The onshore wind industry is set for “years of growth” across Eastern Europe, according to a new report from Wood Mackenzie Power & Renewables, which predicts 16 gigawatts (GW) of new capacity to be added in the region over the next 10 years.
The new report, entitled Eastern Europe Onshore Wind Market Outlook 2018, forecasts compound annual growth of 9% across Eastern Europe between 2018 and 2027, driven largely by the introduction of competitive auction schemes in Russia and Kazakhstan and proposed auctions in Poland and Ukraine, as the region essentially skips over the feed-in tariff (FiT) stage of wind development seen in Northern and Western Europe. Competitive auctions have resulted in tremendous growth in Brazil and Saudi Arabia, for example, and now Eastern Europe is lining up to try it out.
“The main driver is the implementation of auction mechanisms in leading regional markets who want to reap the benefits of declining cost of wind power,” said Sohaib Malik, Wood Mackenzie Research Analyst and lead author of the report, who spoke to me via email. “Post-2020 growth will be driven by ageing coal fleet and stricter emissions regulations in EU member states.”
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.
Somewhat unexpectedly, Russia will lead the way over the next decade as utilities are required to connect the majority of the awarded 3.2 GW between 2021 and 2024. The Ukraine, on the other hand, is expected to have transitioned away from its FiT regime by the end of 2019 which, according to Wood Mackenzie analysts, will create greater competition between developers in the country and further reduce the cost of wind power.
“Developers will add 60% of the forecasted capacity in Russia, Poland and Ukraine, which will drive regional market growth,” said Sohaib Malik.
“Poland will be picking back up as a dominant market in the region soon after the enactment of favourable amendments introduced to the renewable energy act in July 2018, which will allow the previously permitted, but halted, wind projects to participate in auctions,” explained Sohaib Malik. “This development gives a major boost to the Polish onshore wind market.”
“We expect significant coal decommissioning in Hungary, Poland and Romania after 2020 due mainly to an ageing fleet and stricter emissions regulations,” Malik added. “As wind power becomes more competitive due to reductions in technology costs and environmental benefits, it will be in a strong position to displace this coal power capacity in EU member states across the region.”
The Eastern European wind sector will also support the rise of new, smaller wind markets, such as Armenia, Azerbaijan, Georgia, and Slovakia, which will serve to ensure the long-term growth of wind in the region.