A new report has shown that Chinese asset owners remain the largest owners of global wind assets even despite their often dueling interests in coal extraction and generation and in 2017, 63% of global wind capacity additions were owned by 11 Chinese companies.
These are the headline findings from a new report published last week entitled Global Wind Power Asset Ownership 2018 which analyzed global wind power asset ownership, including providing a ranking of the top 25 global wind asset owners — a pool of owners which account for 208 gigawatts (GW), or 40%, of the world’s installed wind capacity. The report was published by Wood Mackenzie Power & Renewables, the resulting analyst group from the merger of solar, energy storage, and grid edge experts formerly of GTM Research, wind consultants and analysts from MAKE, and the global power team from Wood Mackenzie.
The report, which is primarily locked behind a traditional paywall, highlights China’s continuing dominance on the global wind energy scene — despite the fact that a large portion of their capacity ownership is based at home. China’s stranglehold on the top 25 — with Chinese companies accounting for 113 GW of the top 25’s 208 GW — was further solidified following the merger of former top-ranked power producer Guodian Group and the seventh-ranked mining and energy company Shenhua, resulting in the newly rebranded industrial titan CHN Energy, which now accounts for 34 GW, over double that of nearest competitor Iberdrola, which boasts 16 GW.
“Despite the conglomerate’s heavy focus on coal extraction and coal power generation, its wind fleet is more than twice as large as second-ranked utility Iberdrola’s,” said Anthony Logan, lead author of the report and a research analyst covering North America Wind.
However, the focus on building capacity at home in China might taper off, somewhat, and transition both towards a focus on operation and maintenance at home, and development overseas.
“Many turbines installed during recent years of breakneck growth in China’s wind sector are reaching the end of their turbine OEM (manufacturer) warranty period,” explained Xiaoyang Li, an analyst with Wood Mackenzie Power & Renewables’ Asia Pacific. “This coming transition, coupled with the low prices seen at new wind energy tenders, is forcing large asset owners to prioritise availability and annual energy production, driving a significant focus on operations and maintenance.”
“Chinese asset owners, long confined to their domestic market, are now looking to build and buy wind assets abroad,” Li added. “Australia has been a particularly attractive overseas market, thanks to its open market and high project profits.”
“It remains to be seen if China can successfully leverage their domestic experience into global success,” added Anthony Logan. “The domestic market is an insular world-in-itself, where wildly different drivers and barriers to new wind installation have created unusual priorities in turbine design and asset management. As the Chinese market matures and begins to resemble the broader global market, the most advanced and nimble Chinese companies should be competitive globally – and will bring enormous pocketbooks to bear – as we have seen in isolated cases, but the Chinese market will also be more exposed to mature foreign entrants taking opportunities from the weaker domestic players.”
Wood Mackenzie highlighted several other trends impacting regions outside of China’s dominance.
“In the US, 2017 saw domestic owners NextEra, BHE, Invenergy and Duke complete just 20% of their collective average 2015-2016 installation volume as they and several other domestic asset owners used the year to allow their development arms to rebuild exhausted project pipelines,” said Anthony Logan. “Canadian and European firms, on the other hand, developed significant new capacity in the [United States]. So far this year, the US has seen institutional investors move to buy portfolios as independent power producers scramble for capital in time to use the Renewable Electricity Production Tax Credit (PTC) before it runs out in 2020.”
Further south, Latin America’s wind market is being shaped by global IPPs with utility subsidiaries which are building ownership across the region through the dynamics of competitive auctions held through 2017 and 2018. Meanwhile, Enel, an Italian multinational manufacturer and distributor of electricity and gas, divested a majority stake in most of its Mexican renewable power assets to institutional investors late last year via its new “build, sell, operate” strategy intended to improve its ability to bid competitively at long-term auctions.
Northern and Western Europe saw the expiry of subsidies which, in turn, drove a record year of wind capacity additions and impacted asset owner segmentation — for example, utilities in the UK dominated asset ownership, but community ownership in Germany increased. Through the first half of 2018, European utilities and large IPPs sought to secure their project pipelines, ensuring their position in what is becoming an increasingly competitive market.
Overall, according to Wood Mackenzie, the top 15 owners in China hold 124 GW, the top 15 in the Americas account for 64 GW, the top 15 owners in the EMEARC region (Europe, Middle East, Africa, Russia and Caspian) account for 44 GW, and the top 15 owners in the Asia Pacific region hold 13 GW.
Finally, Wood Mackenzie also highlighted four large utilities — Orsted, E.ON, Vattenfall, and RWE — as the dominant force in offshore wind, working in a capital-intensive market which typically sees developers sell off around 50% of their projects to a more fragmented pool of institutional investors from around the world. Moving forward, Wood Mackenzie expects the growth of offshore wind will soon begin to affect ownership in the Asia Pacific region from 2022 onwards.
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