NOVEMBER 20, 2018 Publisher GTM
Next year will see wind, solar and energy storage flourishing globally.
You won’t have to look far to find a renewable energy market worth tracking next year. As more countries establish gigawatt-scale markets for renewables and storage, the global picture is getting much more diverse. Experts helped GTM identify at least 29 countries where wind, solar and energy storage prospects will be worth keeping an eye on in 2019.
Argentina: Wind and solar
Despite recent currency problems, Wood Mackenzie Americas Power & Renewables Analyst Manan Parikh believes new national net metering policies could stimulate the growth of distributed solar systems of up to 300 kilowatts across Argentina. The country has also been identified by Dana Younger, chief renewable energy specialist at the International Finance Corporation, as a wind market to watch.
Australia is hardly a new market for solar, but that won’t make it any less interesting in 2019, said Wood Mackenzie solar analyst Rishab Shrestha. “Australia’s utility-scale solar [market] is picking up pace rapidly from this year onward through 2020,” he said. Australia has a solar pipeline of more than 30 gigawatts, he said, as a result of the country’s Large-Scale Renewable Energy Target, corporate power-purchase agreements (PPAs), state auctions and merchant projects.
Belgium: Energy storage
Europe’s largest behind-the-meter storage system, with 4.3 megawatts of power, has been installed in Belgium, said Alex Eller, senior research analyst for energy at Navigant Research. Recently announced projects in the country include flow battery demonstration projects totaling roughly 5.5 megawatt-hours of capacity and an 18-megawatt Tesla system in Terhills, eastern Belgium, providing reserve and frequency control on electricity trading markets.
Brazil historically has had a strong wind market. Now solar is picking up. “Projects sized above 5 megawatts are taking advantage of a mix of bilateral PPAs and spot prices, depending on where they are located,” said Parikh at Wood Mackenzie. “With auction prices falling and a desire for more market-driven solutions when it comes to renewables, many offtakers, developers and suppliers see this as the largest area for growth,” he said. “Rates of return are not as razor-thin as competitive procurement rounds
China: Energy storage
China is top of the list for just about any renewables watcher. But it has historically lagged behind expectations on energy storage growth, said Eller of Navigant. This changed in 2018, with more than 2.2 gigawatts of new electrochemical storage projects either planned or under construction, according to the China Energy Storage Alliance. “I predict 2019 will be a huge year for the country’s industry,” Eller said.
Wood Mackenzie’s Parikh said there is still a significant amount of enthusiasm for solar in Colombia despite auctions being pushed back from January to March next year. The announcement of utility-scale projects by Enel and Celsia shows there are ways that plants above 20 megawatts can skip an extensive approval process, although the commercial and industrial segment remains the main market opportunity in Colombia.
Egypt: Wind and solar
The financial close of a 250-megawatt project from a consortium led by Engie in the Gulf of Suez has added to hopes for a growing wind industry in Egypt, with 1.2 gigawatts of capacity potentially being developed by companies such as ACWA Power and Marubeni. The country, home to the world’s biggest PV complex, is also highlighted as a solar market to watch by Josefin Berg, research and analysis manager for the solar and energy storage research group at IHS Markit.
The small European Republic of Estonia is attracting wind industry interest over plans for offshore installations in the Baltic Sea, said Richard Heap, editor-in-chief at specialist analyst group A Word About Wind. Stephen Bull, senior vice president of the wind and carbon capture and storage business at Equinor, the oil, gas and floating wind foundation firm, has also cited the Baltic Sea as a potential hotspot for offshore installations.
The International Finance Corporation is expecting to see an uptick in wind development in Ethiopia beginning next year, when the country will be the first in Africa to benefit from extension of the IFC’s Scaling Solar program. The program has traditionally helped African governments, apart from South Africa, to support privately funded solar projects. But in Ethiopia it will be extended to cover wind, too. The country is aiming to install 5.2 gigawatts of wind by 2020, from 324 megawatts today.
Ireland: Energy storage
Alex Eller at Navigant said demand for storage in Ireland is rising on the back of high electricity prices, increasing renewable generation and the island’s inherently restricted grid. A total of 373 megawatts of new energy storage capacity is being processed in the country. Regulators are planning to launch the first auction under the country’s Renewable Energy Support Scheme, which is expected to procure 140 megawatts of fast-responding capacity for grid stability services.
Italy is one of a couple of southern European solar markets that once had strong growth. The country will be worth a second look next year. The Italian government is targeting 72 terawatt-hours of solar generation a year by 2030, up from around 25 terawatt-hours today, said Tom Heggarty, senior analyst for global solar PV at Wood Mackenzie. It is planning seven joint wind-and-solar auctions between 2019 and 2021.
Companies such as Equinor are keeping an eye on Japan’s plans for offshore wind, which came a step closer to reality this year when Tokyo Electric Power Company, Japan’s largest utility, signaled major investments in the technology. Given Japan’s historic hesitancy to bet fully on offshore wind, adding it to the list of markets to watch in 2019 may turn out to be optimistic. But the potential size of the market means few will want to miss the business opportunity when it finally occurs.
Along with Estonia, Lithuania is one of several Eastern European markets that experts are watching for action next year. The country got more than 33 percent of its electricity from wind in 2017, and in June this year approved a new national strategy to meet 80 percent of its total energy demand through renewables by 2050.
Mongolia: Energy storage
Although hardly set to become a galloping energy storage market anytime soon, the landlocked Asian nation of Mongolia deserves a place on the 2019 watch list after signing a groundbreaking finance package for 41 megawatts of distributed energy with batteries. The $66.2 million package, from the Asian Development Bank, the Strategic Climate Fund, the Japan Fund for the Joint Crediting Mechanism and the Mongolian government, will be used to deliver clean energy to 260,000 people in the remote west of the country.
The IFC is hoping 2019 will see a renewal of wind project activity in Morocco after four years of scant progress. Some of the projects on the drawing board are rather speculative, such as Soluna’s plan to build a 900-megawatt off-grid wind farm in the desert.
But project developers are eager. Soluna’s CEO John Belizaire, for example, told GTM he is confident in getting a grid connection to the project within a year of commissioning, and the risks are low. “Morocco has established legal frameworks where the rule of law is sound,” he said.
Bill Lenihan, co-CEO at Off Grid Electric, sees Nigeria as one of Africa’s most promising distributed solar markets in 2019. “Nigeria is Africa’s largest economy and biggest oil producer, and its population growth is expected to surpass the U.S. by 2050,” he said.“Despite this, Nigerians are significantly underserved when it comes to clean, affordable energy. Overall only 45 percent of the population has energy access. As a result, we are observing a significant demand for distributed energy alternatives that don’t rely on the grid.”
Dana Younger at the IFC has cited Pakistan as a promising upcoming market for wind. The country is looking to double the share of wind and solar in its energy mix by 2022. And in November it is set to host the seventh World Wind Energy Conference. The country is heavily dependent on imported oil and gas, so there is an incentive to invest in wind. However, wind projects may have to compete with extensive coal deposits uncovered in 1992 and now being exploited for power generation.
“Poland is trying to rebuild investor confidence after the government that took power in 2015 did major damage to onshore wind support mechanisms,” said A Word About Wind’s Richard Heap. The nation also looks promising for offshore wind — as long as investors can be persuaded that the government’s new wind-friendly stance is for real.
The Iberian Peninsula, where Spanish legislation hampered solar development for the best part of a decade, is now once more looking up for PV. Portugal, which has long had a more favorable stance toward renewables than Spain, looks set to benefit from its proximity to the once-more growing Spanish market. Fun fact: Portugal is also looking to get into the battery game, with lithium exploration licenses up for grabs this year.
Russia appeared to signal growing support for wind power last year when it unveiled a $1.7 billion development fund targeting the sector. The market hasn’t exactly raced ahead since then, but increasing levels of development earned it a spot in A Word About Wind’s latest Emerging Markets Attractiveness Index, ahead of other potential wind hotspots such as Argentina and Pakistan.
