As European onshore wind energy growth slows, investors and analysts pin the blame on political infighting and faulty auction systems. L. Michael Buchsbaum reports on recent figures illustrating a particularly sharp drop in Germany.

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Part two of on-going series: Read part one here

Worldwide wind power still growing

First the good news: According to preliminary figures from the World Wind Energy Association, overall global installed wind energy capacity increased by over 53 new Gigawatts by the end of 2018 to over 600 GW worldwide.

Supplying some 14% of total European energy and some 6% of global electrical demand, wind power has grown to become a major force in the global energy transition. Despite the numbers, WWEA Secretary General Stefan Gsänger says that faster wind power deployment “is imperative not only to achieve the objectives of the Paris Climate Change agreement and the Sustainable Development Goals, but also for every country to participate in the full socio-economic advantages of renewable energy.”

But now the bad news: new onshore wind installations in Europe, the birthplace of the on-going energy revolution, dropped almost a third last year. The worst two performing markets were in Germany, which was down by more half compared to 2017, and the UK, where the rate of expansion seemingly collapsed. Reflecting on the numbers, “It’s very unfortunate that Europe seems to lose track,” lamented Gsänger from his offices near the United Nation’s Sustainability Secretariat in Bonn, Germany.

Overall, new European installed capacity slumped down to numbers not seen since 2013, with just 11.7 gigawatts of gross wind power added. Throughout the European Union, twelve countries failed to install a single wind turbine last year, said Giles Dickson, CEO of industry body WindEurope. The numbers broke down to 8.6 GW of new onshore and 2.65 GW of new offshore wind capacity. (Note: these totals were also further affected by the decommissioning of 0.4 GW of wind turbines, most of which was onshore).

New capacity additions were led by Germany, which installed 3.37 GW, followed by the UK with 1.9 GW and France with 1.56 GW. Despite falling rates, Germany remains the European leader with just under 60 GW installed cumulatively, constituting the third largest fleet globally. It is trailed in Europe by Spain, the UK, France and Italy (see preliminary WWEA figures here).

Overall, wind power remains the EU’s second largest form of power generation and is expected to overtake natural gas in terms of new capacity additions in 2019, WindEurope said. But the pace of expansion is rapidly falling, threatening the realization of the entire group’s 2030 renewable energy goals.

What is killing onshore expansion? Permitting problems and unwieldy auctions  

In an example of polite understatement, CEO Dickson commented that “there are structural problems in permitting, especially in Germany and France,” challenging the onshore wind industry’s growth.

How big are those problems? Well, Germany’s new installations dropped over 55% last year, according to new figures from the German Wind Agency. Worse, unless there is a dramatic turnaround, new construction will likely fall at least another 20% to just two Gigawatts this year. If these rates continue, there is virtually no way the 65 percent renewable energy target set by the German government could be achieved by 2030, the industry groups warn.

Why the drop? Industry groups blame Germany’s permitting process, which has become so complicated that it “can now take over two years compared to just 10 months” to get a green light for development. Worse, “even projects that get a permit are increasingly being challenged in the courts.” Current reports suggest that over 750 MW of wind farm projects are currently stuck in legal proceedings. As moods continue to shift, individual German states are also becoming more reluctant to identify new locations for wind farms.

Germany’s new wind auction processes have hindered growth even further, seemingly  driving away bidders. At its most recent auction, grid regulator BNetz only awarded 476MW of onshore wind capacity, well below the 700MW on offer. Now the third onshore wind auction in a row to be under-subscribed, “it’s clear the permitting process is not fit for the purpose,” said Dickson.

Following the dismal results, the president of the German government’s grid regulator, (BNetz), Jochen Homann seemingly acknowledged that the problem was becoming systemic. “We must work together with the industry and the relevant authorities to find solutions to the licensing situation,” he said. Supposedly intended to enhance the participation of both community and industrial wind developers, the recent German Omnibus Energy Act set a higher tender volume over the next three years from 3,675 MW of new available wind energy capacity in 2019 to over 4,200 in 2021. Instead it’s had the perverse effect of slowing down Germany’s Energiewende further as the barriers to entry in the form of scarcer permits have only grown.

Future investment trends suggest a political fix is needed

Even though wind and solar energy are becoming increasingly competitive against coal, fossil gas and nuclear, all across Europe there seems to be a collective pause as Brexit, strikes in France, political disarray in Germany and reactionary governments elsewhere continue to stall green energy’s progress. Worryingly, “the outlook for new investments is uncertain,” said Dickson as the slump in the larger western European markets is matched (with the exception of Lithuania) with a “lack of ambition” in Central and Eastern Europe,” he continued.

As European parliamentary elections come closer, political solutions might be able to solve what seem to be mainly politically-created problems. “The 2030 National Energy & Climate Plans are a chance to put things right,” continued Dickson. “But the draft Plans are badly lacking in detail: on policy measures, auction volumes, how to ease permitting and remove other barriers to wind investments, and how to expand the grid.”