REM: Europe invested €41bn in new wind farms in 2021, says WindEurope
Europe invested €41bn ($43bn) in 2021 in new wind farms, says WindEurope. But the market is only half the size it should be for Europe to reach its new climate change and energy security targets, says the trade group.
Governments should also avoid running auctions that allow for zero or negative bidding because they increase the cost for wind energy. The EU must also improve permitting.
The 2021 financing accommodated 24.6 GW of new capacity, a record, although the investment is 11% less than 2020. The 2021 investment fell well short of the 35 GW a year of new wind needed in the EU to reach targets.
Most of the new wind farms financed were onshore – 19.8 GW – which partly explains why the amounts invested were down compared to 2020. Onshore wind is slightly cheaper than offshore.
Eleven countries invested more than €1bn. The UK invested the most, almost all of it offshore, followed by Germany, France, Spain, Sweden and Finland. Spain invested the most in onshore wind. Sweden, Finland, Poland and Lithuania all invested more in new farms than they had done in any previous year.
Given that the market is only half the size it should be, the competitiveness of the supply chain is being undermined, compounded by the rising costs of steel, other commodities and components, supply chain disruptions and higher shipping costs. All of Europe’s five wind turbine manufacturers are now operating at a loss, noted WindEurope.
2021 was a record year for corporate renewable power purchase agreements (PPAs). According to the report, 6.9 GW of new PPA deals were announced, raising the total amount of renewables under PPAs by a massive 58% in one year alone to 18.8 GW. Wind was 60% of the new PPA capacity with 41 new PPAs for onshore wind farms and 11 for offshore wind farms.
In auctions, zero bidding increases the financial risk associated with wind farm development. Even worse, negative bidding, as seen in the Danish tender for the Thor offshore wind farm last year, requires developers to pay for the right to build a wind farm.
These additional costs have to be passed on to electricity consumers – already struggling with higher electricity bills – or the wind industry supply chain, which is already strained by increasing costs for materials and components, the trade group concluded.