Germany, playing the pied piper, heralded a new era in renewable energy by introducing meticulously planned energy policies and robust Government support for the wind power market. The Western European market registered a stunning growth rate of 18.3 per cent in cumulative installed capacity in 2006, largely thanks to German feed-in tariffs and their Spanish equivalent.
New analysis from Frost & Sullivan (energy&power.frost.com), Western European Wind Power Market, estimates the market to earn revenues of 9,107USD million in 2006 and estimates this to reach 15,104USD million in 2013.
“Ever since Germany passed the Renewable Energy Act in 2000 and amended it in 2004, there has been no looking back for the Western European wind power market,” notes Frost & Sullivan Research Director Harald Thaler. “The Act relating to the purchase of renewable energy for four times the market rate made German wind installations soar and catapulted Germany to the top slot in the global wind market.”
Twenty other European Union (EU) member states were quick to follow in Germany’s footsteps by offering a range of financial incentives including investment grants and premium tariffs. These measures were necessitated by governments’ eagerness to allay the effects of skyrocketing oil prices, meet the stringent environmental regulations and ensure energy security
The 2001 EU directive on renewable energy requires each member state to achieve a set percentage of renewable energy in their power supply by 2010. For electricity supply, the overall European target is for 21 per cent.
“These ambitious targets push for even stronger support mechanisms and funding programmes that include incentives such as soft loans, tax benefits and subsidies such as feed in tariffs and green certificates,” notes Thaler. “In addition, member states have established direct investment mechanisms through grants and schemes that have strengthened the manufacturing base of the wind industry.”
However, the wind power market has a long way to go before it catches up with the more established fossil-fired generation market in terms of capacity of plants and market penetration. This is partly due to the inadequate supply of essential components, rising installation costs and over-dependence on subsidies.
The huge gap in demand-supply of essential materials is driving up material costs, thereby threatening manufacturers’ margins. Nevertheless, manufacturers can offset this issue to a certain extent by repowering or upgrading their plants for capacity addition and thereby, boosting production.
“Long-term government incentives and installation rebate supports are expected to help wind power participants meet the heavy capital required for production and installation,” observes Thaler. “To become independent of government subsidies, the market has to implement intense end-user marketing and increased output to match conventional fuels.”
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