‘Stabilizing revenue from wind is essential’

The Netherlands and other countries must resist the temptation to invest only in the most sexy innovative technologies for wind energy, according to Giles Dickson, ceo of WindEurope, who will be one of the speakers at this year’s Dutch WindDays. There is still a lot of scope for enhancing existing technologies, which is just as important. Interview with Giles Dickson, CEO WindEurope

Giles Dickson, WindEurope / Bickley

The installed base of wind energy is growing at an unprecedented pace in Europe. By 2030 it is expected to have surpassed gas powered plants as the major source of electricity, supplying up to a quarter of demand. So, there is reason to be optimistic about the sector. At the same time it is important not to get carried away by the thrills of success. There is still a lot of work to do – and nothing will happen by itself.

‘A binding EU wide target is on its way’, Giles Dickson says. ‘This will force countries to articulate their plans. It really is a key moment. Some countries are underperforming. Eleven countries don’t invest at all, even though the potential is huge.’

This matters, because capacity and distribution play an important role in integrating wind energy into the grid. Locally, the availability of wind energy may be volatile, but there’s always wind somewhere. With trading capacity moving closer to the time of production – up to fifteen minutes – adjusting demand to production will be more and more common. Still, response capacity will need to rise from 20 GW nowadays to 100 GW in 2030, Dickson reckons.

According to WindEurope’s report on 2017 a record of 15.6 GW in new wind power installations came into operation in that year. This brings the installed base to 168.7 GW, almost one third of which is Germany’s. Although it is not among the eleven laggards, The Netherlands are not a front runner when it comes to wind energy. The country only contributed 0.5% of European capacity growth in 2017. Cumulative it is 2.5%, putting The Netherlands in the tenth position of total installed capacity. When relating generating capacity to power consumption The Netherlands drops one place, leaving it below the European average. Denmark tops that scale with 44.4% of annual electricity demand covered by wind.

Costs

One of the factors that needs to be addressed in order to sustain growth is to offer a steady financial outlook to investors, Dickson says: ‘It is absolutely essential to stabilize revenue from wind energy development. Governments are moving from subsidies to auctions to drive down costs. Recently we have seen auctions where no subsidy was required at all. That was certainly spectacular, but it is important to note that zero cannot be the norm. Only some developers in some countries can afford this, specifically in Germany and The Netherlands, because of their low capital costs and stable regulation.’

In other words, government spending on wind energy infrastructure is not about to dwindle down. It will lower by itself, in any case, because a lot of money still goes to older facilities, that required higher subsidies. When these are phased out the effective subsidy per GW naturally diminishes.

Actually, WindEurope’s annual report already shows this trend of lowering costs. Although 2017 was a record breaking year for investments that were announced in terms of capacity for future projects (11.5 GW) the total investment was 19% lower than in the previous year, when 10.3 GW reached its final investment decision. Striking, too, was the 60% drop in investments in offshore wind, which had been rising for five years in a row. In contrast, onshore wind rebounded from a slowdown the year before.

Innovation

‘People, especially in The Netherlands, are inclined to look mainly at offshore wind for growth’, Dickson comments. ‘However, most growth is onshore and this will remain so. Witness for instance the recent commitments Akzo, Philips and Google amongst others made in The Netherlands to onshore wind for powering their operations.’

Nevertheless, a focus on offshore wind is understandable in a country with a high population density, resulting in frequent protests against new projects. The challenges of installing ever larger facilities in the North Sea, moreover, sparks the imagination. ‘We certainly will need even larger turbines that can cope with higher wind speeds’, Dickson acknowledges. ‘Floating offshore wind farms are an interesting development, and everything that has to do with storage deserves attention. However, we must resist the temptation to invest only in the most sexy innovative technologies for wind energy. There is a lot of existing technology that deserves attention, such as better components for wind turbines, which should lead to lower maintenance cost.’

Even with these caveats the prospects for wind energy are sunny. As governments realise that wind turbines are cheaper than for instance pv installations, wind energy will remain the dominant sustainable power source of the future. Text: Christian Jongeneel

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