Saudi Arabia: Solar
Despite regulatory uncertainty caused by the headline-grabbing SoftBank affair, the Saudi Arabian market is still poised to lead the Middle East in PV demand in the next five years, said Benjamin Attia, a research analyst in the Power & Renewables practice at Wood Mackenzie. Planned tenders could see up to around 4 gigawatts of PV being developed by the end of 2019. A new renewables strategy, set to be released in the coming weeks, may change this outlook, but Attia said he is “confident the Saudi market will see market-shifting activity in 2019.”
South Africa: Solar and energy storage
After a few years of high uncertainty, the South African solar market is ready to re-emerge with the signing of PPAs from round 4.5 of the Renewable Energy Independent Power Producer Procurement Programme, plus a fifth bid window set for November, Attia said. Navigant’s Alex Eller also identified South Africa as a market to watch for energy storage. The national utility Eskom has announced a two-phase plan for 1.4 gigawatt-hours of energy storage at its sites throughout the country, he said.
Tom Heggarty of Wood Mackenzie said upward of 20 gigawatts of solar projects are currently looking for grid connection permits across the Iberian Peninsula.
Around 4 gigawatts of capacity got awarded through Spanish government auctions in 2017, but some developers see more potential in signing utility or corporate PPAs. With prices as low as €40 ($46) per megawatt-hour, Spain is “all about unsubsidized solar,” Heggarty said.
Taiwan: Solar and wind
Taiwan’s solar market will hit gigawatt-scale levels next year, said Wood Mackenzie’s Rishab Shrestha. The country is targeting 20 gigawatts of capacity by 2025, supported by auctions and feed-in tariffs. Richard Heap of A Word About Wind, meanwhile, is watching the development of Taiwan’s offshore wind market. “It’s a promising market,” he said. “The government has backed enough projects to make it look like a supply chain can grow.”
Thailand: Energy storage
Although still a small market, Thailand’s energy storage sector is “gaining momentum quickly,” said Eller at Navigant. Regulators are looking to use energy storage to help increase the level of renewables on and off the grid, with one 3-megawatt system already in operation and more planned.
The IFC sees potential growth in Turkey’s wind market despite President Tayyip Erdogan’s ultranationalist and protectionist leadership representing a relatively high-risk bet for developers. Turkey is looking to add 16 gigawatts of wind capacity by 2030 and is planning 1.2 gigawatts offshore. “There is plenty for investors to get stuck into,” according to A Word About Wind’s Emerging Markets Attractiveness Index.
United States: Energy storage
The U.S. leads the world in energy storage, and its 2019 market won’t disappoint. Behind the meter, watch out for Massachusetts, New England and New York, as well as California and Hawaii, said Wood Mackenzie Senior Energy Storage Analyst Brett Simon. For front-of-meter action, “keep a close eye on the Carolinas,” said Daniel Finn-Foley, another senior energy storage analyst at Wood Mackenzie. “Duke’s heavy investment in storage there could spark interest across the Southeast,” he said.
Nuclear-and-fossil-fuel-heavy Ukraine is quietly emerging as an interesting market for wind developers. Ukraine commissioned 50.35 megawatts in the first half of 2018, bringing cumulative capacity to 515.5 megawatts, said the Ukrainian Wind Energy Association. In August, Turkish construction and engineering firm Guris Insaat ve Muhendislik started building a 32.4-megawatt wind farm. And in September, the Norwegian wind developer NTB announced a 250-megawatt project in the south of the country.
IHS Markit’s Josefin Berg and Wood Mackenzie’s Rishab Shrestha both cite Vietnam as an Asian solar market to watch. “Cumulative solar capacity is less than 20 megawatts, but the current feed-in tariff is attracting a massive development pipeline of more than 10 gigawatts,” Shrestha said. “We expect around 900 megawatts to be installed in 2019.”