Transitions to climate neutrality will lead electricity demand to more than double in Europe by 2050, and wind generation is tabbed to provide half of the mix, according to WindEurope.
EU moves to cut emissions by electrifying different sectors and industries, including transport, will push demand to 6,800 TWh from 3,000 TWh today. The EU predicts a boom in wind generation, with arrays providing half of the bloc’s electricity mix, up from 16% today, according to a statement from the industry lobby group.
“Electrification will be key to drive growth across renewable energy, and with its proven track record, wind energy can provide a strong foundation for an electrified energy system,” said Javier Rodriguez Diez, Executive Vice President Sales at wind equipment manufacturer Vestas.
Wind producers seeking to reach that target, however, are facing some tough headwinds. Cost inflation and supply chain issues have slammed share prices of Europe’s largest wind equipment manufacturers, Vestas and Siemens Gamesa. Both have cut guidance on profitability margins more than once this year and see difficult conditions lasting into next year.
The plummeting share prices mean that investors believe neither Vestas nor Siemens Gamesa will be able to pass along these increased costs to the utilities and funds which are contracting their services. But even if manufacturers must eat all, or part, of these costs in the short-term, they will eventually get passed along. And that will become a hurdle, as lowering costs remains a key to wind gaining against competing energy sources.
The timing on cost inflation is also not great, because the EU needs to move very fast to reach its goals. The EU will need to increase its wind energy capacity to 1,000 GW of onshore wind and 300 GW of offshore wind by 2050, according to WindEurope. That’s a huge jump from a combined total of only 180 GW today.
These wind energy goals will require Europe to build twice as many new wind farms every year as it is building today. That’s a tall order. And inflation is not the only problem. Europe won’t deliver its electrification targets if it cannot simplify the permitting rules and procedures for new wind farms and ensure permitting authorities are adequately staffed, according to the statement.
The future doesn’t look so bleak for renewables, however. The combined backlog of future wind turbine orders and service agreements for Vestas stood at EUR 47.3 billion in the third quarter – an increase of EUR 13.4 billion compared to the same period a year earlier.
Accelerated deployment in wind and solar projects globally will drive down demand for power from fossil fuels, according to Rystad Energy. Electricity will grow significantly and expand its share at the expense of coal gas and oil to become the favoured energy carrier in buildings, transport and industry, Rystad said.
Europe is already leading the way in electrification and has a track record of steadily adding a greater share of renewables. While it’s hard to predict how fast or slow renewables will gain, it’s easy to see that the energy transition is here to stay.
For the EU, the faster the gain, the better. So the bloc has every reason to listen to an industry lobby like WindEurope. Gains in the EU will be important in and of themselves, yet they may become a gamechanger globally.
EU developments in tech, scale and roll out will set the bar for renewable energy use in the rest of the world. That will allow emerging markets and less developed regions, where there may be an abundance of wind and other resources, to leapfrog to the front in new and different energy systems. That will be a win-win situation, as European companies will gain new clients and emerging markets will gain superior energy delivery without having to spend through the development phase.
And reducing emissions for a cleaner environment will benefit all.