Wind Energy: great challenges lie ahead for the future
Europe and the United States risk missing their ambitious wind energy installation goals as rising costs, supply chain delays and low electricity prices at auctions hamper development and lead to cancellations of offshore wind projects.
The government's goals were very ambitious even before the perfect storm that hit the wind energy sector this year. Now, those goals may be out of reach if policies and auction patterns don't change, analysts and industry officials say.
The wind energy industry is growing in both the United States and Europe, but is currently off track to meet 2030 capacity goals, undermining clean energy and emissions reduction goals.
The problems are most evident in the offshore wind sector, which has seen several major setbacks this summer: auctions in the US and UK were a flop , Big Oil snapped up all the acreage in a bid German procurement and a major project in the UK have been canceled due to rising costs and difficult market conditions putting pressure on new developments. Meanwhile, developers in the United States are seeking more flexible requirements for tax credits to make projects economically feasible.
In the EU, the European Parliament recently approved much higher binding renewable energy targets by 2030, increasing the share of renewable energy in EU energy consumption to 42.5% by 2030, up from the current target of 32 %. Only the wind sector needs to double its current capacity to achieve these goals.
But the EU risks missing its goals of installing wind energy capacity and losing the supply chain to competition in China's traditionally low-cost manufacturing sector. Additionally, inflation, higher interest rates and supply chain issues have made materials and products more expensive, increasing the costs of already approved projects.
The European Commission is therefore set to propose a European wind energy package in October to help put the bloc's struggling wind industry back on the path to growth to help accelerate its decarbonisation goals, the European Commission president said Ursula von der Leyen in the state of the situation by 2023. Address of the Union. The Commission is committed to further accelerating authorisations, improving auction systems across the EU and focusing on skills, access to finance and the stability of supply chains.
In the United States, the Inflation Reduction Act is spurring the development of clean energy projects, but the wind industry expects the Biden administration to ease subsidy eligibility requirements for offshore wind, arguing that current IRA rules make many investments uneconomical.
Orsted, for example, warned in August that it could face writedowns of up to $2.3 billion (16 billion Danish crowns) on its US project portfolio due to supply chain delays, higher interest rates and the possible inability to benefit from additional tax credits beyond 30%.
In a sign of the difficulty of the offshore wind sector, the latest lease auction, the first such sale in the Gulf of Mexico, was a flop last month, attracting only one bid from Germany's RWE. Of three leased areas, two did not receive any offers .
RWE CEO Markus Krebber wrote in a LinkedIn post last month that with the challenge in the offshore wind sector “happening at a time when the entire offshore sector needs to expand to meet expansion targets, this quickly puts discussion on the achievement of climate protection objectives.”
“Simply put: we need a framework that allows for greater investment certainty for both manufacturers and developers,” Krebber added.
Ben Backwell, CEO of the Global Wind Energy Council, also believes that the current pace of global wind energy development is insufficient to meet the 2030 goals.
“We certainly see a big gap between the renewable energy and wind targets for 2030 and the path we're on right now,” Backwell told Reuters this week.
The problem is that the creation of these conditions will not be free, but will happen with an improvement in the economic conditions for companies, all at the expense of taxpayers or energy customers, all at a particularly delicate moment for the whole economy. Are we sure that the economic effort is worth the candle?
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The article Wind Energy: great challenges ahead for the future comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/energia-eolica-grandi-sfide-le-si-presentano-davanti-per-il-futuro/ on Tue, 03 Oct 2023 14:45:39 +0000.