Wind energy is set to become Europe’s biggest source of electricity before 2040. The EU wants wind to generate 50% of Europe’s electricity by 2050. To that end, they want 1000 GW of onshore wind and 300 GW of offshore wind by 2050 in the EU alone. This is up from 165 GW and 15 GW respectively in 2020. Wind can deliver this, provided certain key challenges are overcome. More on the challenges below. First why we need more wind…
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Wind has proven resilient during the COVID-19 pandemic. The production of electricity from wind continued when other forms of energy struggled. In 2020, wind was 16% of all electricity produced in Europe. Wind is cheap and scalable. It is perfectly positioned to lead the economic recovery after COVID-19. Every new turbine installed in Europe generates roughly €10 million in economic activity – creating jobs and directly benefiting communities near wind farms.
In addition, COVID-19 and the gas crisis have shown the downsides of Europe’s dependence on fossil fuels. The European Commission is very clear: renewables are not responsible for the surge in electricity prices. They are a solution to it. Increasing the domestic production of renewable electricity will make Europe’s energy system less dependent on fossil imports and fluctuations on the international energy markets. Whenever Europe builds a new wind turbine under a Contract-for-Difference scheme today, it knows the price of the electricity this turbine will produce over the next 15 - 20 years – an investment security fossil fuels just cannot offer.
Furthermore, wind technology keeps improving and wind energy is one of the cheapest forms of electricity production in Europe today. More powerful turbines and higher capacity factors indicate a more reliable generation of electricity from wind. 2022 will be a particularly big year for floating offshore wind. The Scotwind tender alone could add up to 15 GW of floating wind capacity by the mid-2030s. The optimisation of electricity grids and improvements in storage technology make the integration of ever more wind in the electricity system possible. For several hours in 2022, wind provided 86% of Ireland’s electricity demand and 79% of Germany’s electricity demand – and the electricity grids remained stable.
However, to deliver the huge expansion in wind energy the EU wants, several key challenges have to be overcome.
One such challenge is that the post-COVID-19 recovery puts stress on European OEMs. The European wind industry is a globalised one. We rely on functioning international trade flows for raw materials and wind turbine components. Cost pressures along the supply chain have increased. Raw materials, shipping, components – everything is getting more expensive. Wind energy manufacturers and suppliers have been working on tight margins for years already. Companies such as Siemens Gamesa Renewable Energy, GE Renewables, and Vestas Wind Systems have warned of turbulent times ahead. Only one in five European manufacturers is making a profit today.
Another challenge is permitting, which remains the biggest hurdle for new wind. The market for wind energy is only half as big as it should be. The EU wants to build 30 GW of new wind capacity each year until 2030. Currently the region is only building 15 GW. That is mostly because permitting procedures are too long and cumbersome. Solving the permitting issue will lead to more installations and reduce the current pressure on European OEMs and suppliers.
Governments must urgently fix permitting and guarantee a healthy European market for wind energy. Germany and others have understood, and the European Commission is preparing a Guidance Document for Member States on how to improve permitting. Governments should also start recognising the wider societal value that wind energy brings. They should look beyond the pure financial cost of wind farms and consider also how sustainable they are and what they are contributing to their local economy.