European Wind-Power Investments Expected to Slow in 2017

Investment in new wind farms in Europe rose by more than a fifth last year, but activity is expected to slow in 2017 as governments revise subsidy policies and prices fall.

New projects attracted 43 billion euros ($47 billion) of investment in 2016, up 22 percent from the previous year, according to a report Tuesday report from the Brussels-based trade group WindEurope. Investment in the first quarter of this year was 1.8 billion euros, down sharply from a year earlier when the total was north of 20 billion euros, easily the busiest period of 2016.

The European wind market will slow significantly in 2017 because governments are embracing energy auctions to attract developers and are shifting away from feed-in tariffs. Germany announced its auction results in April, while the U.K. opened its tender for offshore wind. The Netherlands, France and Spain will also host them in the coming months. Investment is also coming down because prices are falling, said Joel Meggelaars, a WindEurope spokesman.

“Nowadays, you need less investments to get a similar level of capacity,” Meggelaars said by email. “And the high levels of investment in recent years were a result of projects being squeezed through the gate before countries moved away from feed-in-tariffs.”

How Germany Hammers Down Renewable Energy Costs: QuickTake Q&A

Last year saw the continent’s largest onshore and offshore wind farms reach their final investment decisions in February, the 1-gigawatt Fosen project in Norway and the Hornsea 1, off the U.K. coast. About 80 percent of investment activity came from the U.K., Germany, Belgium and Norway.

Refinancing levels are expected to stay strong, as low interest rates spur project developers and owners to seek lower cost of capital. The most deals are expected in France, Germany and the U.K. Spain may also see some activity as investors regain confidence after retroactive subsidy cuts dragged down the market, according to WindEurope.

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
 
Sign up for our free monthly newsletter →

Want to learn how we help our clients put it all together? Contact us