Summary

Wind power refers to the use of wind turbines to generate electricity. Historically, wind power has been used in sails, windmills and windpumps but today it is mostly used to generate electricity. Wind power is a renewable energy source used primarily as a replacement for fossil fuel-based electricity generation like coal and gas, as well as nuclear power plants. Wind farms consist of many individual wind turbines connected to the electric power transmission network. Wind farms can be either onshore or offshore and collectively contributed 2% of world energy and 6% of world electricity.

Viability (5)

Wind power is a significant contributor to worldwide electricity capacity. Adoption is accelerating as costs fall and in many places new wind capacity is the cheapest form of new energy generation beating out solar. Onshore wind is generally cheaper than offshore wind today, only 7% of new capacity in 2021 was offshore. R&D is focused on structural engineering to make towers and rotors bigger and more efficient, as well as the development of floating offshore for facilities further out to sea. As well as software-based improvements in forecasting and grid management and integration. These gains will be more impactful for offshore wind where size is less of a constraint.

Drivers (5)

Demand-side, the main driver is the Paris Agreement and the need to decrease global carbon emissions by 45% by 2030 and to reach net zero by 2050. To meet net-zero targets, there needs to be 505 gigawatts of new wind power each year to 2030 (5.2 times the 2020 total).As with Solar Photovoltaics and Stationary Energy Storage, cost declines are the primary driver of adoption falling by between 44%-78% from their peaks between 2007 and 2010. Cost savings come from both plant cost reductions and wind turbine technology improvements, especially larger rotor diameters and higher hub-heights. It is predicted average Levelized Cost of Energy (LCOE) falls of 26% for onshore wind and 35% for offshore. Such falls would make wind and Solar Photovoltaics substantially cheaper than gas, nuclear and coal excluding subsidies. Further policy support either through easier planning permission, tax incentives, or guaranteed prices continues to drive adoption in some countries.

Novelty (3)

Energy and electricity generation sources compete on price, reliability, resource requirements and carbon intensity. Wind competes with Solar Photovoltaics as the cheapest new generation source, with Generation IV Nuclear Reactors and Small Modular Reactors (SMRs) in the mix too because of the baseload features. Wind is notoriously unreliable and fares badly relative to gas, coal and nuclear. Wind+storage does improve reliability but at a much higher LCOE than alternatives. Wind and Solar Photovoltaics compete to be the lowest cost sources of generation and are low carbon compared to alternatives, although some embodied carbon means they are entirely zero carbon options. On resource requirements, wind compares favourably to nuclear, coal, gas and hydro in that wind blows almost everywhere on earth and is not reliant on a large lake or access to coal or gas or uranium, although some rare earths are needed.

Diffusion (4)

The main barriers to adoption left today are high capex and uncertain regulation. Until recently higher costs relative to fossil fuels, lack of storage capacity, and grid capacity constrained growth. Onshore wind is already competitive at $26/MWh, by 2030, offshore wind would have overtaken onshore wind in terms of LCOE and would be competitive in most markets across the world, falling in the low range of costs for fossil fuels (coal and gas). Wind will continue to compete with solar for new capacity, where the costs of utility-scale solar are falling by on average 9% per year to $31/MWh compared to 2% onshore wind to $26/MWh. As the price gap closes, adoption of solar is likely to overtake wind, but regardless, to meet net-zero targets, all renewables need to be deployed at a much faster rate than today so they are not really in competition. Onshore wind does suffer from NIMBY restraints and lack of public support in some countries, although these restraints are weakening in the face of higher energy costs.

Impact (4) Medium certainty

Wind, as important as it will be to the energy transition, will still only contribute about 35% of electricity generation by 2050 (10% more than Solar Photovoltaics), with electricity about 25% of primary energy demand. This is highly impactful in terms of directly reducing 27% of CO2 emissions and all the associated environmental and health benefits that will come from that. A high impact scenario sees costs fall faster than predicted and combined with solar and batteries, significantly increases energy consumption supporting energy-intensive processes like Carbon Capture, Utilisation & Storage and Green Hydrogen . A more probable lower impact scenario is that solar replaces energy generation and does not expand consumption in a meaningful way as is possible with Deep Geothermal Energy or Nuclear Fusion for example.

Timing (2020-2025) High certainty

The wind power market was worth $125 billion in 2020 growing at about 5% to $190 billion in 2030. Much of the growth is coming from offshore wind which is expected to grow by 30% over the next five years, bringing offshore’s market share in global new installations from today’s 6.5% to 21% by 2025. The market is large enough to support investment today but the slow growth rates reflect the high capex and regulatory burdens.