The Global Wind Sector Weathers Financial Upheaval
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On the endless laundry list of markets that have struggled to muddle through the financial mess known as the global economic crisis, the wind sector seems to be showing signs of a rebound, albeit a small one. A recent article featured in the Financial Times highlighted the “period of calm” that wind producers and investors, alike, are more than relieved to see return in the market.
Prior to the global economic vortex that has sent the sensitive wind market spinning (as well as other renewables markets), wind had been showing strong growth in the first half of 2008. The market for turbine installation was worth $47.5 billion and global wind power capacity was 121 GW – more than twice the 48GW capacity in 2004.
Unfortunately, investors and analysts do not even need the figures from late 2008 and the first half of 2009 to know that the pleasant breeze of financial success had turned into a market maelstrom. In the aftermath, there is reason to hope that recent signs of improvement may lead to more growth.
The Wind Turbine Market
Although the U.S. has largest installed capacity of wind power (25 GW), only one of the world’s largest manufacturers is American – General Electric. Given GE’s relatively old turbine design and so many up and coming manufacturers in India (Suzlon) and China (Goldwind and Sinovel), FT reports that the turbine production market could experience some consolidation as GE looks to purchase new technology.
The Wind Farm Market
The wind farm operating business has also experienced some turbulence in the last year. The world’s largest wind farm operator, Iberdrola Renovables, is an electrical utility that opted to separate its wind farm units into smaller businesses. Other farm operating utilities have faced a similar decision.
The biggest problem for farm developers is, of course, capital. Project finance on the scale needed to install a wind farm has been hard to come by, especially as banks have been tightening the purse strings.
While the offshore wind market has been showing signs of growth, the majority of wind farms are still land-based to due to the prohibitively high expenses associated with constructing and maintaining offshore farms. The UK leads the offshore wind market with 1 GW of installed capacity – not an overwhelming figure by any means.
Whichever Way the Wind Blows…
“Explosive” would certainly not be the word to describe the current state of the global wind industry, however, according to FT, The Global Wind Energy Council projects that the sector will grow at about 22% per year over the course of the next five years. Considering the possibility that the economic crisis could have resulted in crippling hardship for wind, as well as other renewables markets, its ability to weather the storm, even if growth is slow, is a testament to the long-term stability of wind power.
Source: Financial Times
Image Credit: Phault on Flickr under a Creative Commons License
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