May 8
offshore wind energy
Image: Vasilios Muselimis via Unsplash

European investment in wind generation reached 43 billion euros last year – its second highest year on record, despite the pandemic – according to Wind Europe, an industry advocacy association.

The investment number was a 70% increase on the previous year, with 17 billion euros going to onshore wind projects and 26 billion euros for offshore wind projects. The investments will result in 20 gigawatts (GW) of new capacity globally, with 13 GW of that in the European Union. 

Large projects boosted the offshore numbers, including the British Dogger Bank project – which, when completed, will be Europe’s largest – and Hollandse Kust Zuid in the Netherlands.

The European Union has increasingly placed its political weight behind renewable energy, especially wind, as a clean, environmentally friendly energy source. Wind generation has also proven it can profitably compete as a power source while creating domestic jobs, for which both Brussels and London are keen.

Even as investment in wind capacity in Europe nears record levels, the actual pace of investment could move faster, according to Wind Europe. Permits and bureaucratic delays are the main deterrent on the rate of investment.

“The money’s out there, but not enough new projects are coming through,” the release said. Rules and procedures are too complex, and authorities lack the staff to process current applications, much less increased levels in a timely manner.

The money isn’t the problem, according to the association. Most wind project investments are mainly debt financed, and banks lent a record 21 billion euros in non-resource debt to new wind farms in 2020. Direct power purchase agreements between corporate users and generators additionally support financing.

The largest investors last year were the UK (13 billion euros), Holland (8 billion), France (6.5 billion) and Germany (4.3 billion). 

Even with near-record pace in investment, renewables are still only building scale and significance in the global energy market. Gaining this scale will be important not only for the industry, job creation and profitability, but also for the underlying environmental message that acts as glue for political support.

The EU is still well short of capacity additions to reach its goal of reaching carbon neutrality by 2050. It will require 27 GW of new capacity annually to reach a new 55% emissions reduction target.

The industry isn’t running at that level yet. All the same, such big moves in a pandemic year – marked by very competitive, very low energy prices worldwide – can only be a positive sign.

By Stephen Bierman

Stephen Bierman is an energy markets journalist and the editor of New Economy Observer.

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