Our ten predictions for wind in 2016

Welcome back. We hope you enjoyed the festive season and have come back refreshed and ready for business in 2016.

But, before the hard work starts again, let’s take a quick look at the year ahead. Here are our ten predictions for the trends and stories that we expect to shape activity in wind this year:

(1) Chinese slowdown but no disaster: The slowdown in the Chinese economy will act as a drag on the rest of the world, but it looks like we will avoid another global recession. In the wind sector, this slow growth means that developers and manufacturers will keep looking at expanding in emerging markets where energy demand is growing — although opportunities to be first in to a completely untapped wind market are few and far between.

(2) Oil to stay below $50 a barrel: For the oil and gas sector, the oil price slump turned into a full-blown crisis in 2015 with firms cutting their investment plans. Oil prices are currently around $40 a barrel and we expect them to stay below $50 at the end of 2016 as there is no indication that Saudi Arabia wants to slow production. However, despite this turmoil in the global energy market, we see there is still good political and business support for renewables.

(3) New global brands to sign wind PPAs: We have seen the likes of US giants Amazon, Facebook and Google making big commitments to wind and, following the COP21 talks in Paris last month, we expect more household names to do so this year. This is good for developers as it will make some schemes viable as governments overhaul wind subsidies.

(4) Brexit risk unsettles EU but no vote yet: UK prime minister David Cameron has said he is going to hold a referendum on the country’s membership of the European Union, and mooted a vote in June 2016. However, we do not expect a vote until 2017, as Cameron is struggling to win key concessions from the EU and does not want the migrant crisis to fan anti-EU sentiment. This will unsettle the EU — but investors are already pricing in the risk.

(5) Increased activity in North America: In October, pro-renewables Justin Trudeau replaced climate change sceptic Stephen Harper as prime minister of Canada, which is to pave the way for an acceleration in the growth of winding the nation. Meanwhile, in the US, the surprise five-year extension of the wind production tax credit gives the industry long-term certainty to 2020.

(6) Senvion future to lead takeover talk: Manufacturers will keep looking at growth by mergers and acquisitions, but we do not expect to see anything as large as Nordex’s €785m acquisition of Acciona’s wind arm. The big unknown is whether US private equity firm Centerbridge Partners sells German manufacturer Senvion to a trade buyer. We expect all or part of Senvion to change hands, even if via an IPO, and its future will keep tongues wagging.

(7) Confidence erodes in UK offshore: The UK may be the world’s largest offshore wind market, with around 6GW either installed or under construction, but that does not mean its position is assured. The UK government has said it would only support the sector through to 2020 if it can meet unspecified cost cuttings goals. This will eat away at confidence, and mean that markets such as Denmark, France and the Netherlands grow in importance.

(8) Listed US yieldcos go conservative: Listed renewables yieldcos have faced a tough six months as investors have exited over fears that their shares were overpriced. However, we do not think this is the death of the sector. These yieldcos have a future as long as they embrace the more conservative strategies favoured by their European peers.

(9) Wind will prevail in Latin America: Falling prices of commodities contributed to slow economic growth in Latin America in 2015, and we expect more of the same 2016. Despite this, we expect demand for wind energy to remain strong, particularly in Brazil and Chile, as firms including Acciona and Enel Green Power have reaffirmed their plans in the region.

(10) Battery storage pioneers take shape: US firm Invenergy opened a 31.5MW battery storage project, totalling 31.5MW, at a wind farm in May; while Germany’s Enercon and Energiequelle opened Europe’s largest wind farm battery storage project, of 10MW, in September. But such projects are rarities. We expect far more to take shape in 2016; and this will also be the year that a few wind players establish themselves as battery pioneers.

Agree? Disagree? Let us know. We will look back at the end of 2016 to see if we were right, and you can see more analysis on the year ahead in our Finance 2016 report, which is out next week.

Welcome back. We hope you enjoyed the festive season and have come back refreshed and ready for business in 2016.

But, before the hard work starts again, let’s take a quick look at the year ahead. Here are our ten predictions for the trends and stories that we expect to shape activity in wind this year:

(1) Chinese slowdown but no disaster: The slowdown in the Chinese economy will act as a drag on the rest of the world, but it looks like we will avoid another global recession. In the wind sector, this slow growth means that developers and manufacturers will keep looking at expanding in emerging markets where energy demand is growing — although opportunities to be first in to a completely untapped wind market are few and far between.

(2) Oil to stay below $50 a barrel: For the oil and gas sector, the oil price slump turned into a full-blown crisis in 2015 with firms cutting their investment plans. Oil prices are currently around $40 a barrel and we expect them to stay below $50 at the end of 2016 as there is no indication that Saudi Arabia wants to slow production. However, despite this turmoil in the global energy market, we see there is still good political and business support for renewables.

(3) New global brands to sign wind PPAs: We have seen the likes of US giants Amazon, Facebook and Google making big commitments to wind and, following the COP21 talks in Paris last month, we expect more household names to do so this year. This is good for developers as it will make some schemes viable as governments overhaul wind subsidies.

(4) Brexit risk unsettles EU but no vote yet: UK prime minister David Cameron has said he is going to hold a referendum on the country’s membership of the European Union, and mooted a vote in June 2016. However, we do not expect a vote until 2017, as Cameron is struggling to win key concessions from the EU and does not want the migrant crisis to fan anti-EU sentiment. This will unsettle the EU — but investors are already pricing in the risk.

(5) Increased activity in North America: In October, pro-renewables Justin Trudeau replaced climate change sceptic Stephen Harper as prime minister of Canada, which is to pave the way for an acceleration in the growth of winding the nation. Meanwhile, in the US, the surprise five-year extension of the wind production tax credit gives the industry long-term certainty to 2020.

