Wind turbine orders and supply chain investments are up – but urgent action is required on grids, permitting and auction design

12 September 2024

Wind turbine orders and supply chain investments are up - but urgent action is required on grids, permitting and auction design

WindEurope's Autumn Wind Energy Data shows Europe built 6.4 GW of new wind farms in the first half of 2024. Turbine orders were up year on year and auction volumes are strong. But grid bottlenecks are delaying projects. And it's challenging right now to get big new investments over the line. Further improvements are needed in auction design. Permitting is improving though not everywhere yet. And ports need investments.

New wind installations in H1 2024

In the first half (H1) of 2024 Europe added 6.4 GW of new wind energy capacity: 5.3 GW onshore and 1.1 GW offshore. The EU-27 built 5.7 GW of this: 4.7 GW onshore and 1 GW offshore. Germany built the most with 1.7 GW, followed by France (1.2 GW) and Spain (876 MW).

Europe now has 278 GW of wind power capacity. 242 GW of this is onshore and 35 GW offshore. The EU-27 now has 225 GW of wind: 205 GW onshore and 20 GW offshore.

Wind turbine orders are up on last year: by 11% on H1 2023 for all of Europe and by 33% for the EU. And current auction volumes are strong: EU Governments awarded 19.7 GW of new wind capacity in their auctions in H1, twice as much as in H1 2023. The permitting numbers are also encouraging, notably the 5 GW new onshore permits Germany awarded in H1.

But investment decisions to build new wind farms are down on last year. Europe took €15.4bn of final investment decisions (FIDs) in new wind farms in H1 2024. This is less than 30% of the total FIDs taken in 2023. There are four FIDs so far this year. The new installations in H1 2024 are slightly less than expected, and less than half of what was built in the whole of 2023. We now expect the EU to build 15 GW of new wind farms this year, compared to 16 GW in 2023.

How much wind will Europe build by 2030 ?

Current trends and the pipeline of projects and auctions now point to the EU having 350 GW of wind energy capacity by 2030: 296 GW onshore and 54 GW offshore. The EU target is 425 GW. Today it has 225 GW. We expect Europe to build 22 GW of new wind farms a year on average over 2024-30, with the numbers rising towards the end of the decade.

The main bottleneck now is in electricity grids. New connections aren't being built or permitted fast enough. There are often constraints in the availability of grid equipment. The permitting of new wind farms remains an issue in many countries. Germany is making excellent progress having implemented overriding public interest and the other new EU permitting rules. But most Governments still haven't implemented them yet.

The combination of still high interest rates and input costs with a lower perspective for future wholesale power prices is also making it challenging to take FID for new wind farms, especially the big offshore ones.

Is the EU Wind Power Package helping?

The EU realised this time last year that things were not going well in wind, and that the sector needed additional support. The Wind Power Package they adopted with 15 immediate measures to strengthen the wind value chain are helping. The European Investment Bank (EIB) have set up and started using their (initially) €5bn counter-guarantee facility. Governments are giving more visibility on their future auctions, making more use of non-price criteria and indexing their auction prices better. And the Commission are taking action to ensure a level playing field.

Governments and public financial institutions are also giving more support to supply chain and logistics investments. And this is helping to support an increase in new manufacturing investments. Europe's wind energy supply chain is now building several new factories and expanding existing ones. By the end of 2025 the European supply chain will have the capacity to manufacture 9.5 GW of offshore and 22.5 GW of onshore wind turbines a year.

What should policymakers do now on wind?

Governments need to fully implement what they've agreed in the new EU permitting rules and in the Wind Power Package. Some of them need to improve their auction design to help improve the business case for new investments, notably by ensuring Contracts for Difference and PPAs are on offer. And they need to act urgently on grids in line with the EU's Grids Action Plan. Governments need to keep supporting the supply chain and logistics, including ports.

The expansion of renewables Europe wants ultimately rests on the electrification of energy - and shifting the three-quarters of energy that's still largely fossil into electricity. That needs action now to support the electrification of industry, transport and the heating of buildings.

"Europe isn't building enough new wind farms to meet its 2030 energy targets. The numbers will rise in the next 6 years but not by enough. Governments need to act urgently to apply the EU permitting rules and ensure the grids connections are ready on time. They need to help improve the business case for those looking to build new wind farms. And ensure the ports and other logistics are fit for purpose. They must also ramp up their support for the electrification of heating, transport and industry." says Giles Dickson CEO of WindEurope.

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