The wind power sector is maturing due to technological advancements and cost reductions. The land-based wind power industry is currently expanding, and the offshore wind market is showing significant potential. However, while major investment opportunities exist, wind power still faces key challenges, such as intermittency and an underdeveloped supply chain. That being said, the future looks bright for the industry. This article will take a closer look.
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Current State of Wind Power Technology
Decreasing costs have led to an insurgent international wind power market. From 2009 to 2019, the cost of wind turbines decreased by almost one-third. In 2022, international capacity grew by 78 GW to reach a global capacity of 906 GW.
China, the US, Germany, and India are the top four countries for installed wind power capacity. Given China’s enormous energy needs and its government's ability to direct resources as it sees fit, it has the greatest wind power capacity.
Western countries are also increasingly receiving their power from wind. In the UK, wind power accounted for nearly 27% of the nation’s energy production in 2022. According to the BBC, wind power produced 54% of the nation’s total energy in one day in 2022. This is despite an effective ban on onshore wind installations that went into effect in 2015. In December 2022, Prime Minister Rishi Sunak relaxed restrictions that reversed the ban.
Technological Advancements in Wind Power Technology
Innovation is poised to make wind energy more financially viable in the coming years. In the US, advancements are expected to open up 80% more wind power capacity, according to a 2023 report from the National Renewable Energy Laboratory (NREL).
The innovations making wind power more financially viable include:
- Longer blades capable of harnessing more wind energy
- Segmented blades that are less costly to transport
- Taller towers that capture the stronger winds that exist at higher altitudes
- Larger rotors that catch more wind, sending more power to the generator
- 3D printing and other novel production techniques that allow for lower-cost, on-site fabrication
- Climbing construction cranes that allow more efficient installations
- Steering controls that allow a turbine to turn or tilt toward blowing wind
Market Dynamics and Trends in the Wind Sector
In the US, wind energy continues to grow onshore and offshore.
The land-based market is the most developed of the three, with a cumulative capacity of more than 135,000 MW, according to a 2022 report from the Office of Energy Efficiency and Renewable Energy.
Wind power currently provides more than 9% of total energy production in the US, which is up more than 300% since 1999.
Decreasing costs, technological improvements, and government incentives have all driven the expansion of onshore wind power capacity.
From 2021 to 2022, capacity in the offshore wind pipeline grew by 14% in the US, and the two offshore projects came online to add 42 MW. By comparison, global offshore installations reached a record number over the same time.
Nearly 17,400 MW of new capacity is coming online. As of the 2022 US report, the global offshore wind capacity is more than 50,600 MW. The report noted two increasing trends during 2021: more offshore installations producing clean hydrogen and more floating wind turbines entering the global pipeline.
Investment Opportunities in the Wind Sector
Offshore wind is a critical investment opportunity because it offers higher wind speeds and the increasing ability to generate high amounts of clean energy. In addition to having higher average wind speeds, offshore installations also produce more power in cold-weather months, when societies need power the most.
Many offshore wind projects are in the pipeline, but the offshore market is still relatively immature compared to the land-based market. To compete with onshore wind, companies in the offshore wind industry must take a multidisciplinary approach. While the supply chain is relatively mature in Europe, it is not in many markets worldwide. There is also a significant skills gap among the labor force for offshore wind projects.
Future Outlook of the Wind Power Industry
According to a 2023 projection from the Global Wind Energy Council, international capacity will increase an average of 136 GW annually through 2027, and the council projected a positive outlook through the decade's end. The GWC also increased its projections for added capacity through the end of the decade, from 1078 GW to 1221 GW.
Wind intermittency has been a major obstacle to expanding wind power capacity, but the industry is investing heavily in energy storage technologies that will enable wind to become a more dependable and regular energy source. Industry experts say smart grid advancements related to distribution and transmission will also bolster the value of wind power installations.
The wind power industry is in an exciting growth phase, driven by the increasing global demand for clean energy. In particular, the offshore wind industry holds significant potential for society and institutional investors.
As the industry continues to mature, integrating energy storage and smart grid technologies will help wind power rival that of the legacy energy production industries. Now is the time for industry stakeholders to capitalize on the exciting opportunities in the wind power industry.
References and Further Reading
Darwish A. et al. (2020). Wind energy state of the art: present and future technology advancements. Renewable Energy and Environmental Sustainability. https://www.rees-journal.org/articles/rees/full_html/2020/01/rees190010/rees190010.html
Dunn, C. (2018). The offshore opportunity: Five factors that make wind power investment work. [Online] Arup. Available at: https://www.arup.com/insights/the-offshore-opportunity-five-factors-that-make-wind-power-investment-work/
Eiert, S. (2024, March 15). Wind energy: The trends defining the future of the industry. [Online] Forbes. Available at: https://www.forbes.com/sites/forbesbusinesscouncil/2024/03/15/wind-energy-the-trends-defining-the-future-of-the-industry/
Global Wind Energy Council (GWEC). (2023). Global Wind Report 2023. [Online] Available at: https://gwec.net/globalwindreport2023/
Laurie, C. (2023, March 2). Technology Advancements Could Unlock 80% More Wind Energy Potential During This Decade. [Online] National Renewable Energy Laboratory. Available at: https://techxplore.com/news/2023-09-technology-advancements-energy-potential-decade.html
Wind Energy Technologies Office. (2022). Wind Market Reports: 2022 Edition. [Online] U.S. Department of Energy. Available at: https://www.energy.gov/eere/wind/wind-market-reports-2022-edition
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