(6) Senvion future to lead takeover talk: Manufacturers will keep looking at growth by mergers and acquisitions, but we do not expect to see anything as large as Nordex’s €785m acquisition of Acciona’s wind arm. The big unknown is whether US private equity firm Centerbridge Partners sells German manufacturer Senvion to a trade buyer. We expect all or part of Senvion to change hands, even if via an IPO, and its future will keep tongues wagging.

(7) Confidence erodes in UK offshore: The UK may be the world’s largest offshore wind market, with around 6GW either installed or under construction, but that does not mean its position is assured. The UK government has said it would only support the sector through to 2020 if it can meet unspecified cost cuttings goals. This will eat away at confidence, and mean that markets such as Denmark, France and the Netherlands grow in importance.

(8) Listed US yieldcos go conservative: Listed renewables yieldcos have faced a tough six months as investors have exited over fears that their shares were overpriced. However, we do not think this is the death of the sector. These yieldcos have a future as long as they embrace the more conservative strategies favoured by their European peers.

(9) Wind will prevail in Latin America: Falling prices of commodities contributed to slow economic growth in Latin America in 2015, and we expect more of the same 2016. Despite this, we expect demand for wind energy to remain strong, particularly in Brazil and Chile, as firms including Acciona and Enel Green Power have reaffirmed their plans in the region.

(10) Battery storage pioneers take shape: US firm Invenergy opened a 31.5MW battery storage project, totalling 31.5MW, at a wind farm in May; while Germany’s Enercon and Energiequelle opened Europe’s largest wind farm battery storage project, of 10MW, in September. But such projects are rarities. We expect far more to take shape in 2016; and this will also be the year that a few wind players establish themselves as battery pioneers.

Agree? Disagree? Let us know. We will look back at the end of 2016 to see if we were right, and you can see more analysis on the year ahead in our Finance 2016 report, which is out next week.

Welcome back. We hope you enjoyed the festive season and have come back refreshed and ready for business in 2016.

But, before the hard work starts again, let’s take a quick look at the year ahead. Here are our ten predictions for the trends and stories that we expect to shape activity in wind this year:

(1) Chinese slowdown but no disaster: The slowdown in the Chinese economy will act as a drag on the rest of the world, but it looks like we will avoid another global recession. In the wind sector, this slow growth means that developers and manufacturers will keep looking at expanding in emerging markets where energy demand is growing — although opportunities to be first in to a completely untapped wind market are few and far between.

(2) Oil to stay below $50 a barrel: For the oil and gas sector, the oil price slump turned into a full-blown crisis in 2015 with firms cutting their investment plans. Oil prices are currently around $40 a barrel and we expect them to stay below $50 at the end of 2016 as there is no indication that Saudi Arabia wants to slow production. However, despite this turmoil in the global energy market, we see there is still good political and business support for renewables.

(3) New global brands to sign wind PPAs: We have seen the likes of US giants Amazon, Facebook and Google making big commitments to wind and, following the COP21 talks in Paris last month, we expect more household names to do so this year. This is good for developers as it will make some schemes viable as governments overhaul wind subsidies.

(4) Brexit risk unsettles EU but no vote yet: UK prime minister David Cameron has said he is going to hold a referendum on the country’s membership of the European Union, and mooted a vote in June 2016. However, we do not expect a vote until 2017, as Cameron is struggling to win key concessions from the EU and does not want the migrant crisis to fan anti-EU sentiment. This will unsettle the EU — but investors are already pricing in the risk.

(5) Increased activity in North America: In October, pro-renewables Justin Trudeau replaced climate change sceptic Stephen Harper as prime minister of Canada, which is to pave the way for an acceleration in the growth of winding the nation. Meanwhile, in the US, the surprise five-year extension of the wind production tax credit gives the industry long-term certainty to 2020.

(6) Senvion future to lead takeover talk: Manufacturers will keep looking at growth by mergers and acquisitions, but we do not expect to see anything as large as Nordex’s €785m acquisition of Acciona’s wind arm. The big unknown is whether US private equity firm Centerbridge Partners sells German manufacturer Senvion to a trade buyer. We expect all or part of Senvion to change hands, even if via an IPO, and its future will keep tongues wagging.

(7) Confidence erodes in UK offshore: The UK may be the world’s largest offshore wind market, with around 6GW either installed or under construction, but that does not mean its position is assured. The UK government has said it would only support the sector through to 2020 if it can meet unspecified cost cuttings goals. This will eat away at confidence, and mean that markets such as Denmark, France and the Netherlands grow in importance.

(8) Listed US yieldcos go conservative: Listed renewables yieldcos have faced a tough six months as investors have exited over fears that their shares were overpriced. However, we do not think this is the death of the sector. These yieldcos have a future as long as they embrace the more conservative strategies favoured by their European peers.

(9) Wind will prevail in Latin America: Falling prices of commodities contributed to slow economic growth in Latin America in 2015, and we expect more of the same 2016. Despite this, we expect demand for wind energy to remain strong, particularly in Brazil and Chile, as firms including Acciona and Enel Green Power have reaffirmed their plans in the region.

(10) Battery storage pioneers take shape: US firm Invenergy opened a 31.5MW battery storage project, totalling 31.5MW, at a wind farm in May; while Germany’s Enercon and Energiequelle opened Europe’s largest wind farm battery storage project, of 10MW, in September. But such projects are rarities. We expect far more to take shape in 2016; and this will also be the year that a few wind players establish themselves as battery pioneers.

Agree? Disagree? Let us know. We will look back at the end of 2016 to see if we were right, and you can see more analysis on the year ahead in our Finance 2016 report, which is out next week.