. Brazil is set to not only be the largest wind power market in the region, but will also be a major manufacturing hub for the region.
Mexico, too, has an outstanding wind resource, especially in the Oaxaca region, but also in Baja California, as well as in other regions. Mexico’s installed wind capacity has increased more than sixfold since the end of 2008, and 316 MW of new capacity was added in 2010 to reach a total of 519 MW.
Argentina’s wind resources are unrivalled in the region, and are estimated to be sufficient to supply Latin America’s entire electrical demand several times over. However, to date, only a tiny amount of the potential has been developed with just 60 MW of wind power operating, up from 33.5 MW at the end of 2009.
Another promising market is Chile, which had nearly 172 MW of wind power in operation at the end of 2010. A number of large wind power projects are under development, and they are desperately needed to help alleviate chronic gas shortages.
Uruguay is also starting to develop its wind resource and added 23 MW of new capacity for a total of 43 MW at the end of 2010. The country has a target of reaching 500 MW of installed capacity by 2015.
Other wind power markets in the region include Costa Rica, which had about 123 MW of wind power at the end of 2010, and a new 50 MW project in the pipeline; Peru, which had nearly 150 MW under construction at the end of 2010; Venezuela with 100 MW currently under construction, scheduled to come on line in 2011; Jamaica, with 24 MW installed capacity; Nicaragua, which installed 40 MW of wind power in 2009; and Honduras, with 102 MW under development, due to come on line in 2012.
Unfortunately, however, most of these early markets suffer from the lack of a clear, long-term policy framework for wind power development, which continues to hamper market development.
Africa’s small but important steps
Wind energy could bring many benefits to Africa due to its scalability, which means that it can play a key role in both decentralized and centralized systems. Also, the fact that wind power uses no water to generate electricity is good news for this water-stressed continent.
About a quarter of the world’s population has no access to electricity, and the problem is especially acute in peri-urban and rural areas in sub-Saharan Africa. In many African countries, the electricity that is available is likely to be generated from diesel generators or other small-scale plants.
These very often use expensive imported fuel and many countries spend a considerable share of their scarce foreign exchange reserves on energy imports. Large-scale power production in Africa, where it exists, is mostly from large hydro (as found in Egypt) or coal-based generation (as in South Africa).
Africa’s wind resource is best around the coasts and in the eastern highlands, but it is only in Mediterranean North Africa that wind power has been developed at scale. Ninety-seven per cent of the continent’s total wind installations are located in Egypt (550 MW), Morocco (286 MW) and Tunisia (114 MW).
Egypt has a target of producing 20 per cent of its electric power from renewable sources by 2020, and this includes a 12 per cent contribution from wind energy, which translates into more than 7200 MW of grid-connected wind power. Most of Egypt’s wind development to date is in the Zafarana district on the Red Sea coast, but there are also plans to construct a 250 MW plant at Gabal el-Zeit, and a recent tender has called for proposals to build a further 500 MW in the Gulf of Suez. A second tender for the same amount is expected for July 2011.
Morocco has excellent wind resources along the coastline, as well as inland near the Atlas Mountains. The Moroccan government has set a target of raising the contribution of renewable energy to 20 per cent of national electricity consumption (up from 7.9 per cent) by 2020. Wind power is poised to play a key role with a targeted 2000 MW of capacity, up from the existing 286 MW at the end of 2010. Half of this will be installed by the government-owned utility ONE, with the other half coming from industrial players producing their own wind power.
South Africa’s electricity system, which is primarily based on coal, suffers from low reserve margins, and is barely adequate to meet demand. The state utility Eskom estimates that the country needs to construct 40 GW of new generating capacity by 2025.
South Africa is ideally suited for wind power, given its abundant wind resources. While only one commercial-scale wind farm is in operation, the 8 MW Darling wind farm, the South African Wind Energy Association (SAWEA) estimates that with the right policy framework, wind could provide as much as 20 per cent of the country’s energy demand by 2025, or 30 000 MW of installed capacity. According to SAWEA, 7000 MW of this wind capacity is already at various stages of development, waiting for confirmation of grid connection and a power purchase agreement.
Interestingly, there have recently been developments in East Africa, with a 300 MW project under construction in Kenya and other wind projects well advanced in Ethiopia and Tanzania. These early projects will make a substantial contribution to the total generating capacity in each of these countries, and may also spur similar large-scale developments in other African countries.
Middle East turning attention to wind power
The Middle East is rich in oil and gas, yet these reserves are unevenly distributed. While some countries are major oil exporters, others are importers. With increasing prosperity in much of the region, power demand has been growing rapidly.
A number of governments in the Middle East have developed national plans for renewable energy, but current uptake of wind power is in its infancy, with only 92 MW installed in Iran, 8 MW in Israel and 2 MW in Jordan. While less evenly distributed than solar, the region’s wind resource is excellent in some countries such as Iran, Oman, Syria, Saudi Arabia and Jordan.
Iran is the only country in the region with any large-scale wind power installations. The country currently has two wind farms, with a combined capacity of 92 MW. There are plans for expanding wind capacity to reach 400 MW in the coming years. Preliminary studies conducted by SUNA (the Iran Renewable Energy Organization) have shown that Iran has at least 6.5 GW of practical wind power potential.
Jordan has a target of achieving 7 per cent of its primary energy demand from renewables by 2015, and 10 per cent by 2020. In 2010, Jordan introduced a Renewable Energy Law which requires the National Electric Power Company to purchase all electricity produced by independent and small-scale renewable plants at full retail price (net metering).
Syria’s target is for renewable energy to make up 4.3 per cent of primary energy demand by 2011, and it has two wind farms (100 MW and 30 MW) in planning. Oman also has considerable wind power potential, mainly in the South and in the mountains north of Salalah.
Wind power uptake in emerging economies – A trend for the future?
Given the vast potential for wind power development in Asia, Latin America, Africa and the Middle East, GWEC’s Global Wind Energy Outlook “advanced scenario” forecasts that by 2020, more than 40 per cent of the total global wind power capacity could be installed in these regions, up from 31 per cent at the end of 2010.
Given the swing in the 2010 market, this shift could be even more pronounced. China will continue to drive this development, hosting more than half of the wind power operating outside of the OECD by 2020, but other markets in the rest of Asia, Latin America and Africa are also expected to contribute substantially to the global total.
While there are strong economic, supply security and environmental drivers for wind power in developing countries and emerging economies, a key determining factor for realizing the vast potential will be the political will of governments to make this happen. Favourable support schemes, financial incentives, adequate grid infrastructure and access to financing are some key conditions required.
This article is taken from the Global Wind Energy Council’s recent Global Wind Report – Annual Market Update 2010. The full report can be downloaded at: www.gwec.net
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