Global installed wind energy hit the 100GW mark already in 2008 – four years before solar did. It created hundreds of thousands of jobs along the way as the sheer scale of wind turbines, whose transport requires costly logistics solutions, has traditionally strengthened the argument for wind supply chains localization. In its 2021 annual review on renewable energy, Irena remarks that “the integration of local content and local employment in wind energy requires further efforts in contracting arrangements, technical development and cooperation, and local capacity development”.
Switch Report 2022 highlights the following FDI trends at global wind market:
– leadership of European power utilities and wind turbine suppliers;
– the rise of China, the US and Europe as the biggest wind energy geographies, with emerging markets (India, Brazil and Mexico) also achieving major progress;
– the attractiveness of the UK as the destination of choice of FDI into large-scale offshore wind projects.
Geography of wind power FDI
European power utilities became the dominant foreign investors in the market, accounting for 77% of global FDI into wind energy between 2005 and 2020. According to fdi Markets data, Spain ($58 bln), Germany ($51 bln), France ($30 bln) and Denmark ($29 bln) take the lead at the global wind market in terms of announced FDI both as recipient countries and foreign investors. Such major European energy companies, like Iberdrola ($31.6 bln investments, Spain), Enel ($22.9 bln investments, Italy) and RWE (Germany), have been the biggest wind investors over the period 2005 to 2022. Over the past two years, two more companies – Equinor (Norway) and Total (France) – have entered the fray, both thanks to multi-billion dollar investments in offshore wind in the UK.
Apart from Western Europe, international wind energy investments have been mainly distributed among North America (USA, Canada), Asia-Pacific (China, Japan), Emerging Europe (Czech Republic) and Middle East (Israel). During the pandemic years there has also been FDI increase in Latin America region.
Global FDI in the production of wind turbines is equally concentrated in the hands of a few producers. Only four European companies – Danish Vestas and LM Wind Power (acquired by GE in 2017), German Siemens and Spanish Gamesa (which merged with Siemens Wind in 2016) – covered about half the $17.4bn in FDI projects in the production of wind turbines announced worldwide between 2005 and 2020.
Wind energy potential
That room is definitely bigger for emerging markets of the likes of Uzbekistan, Morocco, Kazakhstan, which all have remarkable wind resources, all need to clean up their energy matrix and all have seen some wind energy projects being announced in the past couple of years mainly with support from the European Bank for Reconstruction and Development. Emerging Europe economies – Greece and Poland have both attracted more than $2bn of wind FDI each thanks for favourable policy frameworks, particularly in the latter, where the government has reduced barriers to both onshore and offshore wind developments.
Conclusion
The case for renewable energy grew even stronger during the pandemic years (2020 and 2021) as major economies committed to net-zero targets and electric mobility. Offshore wind developments carried the strong investment momentum of the late 2010s into the pandemic and shored up overall FDI flows in the 2020-2021 period as onshore wind continued to attract big-ticket investment projects.
Over the last decade, Ukraine has achieved significant results in the development of renewable energy sector. According to the Ukrainian Association of Renewable Energy (UARE), the capital investment in renewable energy in Ukraine amounts to over 12 billion dollars. According to the forecasts of the Ministry of Energy, the share of RES in the energy balance of Ukraine should have reached 9% by the end of 2022. The Ukrainian Wind Energy Association (UWEA) assessed the total installed capacity of the constructed wind power plants at 1.7 GW as of the end of 2021.
In 2020, Chinese PowerChina (which built the Three Gorges Dam) together with Ukrainian Windfarm (with a portfolio of wind power plants of 1.3 GW commissioned, totaling over 400 MW capacity) agreed to construct the biggest onshore unit of its kind in Europe – an 800 MW wind power plant – in Donetsk region. It was a sign that the wind power sector of Ukraine was entering a new phase of its development, based on competitive market conditions. