MAKING TRANSITION WORK IN EUROPE
Wind energy makes economic sense.
So why is Europe’s leadership in it slowly slipping away?
Wind energy in Europe is at a crossroads.It’s a time of great opportunity and great uncertainty. Great opportunity because wind energy continues to set record son installations and investments. And costs continue to fall rapidly. But great uncertainty because the policies and markets are not in place to support its continued deployment, crucially to deliver the price signals investors need.
Wind now meets over 11% of Europe’ selectricity demand, and the industry generates €67bn in annual turnover. On economics alone, this should be a golden age for wind energy in Europe. Onshorewind is the cheapest form of new power generation in Europe: it costs less than building new coal, gas or nuclear.
Off shore wind is also cutting costs dramatically. In June 2016, 11 major energy companies declared off shore wind costs could fall to below €80/MWh by 2025,assuming an annual build out of 4GWa year. A month later, DONG Energy secured the cheapest off shore price everseen, winning the Borssele I and II sites in the Netherlands for a record €87/MW hincluding grid connection. This exceededeven the most optimistic expectations.It puts off shore wind in the same costrange as conventional power generation.
The favourable economics around wind gives European governments a perfect opportunity to accelerate the transition to low carbon energy. The wider economic benefits are evident.Already the wind industry provides330,000 jobs across Europe. That number could grow significantly. By2030 wind could provide nearly a quarter of Europe’s electricity, making it as central to Europe’s energy mix as coal and gas are today. Consumer bills would come down. And Europe would save on the huge amounts it pays for energy imports – yes, Europe’ sconsumers each pay nearly €1,000 a year for imported coal, gas and oil.Unfortunately, most governments in Europe are failing to grasp this. Policy and regulation on renewables are much less clear and ambitious than they were.Only 7 out of 28 EU countries have goals and policies in place for renewables beyond 2020. As things stand there’ll be not much onshore wind built in the UK or Poland, the once-strong Spanish market is also dormant, and Germany annual installations will be little more than half of what they are today. There is more ambitious and policy clarity in China,India and other emerging economies.The hard truth is Europe’s leadership in renewables leadership is slipping away.Offshore wind is also facing doubt.Despite current record investments levels,it’s unclear what many key governments are planning for offshore wind beyond2020 by way of volumes and regulation.We’re a long way from being able to say“job done” on offshore wind.
At the end of 2016 the EU Commission will propose a new EU Renewable Energy Directive. This will set the legal framework for renewable across Europe upon 2030. It has to be an ambitious proposal. Without robust legislation,investor uncertainty will take hold,and Europe will fail to realise the full economic potential of wind energy.It is essential that Europe ensures its domestic renewables industry remains strong – and that requires a vibrant home market. But as things stand Europe will not be number one in renewables.EU companies risk losing their lead over competitors and this will have a negative impact on jobs and growth.In 2015, China overtook the EU for total installed wind energy capa city. This wasa watershed moment. China and the US are hot on Europe’s heels. If Europe really wants to be number one in renewables it needs to get its act together. And fast.As an industry we will address allthese issues at the WindEurope Summit2016 on 27-29 September in Hamburg alongside the Wind Energy Europe fair. Hamburg is a major hub of the European wind industry so a natural place for us to meet – and with energy transition now a key issue for the G20it will be an excellent venue also for next year’s G20 Summit.
The title of our 2016 Summit in Hamburg is ‘making transition work’. Leading players in the wind industry and global energy policy will share their insights on the opportunities and challenges facing the wind sector. Speakers include German Vice-Chancellor Sigmar Gabriel,EU Commission Vice-PresidentMaroš Šef?ovi? and IEA Executive Director Fatih Birol.
We hope the Wind Europe Summit in Hamburg this September will generate a momentum on energy issues that will feed in to the Hamburg G20 Summit next July. We look forward to sharing the results with G20 leaders.