The European wind industry association, WindEurope, has published a report – Financing and Investment Trends – according to which last year the sector invested in the Old Continent 27,000 million euros (almost 520 million every week). The financial muscle thus remains robust (the amount is similar to that of previous years), but the technology has been in 2018 more fruitful than ever before. And is that, thanks to the fall in installation costs (due to constant technological advances), especially in offshore wind, those 27,000 million euros are going to be used to start nothing more and nothing less than 16,700 new megawatts wind, according to WindEurope.
A megawatt of onshore wind power today demands an investment of 1.4 million euros, when just four years ago starting up a megawatt on land required two million euros. The numbers of offshore wind are more striking. Installing one megawatt in the sea in 2015 cost four and a half million euros. Putting it into operation today costs only 2.5 million (55% less). According to the WindEurope Financing and Investment Trends study, most of the investments announced last year have gone ashore -12,500 megawatts-, while the remaining 4,200 megawatts (which will take 38.5% of the 27,000 million mentioned above) will be carried out offshore.
According to data published by WindEurope in this report, a total of 190 wind farms from 22 different European countries announced their Final Investment Decision (FID) last year. The North and West of the Old Continent continue to be the territories most benefited by these investments. The United Kingdom has been the largest investor, especially in offshore wind. Sweden came second. Investments in the South and Central Europe – WindEurope continues – have accounted for only four percent of the total, “although Spain and Poland -matizing from the association- have taken off in 2018”.
According to the study, 2018 has also been a year with a lot of movement in the sector. WindEurope estimates that 24.1 billion euros have been invested in the acquisition of wind farms, “including projects in the development phase and companies in the sector involved in these developments”. The European Wind Industry Association explains that this volume is “much larger” than in previous years. According to WindEurope, the sector’s maturity and fierce competitiveness have attracted more investors, particularly from the financial sector. The association considers that this has been due to the growing confidence that wind technology inspires among new investors.
WindEurope’s Financing and Investment Trends study also points out that developers are working more and more, financing their projects more and more frequently, with debt. In addition, the new business models have encouraged the diversification of investors, including banks, credit agencies and other institutional bodies. Confidence in technology has driven down interest rates and risk premiums, so that capital reaching the sector is becoming cheaper and cheaper.
Giles Dickson, CEO of WindEurope: “Wind energy has attracted 60% of Europe’s investment in new generation capacity by 2018. And this year has become the year in which the most wind power has been financed. Reducing installation costs means that investors can now start up more power for every euro they invest. And as credit bureaus feel increasingly comfortable, financing costs are falling as well.
The highest representative of the European wind industry association warns however: “Europe must keep up the pace of investment if it wants to meet its 2030 target of 32% renewable quota”. Dickson complains about the insufficiency of the projects, the slowness of the administrations in processing permits, authorizations and so on and the fact that many governments have not yet sufficiently clarified in their Energy and Climate Plans what their wind power objectives are: “if they are clear and ambitious, this will send a signal to investors that will make the projects viable.