MAKE has upgraded its ten-year global wind outlook citing innovation and advancements in cost-out measures in offshore wind as main drivers behind the upgrade.
MAKE believes that the offshore sector is an important area of growth, particularly in carbon-intensive markets. According to the company, much of the momentum in the offshore sector is concentrated in leading countries of Northern Europe, but as offshore wind costs fall, government appetites for procurement and policy support increase globally.
Changes borne of cost reduction in the offshore sector, as MAKE believes, contribute to a 13 percent increase in the outlook for offshore wind in Northern Europe, which supports a nearly 3 percent upgrade in Europe quarter on quarter (QoQ), with the upgrade in the UK offsetting aggregated adjustments in the region.
A plunge in Contract for Difference (CfD) strike prices for offshore projects in the UK results in a significant upgrade QoQ. The outlook for Belgium also receives an offshore-driven upgrade since cost reduction prompted the government to commit to the Modular Offshore Grid hub and set up a new remuneration level for three projects.
The outlook for Asia Pacific is relatively flat QoQ. The boost from Taiwan’s national offshore target is largely offset by Australia’s decision not to adopt the Clean Energy Target, which creates a void in post-2020 support and hinders recent momentum in the market, MAKE said.
Overall, MAKE has upgraded the outlook in Q4 by less than 1 percent, with more than a 5GW upgrade in the offshore sector, which, according to the company, will more than off-set downgrades to the onshore sector in markets such as the US, Australia and the Philippines. The upgrade will not impact the global outlook until 2020 and beyond, due to the longer development cycle in the offshore sector and a dependence in part on expected technology gains, the company said.
In addition, MAKE has downgraded the 2017 to 2019 global outlook by 1.3GW, but the 2020+ global outlook is upgraded by more than 4GW, which results in a ten-year compounded annual global growth rate of 3.8 percent.
Global firm turbine order intake is down 25 percent year on year (YoY) in Q3/2017 to nearly 11GW, and down 18 percent YoY in the first three quarters of 2017. According to MAKE, the drop is influenced by onshore dynamics in China. Competition amongst original turbine equipment manufacturers in Northern China has intensified amidst a dearth of opportunities, which has limited a willingness to announce orders publicly and resulted in a more than 60 percent drop QoQ in registered order capacity.
Excluding China, global order intake is in line with order capacity registered in 2015 and 2016 and supports the company’s near-term market outlook expectations.