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Bloomberg New Energy Finance predicts that, despite impressive European wind power investment figures in 2016, new investment will slow in 2017 due to policy revisions and continued technology price declines.

Clean Power

European Wind Power Investments To Slow In 2017 After €43 Billion In 2016

Bloomberg New Energy Finance predicts that, despite impressive European wind power investment figures in 2016, new investment will slow in 2017 due to policy revisions and continued technology price declines.

Despite impressive European wind power investment figures in 2016, new investment will slow in 2017 due to policy revisions and continued technology price declines, says WindEurope and Bloomberg New Energy Finance.

In a short note on its website, Bloomberg New Energy Finance (BNEF) this week pointed to figures published earlier in the week by the region’s wind energy trade group, WindEurope, that new wind energy projects in 2016 attracted €43 billion ($47 billion) worth of investment, up 22% over the €35 billion of 2015. Specifically, the WindEurope figures showed that new asset financing for wind power projects reached €27.6 billion in 2016 with a record breaking €18.2 billion in offshore wind, while onshore wind investments dropped by 5%, the first decrease for the sector in five years.

However, according to both WindEurope and Bloomberg New Energy Finance, investment levels are likely to slow in 2017.

One of the primary reasons for this investment slowdown, according to WindEurope, is the inflation of investment levels over the past two years as projects hurried to reach a developmental-stage wherein they qualified for government subsidies, before governments transitioned to auction-based remuneration mechanisms. With these transitions already in effect in major markets like Germany and France, WindEurope predicts that there will be a lull before the results of these auctions lead to final new investment decisions.

“Wind was the largest recipient of power sector investments in 2016,” said Giles Dickson, Chief Executive Officer of WindEurope. “The competitiveness of our industry and reduced risk perceptions have brought in major financial players who are looking to diversify their portfolios. Cost reductions across the industry’s value chain mean investors can finance more generation capacity for less money.”

Bloomberg New Energy Finance echoed these sentiments, highlighting the historic results of Germany’s most recent auction, the recently-opened tender for UK offshore wind, and future auctions in the Netherlands, France, and Spain.

However, it is also important to note that another reason wind power investments are declining is simply because less money is needed to achieve the same results.

“Nowadays, you need less investments to get a similar level of capacity,” Joel Meggelaars, a WindEurope spokesman, in an email to BNEF. “And the high levels of investment in recent years were a result of projects being squeezed through the gate before countries moved away from feed-in-tariffs.”

WindEurope nevertheless raised the specter of geographical inequality when it comes to just how widespread the European wind energy revolution has become.

“What is worrying is the uneven growth geographically. 80% of new investments came from four countries alone, the UK, Germany, Belgium, and Norway,” explained Giles Dickson. “14 EU Member States did not announce any new wind energy investments in 2016. Many countries struggle to manage the transition to auctions. Only 7 EU Member States have clear policies for renewables beyond 2020 – the unclear policy outlook in the rest makes investors and project developers go elsewhere. The National Energy & Climate Action Plans required under the Clean Energy Package (by 1 January 2019) will be crucial to sustain investments.”

 
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