Report: Onshore wind faces slowdown without a ‘game changer’ 

Transmission challenges, a lack of breakthrough technologies and competition from solar threaten the growth of onshore wind in the 2020s, according to a report last week from Wood Mackenzie.

Yet offshore wind power could become cheaper than coal, natural gas and nuclear due to improvements in the technology. Demand for offshore wind is currently 10% of all wind power demand, but that number will reach 25% by 2028, the firm said.

Wood Mackenzie’s analysis hinges on the concept that most of the engineering innovations that could make onshore wind cheaper have already been discovered.

“Ground-breaking technology advancements generally fall within the offshore wind sector as opposed to the onshore industry,” Dan Shreve, Wood Mackenzie’s head of global wind research, said in an analysis accompanying the report.

“Key evolutionary changes in turbine tower design, blade materials and controls will cause further reductions in onshore wind’s [levelized cost of energy], however none can be considered true game changers,” he said. “While further cost reductions could occur within the industry, the low hanging fruit has already been picked. Additional reductions will be marginal.”

Offshore wind still has potential to benefit from “game changer” innovations in technology, however.

Wood Mackenzie predicts floating offshore wind turbines will open substantial, albeit comparatively small, markets that are presently unavailable to the wind industry.

“The 350MW+ of floating demonstrators that are set to be deployed by 2022 will strengthen [floating offshore wind generation’s] case,” Rolf Kragelund, Wood Mackenzie director of global offshore wind, said in the analysis.

“More than 75 floating wind concepts have already been introduced, and experienced developers are starting to position themselves more aggressively in the floating industry by forging alliances and building up floating wind pipelines,” Kragelund said.

A ‘dramatic peak’

Last month, the American Wind Energy Association (AWEA), which represents both onshore and offshore industry members, said 2019 was the third-best year in history for onshore wind (Energywire, Jan. 30).

AWEA said it expects 2020 to be its best year yet, but the industry recognizes that much of this new investment was spurred by favorable policy.

“There’s a lot of momentum moving through now and that’s translating to a tremendous amount of wind deployments in the next few years,” John Hensley, vice president of research and analytics at AWEA, said in an email.

“We do expect a dramatic peak in 2020,” which, Hensley added, is largely driven by a federal production tax credit that’s been extended into the early 2020s. “But we don’t see a dramatic fall in the following years,” he said.

Hensley said he agrees with Wood Mackenzie’s assessment that transmission infrastructure will be the biggest challenge to the wind industry’s ability to invest in new build-out. The root of that infrastructure problem is geography.

The best siting options for onshore wind tend to be in remote areas distant from utility ratepayers such as the Great Plains region, meaning wind development often requires accompanied investment in transmission infrastructure.

“There’s only so much demand in that kind of interior part of the country,” Hensley said. When that local demand is met, any excess build-out needs to be transmitted to other markets, which he said has been difficult.

To get more transmission infrastructure built requires consistent and reliable cooperation among utilities, utility regulators and grid operators. In many areas, that cooperation is difficult to sustain.

Regulatory barriers to new transmission projects led a coalition of electric companies called the Wires Group – which includes large utilities – to commission a study on how transmission could move renewable energy from areas of abundance to areas of need.

That analysis also outlined why more transmission infrastructure is necessary for cities and states to meet their carbon reduction goals (Energywire, Jan. 16).

Transmission infrastructure problems are not unique to onshore wind development. As was noted at AWEA’s offshore wind conference in Boston last year, offshore also faces a lack of adequate transmission infrastructure (Energywire, Nov. 4, 2019).

Without more transmission, the ongoing decline in solar costs will make it difficult for onshore wind to compete, Wood Mackenzie said. The study noted the closure of some pioneer names in the wind energy industry and consolidation of others, a trend that is expected to continue.

“If regional giants fall prey to global corporations, it is feasible that 98% of the western wind market will fall under the control of three companies,” Shreve said in his analysis. “The passing of industry pioneers is bittersweet, though likely a necessity to yield the next round of cost reductions for global wind.”

Wood Mackenzie reiterated its call for a national grid – or at least several pan-regional “super” grids – that would be managed by a single operator to boost wind and other renewables.

“The sweeping regulatory changes required to achieve this dovetail with various Green New Deal frameworks, which in and of themselves will be massive undertakings from a political standpoint,” the report said.