TABLE OF CONTENTS Foreword. 1 Introduction: Booming wind markets put temporary strain on supply chains. 2 Global summary: The Status of the Global Wind Energy Markets . 7 Market forecast for 2007-2010. 12 COUNTRY REPORTS Europe . .16 European Union . 16 Germany. 20 Italy . 22 Poland. 24 Spain . 26 United Kingdom . 28 Americas . .30 United States . 30 Canada. 32 Brazil . 34 Mexico . 36 Asia . .38 India. 38 China. 40 Japan . 42 Korea. 44 Pacifi c. .46 Australia . 46 Africa. .48 Egypt. 48 Iran. 50 Morroco. 52 Conclusions: The need for solid political frameworks. 54 About GWEC . 56 Foreword 2006 was another booming year for the wind industry, The Global Wind Report 2006 is the second annual report with growth in annual installed capacity of 32 % globally, by GWEC on the status of global wind energy markets, and well ahead of our own projections. The market continued it clearly shows that wind energy today is a global business, to broaden, further establishing wind power as the leading with installations in over 70 countries. renewable energy technology – in the vanguard of the 21st century energy industry transformation. Globally, the value While Europe continues to lead the way, with 65 % of the of new generating plant installed in 2006 reached global market, the United States was the leader in new €18 billion, or US$24 billion. installed capacity for the second year running, bringing about 2,500 MW capacity of new plant on line in 2006. Against the backdrop of a growing acknowledgement of the twin crises of global climate change and energy security, The Asian market is also growing at a breathtaking rate, by wind power is the most effective means available now to 53 % in 2006. China’s booming industry more than doubled tackle both issues. At the same, wind energy development its capacity; India, the world’s 4th largest market, continued strengthens local economies and insulates countries from its strong growth. the macro-economic shocks of global commodities markets. Wind energy provides a clear solution for policymakers and The broadening of the global market is clearly illustrated by a general public increasingly concerned with volatility in the the list of markets which more than doubled their installed gas market, discussions of ‘peak’ oil, and growing realization capacity in 2006: Iran, Brazil, Mexico, Taiwan and South of the true cost of coal. Korea; while Poland, Morocco and Egypt nearly doubled. Energy policy is now at the heart of high-level international The data and country reports for 2006 have been collected meetings, such as the UN Commission on Sustainable through GWEC’s member associations around the world Development (CSD) in May 2007 in New York and the as well as other industry sources. The Council thanks the G8 Summit in June in the German city of Heiligendamm. contributors and looks forward to further cooperation for Climate and energy policy were the subject of a recent future editions. debate in the UN Security Council and a General Assembly debate is planned for later in the year. The central message from the Global Wind 2006 Report is clear: wind power is becoming an established, mainstream Renewable energies, and especially wind energy, are able power source in a rapidly growing number of countries, and to provide solutions to the manifold energy challenges the that growth will, and must, continue as we seek to stave off world is facing, and their promotion should form the basis of the threat of global climate change and create true energy both national and international energy policy. security while at the same time growing new industries, creating new jobs and a new paradigm for a truly sustainable 21st century energy economy. Arthouros Zervos Steve Sawyer Chairman Secretary General Global Wind Energy Council Global Wind Energy Council GWEC – GLOBAL WIND 2006 REPORT 1 INTRODUCTION Booming wind markets put temporary strain on supply chains The global wind energy industry is facing a challenge that 2006 ANOTHER RECORD YEAR many other sectors would qualify as a ‘luxury problem’, that DESPITE SUPPLY CHAIN DIFFICULTIES of supply chain diffi culties due to booming demand. Despite these constraints facing supply chains for turbines, The global wind energy industry has been growing at the the annual market for wind energy continued to increase at a staggering rate of nearly 30 % per year for the last rate of 32 % in 2006, with over 15,000 MW of new capacity 10 years, and experts predict that there is no end in sight installed worldwide. This follows a record year in 2005, where for this boom. While a large proportion of this development the growth rate topped 40 %. To keep up this pace, the sector is happening in Europe, other markets, especially Asia and has had to rapidly mature into a streamlined, effi cient mass North America are catching up fast. producer of