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Together with energy efficiency, clean energy technologies such as solar and wind are central to the fight against climate change. They are available today, getting better and cheaper all the time, and help improve air quality whilst creating new jobs. Photo©UN/Eskinder Debebe

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Wind energy is globally on the rise, an encouraging trend ahead of the UN climate change agreement in Paris at the end of the year. The growth of wind power is a direct result of renewable energy policies implemented by governments. Such policy action, as discussed by governments meeting under the UNFCCC this year, needs to be accelerated for the international community to reach its goal of a maximum 2 degrees Celsius global average temperature rise. And policies need to be supported with adequate finance.

Recent Global Wind Energy Council (GWEC) analysis shows that considerable wind energy capacity will be added this year notably in Brazil, Canada, Mexico and the United States. The European offshore industry has already enjoyed strong growth in the first half of 2015. The largest markets globally are currently China, the US and Germany - three major economies with policies that are reaping significant clean energy rewards.

2014, a Record Year

Last year already saw record installation of wind power, led by China, the United States and Germany. According to GWEC data, 51.5 gigawatts (GW) were installed globally last year and 100 billion dollars invested. China alone added 45.1% of the new infrastructure, while Germany added 10.2% and the United States 9.4%. Global installed capacity in 2014 was almost 370 GW, of which 31% were in China, 17.8% in the USA and 10.6% in Germany.

The Rapid Rise of Wind in China

A good example of how wind energy growth finds its roots in policy at country level is China, which has a renewable energy law and a National Action Plan for Air Pollution Control. This helped the country to go from nearly zero to 114.6 GW in wind power capacity in a decade, creating capacity to power 110 million homes.

The current target of 200 GW by 2020 "is likely to be increased to 250 GW or more in the next five-year plan which will be introduced later this year", says Kristian Ruby, Chief Policy Officer at the European Wind Energy Association (EWEA). "Moreover, the new five-year plan is expected to introduce a nation-wide emissions trading scheme, which could provide further incentives for deployment."

US Wind Benefitting from Production Tax Credit

The United States had 65.9 GW installed at the end of 2014. California, Iowa and Texas are the strongholds of wind power.

Wind totalled almost 30% of new generation capacity in the last 5 years, according to the American Wind Energy Association (AWEA). It provides enough power for 16.7 million American homes and has attracted over $100 billion in private investment since 2008.

The industry benefits from a federal Production Tax Credit (PTC) in place since 1992. The credit provides a 2.3 cent per kilowatt-hour incentive for the first ten years of a facility's operations.

Washington's Clean Power Plan could help the industry make a further push. This depends on the renewal of the PTC, which requires a vote by Congress at the end of each year.

Wind farm USA
Judith Gap Wind Farm, Montana (Photo credit: U.S. Department of Energy)

Germany's Energy Transition in Full Swing

With 39.2 GW of wind capacity installed at the end of last year, Germany is the third biggest player in the world in the sector.

Berlin's target is for a third of Germany's electricity to come from renewable sources by 2020, a percentage that is to rise to 50% by 2030. The country's Renewable Energy Act guarantees rates for 20 years and gives priority access to the electricity grid.

The German federal government's “Energiewende” (energy transition) site states that Germans pay more on their bills, but notes that power from wind and solar sources comes without hidden costs, such as pollution. Communities also keep money locally, as 47% of wind farms were community-owned in 2012 according to the Renewable Energies Agency.

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Growth scenario for renewables in Germany according to EWEA

Record Start to European Offshore this year

European offshore had its best start in history. The 2.3 GW installed in the first six months established an annual record, with Germany, the United Kingdom and the Netherlands at the forefront. This includes delayed German grid infrastructure that came online.

Kristian Ruby signals that Brazil’s wind energy is likely to grow fast. "The auction system introduced for renewable energy in 2009 and their stated goal to make wind energy the second energy source in the country after hydro has been an important driver of investments and new capacity. There is currently a total of 15+ GW of wind contracted for by 2020, which will bring the national total over 20 GW by that date," he said.

More Finance and Policy Certainty Needed

Wind power could still weigh more in the balance. Better policies and adequate finance are key for this to happen, as technical experts discussed at a UNFCCC meeting in Bonn in June. Despite its 24.8% annual growth rate since 1990, wind represented just 3% of renewable energy supplies in 2013, according to the International Energy Agency (IEA).

Predictable access to the market and predictable rates for 10 to 15 years is what entrepreneurs need to finance projects and lower production costs, argues Letha Tawney, leader of Charge, the electricity initiative at the World Resources Institute (WRI). "Producers need long-term contracts, with certainty to sell the energy. Wind is cost-effective if you can get low-cost finance and certainty about revenue."

Mrs. Tawney does not advocate subsidies and higher rates because those are not necessarily efficient. Long-term purchase agreements, such as those of Google and Facebook in Iowa, for instance, have provided certainty and spurred investment by utilities.

Technical solutions, such as maximizing capacity factors, also drive growth, suggests Letha Tawney. "China is working hard on it. We can use that knowledge, although the technical challenges are not the same everywhere."

Optimizing infrastructure makes wind power more competitive than fossil fuels when adding new capacity to the grid. "In Colorado, there is more wind than required by the state. Some wind farms reach a 40% capacity factor. People did not know it was possible 5 to 8 years ago."

Green Climate Fund Can Play Key Role

In developing countries, a helping hand can make renewables go a long way, said Amit Kumar, an adviser at REEEP, a non-profit organization that manages funds for clean energy projects, after the technical experts meeting in Bonn. "Through its wide spectrum of financial instruments, the Green Climate Fund could play a key role in fostering investments in renewable energy by tailoring financial tools to national conditions."

Investors themselves can look forward to putting skin in the game according to the Investing in a Time of Climate Change report published in June by the Mercer consultancy. The firm predicts that "the renewables sub-sector could see average annual returns increase by between 6% and 54% over a 35 year time horizon" while returns on coal should fall by 18% to 74%.

Read more about the Bonn Expert Meeting on Renewable Energy and about Inspiring Examples of Renewable Energy Supply 

Photo credit: Chauncey Davis

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