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According to the International Energy Agency, the global wind generation will create output of 65GW in 2020. The output will register a notable 9% growth as compared to previous year. Despite the economic paralysis created by Covid-19 pandemic, the growth shows promise of renewable energy, and strong push from governments to increase renewable electricity generation in the near future. The governments in the US, and Europe passed legislations to extend deadlines for providing flexibility to onshore wind power generation projects. During the pandemic, the demand for onshore projects slowed down, while the tremendous pace of offshore growth picked up pace as expanding technological advancements from mainly Europe, and subsequent, cost benefits continue to drive new opportunities for growth in the global wind power equipment market.
Europe Remains a Bright Prospect for Growth as Support for Wind Generation in the US Dwindles
Europe, despite remaining a low-key region, continues to expand wind energy faster than the United States, and China, thanks to its phasing out of incentives in these countries. Europe leads wind power generation share in the offshore market, with promising 15% more expansion in 2022, as per the International Energy Agency. IEA also estimates that United States will likely join an accelerated development of offshore wind energy generation, helping rise the total wind energy output to 65 GW, under normal conditions. In an optimistic scenario, IEA estimates that the generation will reach 100GW by 2023-2025. The rising demand for electricity in Asia Pacific, the growing technological advancements in Europe, and growing need to switch to renewable energy will drive major growth for the global wind power equipment market in near future.
Continuous Cost-Reductions Remain Key to Growth as Policy Support Dwindles
IEA estimates that supporting government policies, and continuous cost reductions will remain key to growth in the wind power generation. The IEA estimates that 40% of all wind generation globally during 2020-2025 will come from policies like floating FIP, or FiTs. Moreover, among rest, 35% will come from auction schemes. The IEA also estimates that competitive auctions will remain key to growth in all regions except China, and United States. In the US, policies like corporate PPAs, renewable portfolio standards, and tax credits remain main stimulants to growth. In China, and the US, the policies are quickly moving from administratively set tariffs towards competitively set remuneration. This will drive dramatically increase cost-efficiency in wind power generation, and help expansion of the wind industry, along with wind power equipment market.
Demand for Electricity Generation a Challenge, But Renewables to Grow
Due to the slowing demand for electricity generation globally, the global energy demand is set to decline by 5%. However, despite the demand challenge, the demand for renewables will likely grow by 1%, thanks to long term contracts, priority access to the grid, and continuous installation of new power plants will drive growth. Moreover, the decline in demand for fuel, and other energy sources will also drive robust growth for players in the global wind power equipment market in near future.
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