high quality technical equipment. Nevertheless, there are still a number of bottlenecks in the supply chain, The success of wind energy worldwide and its tremendous and many developers continue to have diffi culties in sourcing growth has put unprecedented pressure on the turbines for their projects. manufacturers of the components of wind turbines, such as towers, rotor blades, gearboxes, bearings, generators, etc., For 2007, experts predict a rise in demand to nearly and the industry has been struggling to keep up with the 20,000 MW, stretching the industry beyond its demand. At the moment, developers of wind farms have to manufacturing capabilities. However, all players are working wait for 12 months for the turbines required, and the trend to resolve supply chain diffi culties and to counteract existing shows that this may increase to 18 or even 24 months. bottlenecks, and it is expected that the current challenges will be overcome by 2009 the latest. FACTORS LEADING TO BOTTLENECKS OFTEN OUTSIDE OF INDUSTRY’S CONTROL Overcoming supply chain diffi culties is not simply a matter of ramping up the production of wind turbine components to meet the increased levels of demand. The real picture is more complicated that that, since large scale investment decisions must be based on a sound long-term outlook for the industry; but in most markets, both the projections and actual demand for wind energy depend on a number of factors, some of which are outside of the control of the industry. In particular, the political frameworks for wind energy in various countries play a crucial role in fostering the growth of the industry. The future of national incentive programmes Construction site Vestas, Porep, Germany is not always easy to predict for the long-term, making it 2 GWEC – GLOBAL WIND 2006 REPORT INTRODUCTION Other broader developments have also affected the wind industry, such as the price and availability of certain raw materials used in the manufacturing of wind turbines. Prices have increased substantially for steel, copper and carbon, all of which are essential in this industry. Growing economies such as China and India have boosted global demand for raw materials more than expected, and global steel prices have more than doubled since 2001, putting additional strain on manufacturers. PRODUCTION CAPACITY BEING EXPANDED, MAINLY IN US, INDIA AND CHINA While the industry is doing its best to keep up with the strong Construction site Vestas, Porep, Germany demand, this cannot be done overnight. For component suppliers, ramping up their manufacturing requires a major diffi cult for manufacturers to commit to big investments. investment in machinery with up to two years lead-time. At a One of the most striking examples of the impact that time when the entire machine tools business is struggling to national programmes can have on wind energy development meet demand, this is not an easy proposition. is the Production Tax Credit (PTC) in the United States, which in the past was often not renewed in a timely fashion. However, despite the uncertain investment environment, the massive up-front investment required and long lead times At the end of 2003, the PTC period expired without an involved, most turbine and components manufacturers have extension, leaving the market in a very insecure position. already taken the plunge to respond to the boom in demand This resulted in new installations of only 389 MW in the US by substantially expanding their production capacity. This in 2004, while market participants waited for the credit to expansion is continuing in Europe, but there is an increasing get extended. This happened at the end of 2004, spurring focus on new production facilities in the US, China and renewed investment and turning 2005 and 2006 into India. The challenge will be to make the whole supply chain record years with over 2,400 MW of new capacity built in follow this trend in order to secure long-term supply of all each year. This boom is still continuing and has resulted in necessary components. a massive increase in demand for turbines. However, the limited timescale of the PTC and the danger of it expiring again at the end of 2008 have prompted manufacturers EXPERTS PREDICT CONTINUING to prioritise the US market, which as a result has diverted STRONG GROWTH – PROBLEMS TO BE turbines from European suppliers that were originally RESOLVED BY 2009 destined for other markets around the world. With these ambitious plans for expansion and a continuous There are various other reasons that have led to the current infl ux of new players emerging on the stage, experts predict diffi culties. One factor is the steady growth of the size of that the current tight situation for turbine manufacturers turbines, increasing from less than 1 MW to 2 MW and larger should be overcome by 2009 at the latest.