Last year, the EU installed 15 gigawatts (GW) of new wind farms, up by a third compared to 2021, despite supply chain challenges, according to new analysis from Wind Europe. However, despite this important contribution to strengthening Europe’s energy security ahead of next winter, Europe must continue to simplify permitting and invest heavily in its wind energy supply chain to deliver its energy and climate targets.
According to Wind Europe, 15 GW still falls significantly short of what Europe needs to build to deliver on its climate and energy security targets. The shortfall is largely due to permitting bottlenecks. 80 GW of wind energy projects are currently stuck in permitting procedures across Europe. The REPowerEU measures on permitting are expected to help, and some Governments are already taking steps nationally to improve things.
“15 GW new wind in 2022 is not too bad given the challenges faced last year by Europe’s wind industry. It is not enough for the EU’s energy targets, but Governments know the latter can only be achieved if they simplify the permitting rules and procedures – and there are now signs of progress on this,” said WindEurope CEO Giles Dickson. “Less encouraging is the slowdown in investments in new wind farms. Confusion about electricity market rules is turning investors away. The EU must make Europe an attractive place for renewables investments again.”
A combination of inflation and unhelpful Government interventions in electricity markets is undermining investments in new wind farms. In the first 11 months of 2022 the total new investments in wind farms in the EU covered only 12 GW of new capacity. This is significantly less than the rate of new investments needed to deliver the EU’s 2030 climate and energy targets.
Wind Europe says that the EU’s forthcoming reform of electricity markets must give investors greater clarity about what rules apply. The freedom given to Member States in last year’s emergency measures to set their own national rules is turning investors away, and they are now investing in the US, Australia and elsewhere instead. The EU is not attractive for major renewables investors right now.
What makes this especially frustrating is that demand for wind energy among industrial consumers in Europe has never been higher. They want more wind to help decarbonise their operations. The number of corporate renewable PPAs held up quite well in 2022 but would have been much higher if there were more investments in new wind farms coming.
2022 was also a difficult year for the wind energy supply chain. Inflation hit Europe’s turbine manufacturers and suppliers hard, and they now face a range of overlapping challenges: inflation in key inputs and commodities, dysfunctional trade flows and bottlenecks in the sourcing of some materials and components plus poor auction design in some countries.
Investment in Europe’s industrial base must be a priority, said Wind Europe, in order to deliver the clean and digital transitions, not least to emulate the comprehensive policy support for green technologies offered in other parts of the world, such as the US Inflation Reduction Act. The EU, national Governments and the EIB all have a role to play in supporting investments in new and upgraded wind energy production facilities.
“Last year’s 33 per cent increase in new installations shows that the European wind industry is stepping up to the challenge. But the current cost pressures leave our companies with little room for urgently needed new investments. If the EU is serious about its energy and climate targets, it should facilitate these investments in our supply chain: factories, skilled workers, grids, raw materials and vessels,” concluded Dickson.
