Wind delivers the energy society wants
- European citizens and businesses want reliable, affordable and clean energy.
- The war in Ukraine is a stark reminder imported fossil fuels do not deliver that.
- Wind is a local energy source, it is competitive, clean and scalable. Delivering the wind volumes set out in REPowerEU, Europe’s energy security strategy, will save 65 bcm of gas, reinforcing Europe’s energy independence.
- Every new turbine reduces Europe’s energy imports and exposure to volatile fossil fuel prices. And helps minimise power bills.
- Wind is an increasingly stable form of power supply. New onshore wind farms now operate at 30-45% capacity factors and new offshore wind farms at 50%+.
- Advances in technology make it easier to manage energy systems with large shares of wind energy. Wind turbines are increasingly flexible: able to operate at lower wind speeds and to be more aligned with energy demand. And they help control frequency and voltage in the grid.
- Digitalisation optimises wind energy output and is improving the design of turbines and wind farms. It’s making it easier to maintain equipment and extend its lifetime.
- Wind power emits zero carbon, SOx, NOx or PM. It emits ~95% less CO2 than electricity from gas and ~98% less CO2 than electricity from coal. And consumes hardly any water. The CO2 footprint of wind turbines is negligible: a turbine pays off its lifecycle emissions in 6-9 months of operation.
- The wind industry is constantly improving the materials it uses. 85-90% of a turbine is recyclable. We are working towards full circularity in the wind supply chain and to limit biodiversity impacts. We are committed to engaging with local communities and to a happy coexistence with other economic and societal interests, including fishing and aviation and by working with environmental NGOs.
Wind gives Europeans wider social and economic benefits
- Wind is a strategic industry for Europe. It is central to Europe’s energy security strategy. Its 300,000 quality jobs contribute €37bn to EU GDP. Each new turbine generates on average €10m economic activity. Its 248 factories are spread all over Europe, including in economically-deprived regions. Wind is a major European exporter.
- Wind farms bring economic benefits, e.g. €5bn in taxes, to the places they’re located. They provide jobs and investments in local, often rural communities. Collective ownership models help share revenues locally and give citizens a stake in their energy supply.
- With its European supply chain and local benefits wind helps deliver an inclusive and just energy transition. 70-80% of Europeans support wind energy, even more among those who live near wind farms. The industry is committed to help re-skill those who’ve worked in fossil fuels.
- Wind is helping to decarbonise industry. Heavy industry used to worry about the costs of wind and its impact on energy systems. Now they want wind. Companies in chemicals, steel, ICT, aluminium, transport, pharma and food/drink are now sourcing power directly from wind farms on long-term supply agreements.
Wind will be the backbone of Europe’s energy system
- Wind now meets 15% of Europe’s electricity demand and much more in many countries: Denmark 44%; Ireland 31%; Portugal 26%; Spain 24%; Germany 23%. The IEA expects wind to be the no. 1 of power in Europe by 2027.
- The EU Commission sees wind being half of Europe’s electricity by 2050, with wind energy capacity rising from 190 GW today to up to 1,300 GW. That entails a 25x increase in offshore wind in the EU. But most of the GW capacity increase will come from onshore wind.
- Europe needs to accelerate the build-out of wind to deliver REPowerEU. The EU is set to build 18 GW a year of new capacity over 2022-26. But it needs 39 GW a year to meet the objectives set out in REPowerEU. The energy transition also requires doubling annual investments in electricity grids by 2025.
- The further expansion of wind energy will be driven by new wind farms on new sites. But it also requires significant investment in the repowering and lifetime extension of existing wind farms. Nearly half of Europe’s existing wind farms will reach the end of their normal life by 2030.
- The expansion of wind requires (a) progress on electrification; (b) a competitive supply chain; (c) the right policies, notably on planning and permitting; and (d) the right energy markets and grids.
- Electricity is less than a quarter of Europe’s energy mix today. The EU want it to be 57% by 2050, and 75% including indirect electrification with the production of renewable hydrogen.
- Renewables-based electrification of transport, buildings and industrial processes will drive their decarbonisation, boost energy efficiency and unlock the benefits of “sector integration” e.g. using EV batteries as storage; and
- Key priorities are: incentivising uptake of EVs and accelerating deployment of charging infrastructure; investing in heat-pumps and the electrification of district heating; and scaling up renewable hydrogen for those sectors that cannot be electrified directly.
A competitive supply chain
- The huge expansion of wind requires a strong manufacturing base. The EU recognises wind as strategic for the delivery of its energy, climate and industrial competitiveness goals.
- But the European wind energy supply chain is struggling as a result of low market volumes and cost pressure due to slow and cumbersome permitting, poor auction design and uncoordinated EU Trade policies.
- A strong industrial policy for wind means:
- market scale: national auction volumes aligned with REPowerEU, underpinned by accelerated permitting;
- the right auction design: technology-specific auctions, indexed to reflect possible increases in commodity prices, avoiding negative bidding where the industry pays for the privilege of building a wind farm, and applying qualitative criteria to reward the added value that European manufacturers bring in terms of energy system integration, sustainability, European jobs and community engagement;
- the right trade policies: open markets so we can import key components and materials and export high value-added finished products;
- an EU export strategy for renewables that tackles market barriers in third countries and helps us compete with low-cost finance from Asia;
- investing in R&D: continuous research and innovation in today’s technologies and in digitalisation, recyclable turbines, system flexibility including wind+ hybrid and grid optimisation;
- proactive workforce development; qualifications have to reflect industry needs and be recognised across borders; and
- funding and finance targeting the infrastructure needed for the expansion of renewables and the delivery or REPowerEU such as wind technology manufacturing, electricity grids, ports, and renewable hydrogen.;
The right policies
- Clearer and simpler rules on the planning and permitting recognising renewables as being in the overriding public interest, and meeting the EU’s binding deadlines: 2 years for new projects and 1 year for repowering;
- The prospect of stable revenues for those investing in wind: 2-way Contracts for Difference or market premiums to minimise financing costs; and market rules allowing to leverage the full potential of Power Purchase Agreements (PPAs);
- Robust CO2 prices driven by the ETS and relevant national or regional measures notably in the non-ETS sector; and
- Avoiding abrupt and uncoordinated energy market interventions that undermine investor confidence and put the accelerated deployment of wind at risk. Emergency measures to help Europeans deal with the current energy crisis must be time bound. Any ‘windfall taxes’ must apply to actually realised profit only. Most wind farms have fixed income, either from a Government auction contract or a Power Purchase Agreement (PPA) with an energy consumer. Or they have hedged against wholesale market price fluctuation. Most wind farm operators therefore don’t earn the upside when electricity prices rise.
The right energy markets and grids:
- Expanding, modernising and digitalising transmission and distribution networks: onshore and offshore; in-country and across borders. Existing grid capacity needs to be fully optimised. Transmission and Distribution System operators must lead and coordinate the planning build-out of electricity grids consistent with delivering climate neutrality by 2050 at the latest. System operators must deal with short-term bottlenecks to minimise curtailment. And the regulatory framework must support the development and introduction of new grid and system integration technologies;
- More dynamic and larger intraday markets, common balancing platforms and products to cover wider trading areas;
- Full and equal access for renewables to ancillary services markets. Rewards for flexibility including demand response, storage, inertia and fast frequency response; and
- Climate-proof capacity remuneration mechanisms fully leveraging the potential of storage, demand response and cross-border capacity.
If all this happens, wind energy will be at the core of a home-grown, resilient, cost-efficient and climate neutral energy system.