Global Wind Power Sector Faces Setbacks Due to US Financial Trouble and China Slowdown
Global Wind Power Sector Faces Challenges
The global wind power sector is expected to experience a slower growth in the next decade than previously anticipated. This is primarily due to financial difficulties in the U.S. offshore wind industry and delays in project approvals and execution in China, according to a report by consultancy Wood Mackenzie.
Financial Troubles in U.S. Offshore Wind Industry
Major players in the offshore windfarm development sector, such as Orsted, BP, and Equinor, have reported significant impairments on their U.S. offshore wind power portfolios. This is attributed to escalating financing costs and supply chain delays, resulting in hundreds of millions of dollars in write-offs.
Downgraded Forecast for Global Wind Power Capacity
Wood Mackenzie has revised its forecast for global wind power capacity by 29 gigawatts (GW) by the end of 2032, lowering the cumulative installed capacity to 2.35 terawatts. This downgrade represents a less than 2% change in expected capacity, with the majority of the reduction stemming from challenges in key markets like the United States and China.
Impact on Market Fundamentals
Despite near-term challenges in project execution in China and offshore market maturation in the U.S., long-term market fundamentals for wind power remain strong globally. Luke Lewandowski, Vice President of Global Renewables Research at Wood Mackenzie, emphasized the resilience of the industry despite the current obstacles.
Implications of U.S. Offshore Wind Project Cancellations
The cancellation of Orsted’s Ocean Wind project in New Jersey, along with supply chain issues, is projected to delay the completion of nearly 8 GW of U.S. offshore wind projects beyond 2032. This setback means that the United States may fall short of its goal to install 30 GW of offshore wind by 2030.
Challenges in Chinese Wind Project Market
Wood Mackenzie attributed a 12 GW reduction in the global wind capacity forecast to near-term headwinds from a slow Chinese project market. This is a result of tightened permit requirements and project cancellations. However, despite these short-term challenges, China’s onshore wind outlook from 2026 to 2032 remains unchanged.
It is clear that the global wind power sector faces significant hurdles in the coming years, but the long-term potential for growth and expansion remains promising.
