Good morning and welcome back.
I hope you managed to have a good festive break and are reinvigorated about what we can do for the global energy transition in 2022. If you’re on Netflix, I hope you also made time to watch ‘Don’t Look Up’. I’d love your views on it.
But now we’re here – with a cast every bit as impressive as Leonardo DiCaprio and Meryl Streep – for our first edition of 2022. Most of you know the drill. In the first edition of each year we make ten predictions for wind in the next 12 months, and in the last edition we come back to see how many we got right.
Here are ten stories we see in our crystal ball:
Vestas and Siemens Gamesa have both started 2022 with warnings about the impacts of rising raw material and transport costs on turbine makers, also known as ‘greenflation’. This will put pressure on the margins of already stressed turbine makers in 2022 and mean more restructuring, as well as the disappearance of some small players. More costly turbines will put pressure on developers and asset managers too.
Everyone’s a virologist now, right?! We may not be public health experts, but it is clear that Covid-19 will carry on disrupting wind businesses in 2022, with new variants, travel restrictions, and supply issues. This will be worst in emerging markets due to vaccine inequality and may worsen skills shortages in established markets too. Despite that, investor interest in wind will stay high.
Germany has had a quiet few years, but its new coalition government is looking to be more ambitious in its wind plans. In 2022, we will hear more on big targets for offshore wind; how it sees renewables as key to solving Europe’s energy crisis; and increasingly muscular responses to ‘dirty energy’ policies from the European Union.
We should also give an honourable mention for Spain, where investors have been reassured by the government’s U-turn on a damaging policy for wind farm owners. The country enters 2022 with quiet confidence and should expect little in the way of nasty surprises.
The UK will continue to provide a good litmus test of interest in European offshore wind. The sector’s eyes will be on option fees and floating wind in the Crown Estate’s ScotWind tender; and the amount of capacity backed in the UK’s latest Contracts for Difference auction. The return of onshore wind in CfDs will also raise tensions between Boris Johnson and his party’s wind-haters.
The momentum will keep growing in US offshore wind, and onshore wind will enjoy another record year – but again we expect few answers on transmission. President Biden will keep struggling to deliver on his environmental promises, particularly in his flagship Build Back Better bill, but companies should still take heart. Having him in the White House gives renewables a tailwind until 2024.
Chinese turbine makers have traditionally focused on their huge home market, but we expect globetrotters Ming Yang and Goldwind to make bigger waves across Europe and Asia this year. Ming Yang is focused on European offshore after its success with the 30MW Taranto project in Italy; and Goldwind is taking its 12MW offshore platform global too. We expect a few eye-catching deals from both.
Hydrogen produced using renewables has been a big talking point in wind for the last two years, but in 2022 we will start to see projects completed. This will give investors a better idea of how viable the technology is in the long-term, which business models work best, and exactly how the technology fits with wind. The excitement isn’t going away but onlookers will pore over new projects.
Vestas, Invenergy and CS Energy were three big names in wind that we know were hit by cyberattacks in 2021, and this threat will keep growing in 2022 despite efforts to keep out the hackers. We expect to see more attacks on big names, and more focus on how wind firms can make grids safer at a time when cybersecurity experts are at a premium. Sadly, we don’t think 2021 was a one-off.
We will see new corporates signing power purchase agreements of course but, in 2022, we expect more to emphasise that buying renewable power is only one element of their sustainability plans. We will see some corporates moving into co-developing wind farms to help bolster their energy security; and we will see greater emphasis on how corporates pair wind power with electric vehicles, green heat and energy storage.
Picking favourites globally is a tough business, but here are three countries we expect to excite investors in 2022. We are seeing big projects emerging in Finland as the backlash against onshore wind grows in Norway and Sweden; and South Africa is getting more enthusiastic about renewables. Then there is Vietnam, which is emerging as a hotspot for offshore wind development in Asia. We’ll be watching all three.
They aren’t alone through. From onshore wind in Colombia and Kazakhstan to offshore wind in Italy and Australia, we see pockets of activity worldwide.
It promises to be another exciting year for wind, solar and other renewables wherever you are in the world. We look forward to joining you on the ride.
What do you think? What did we miss? We’d love to hear!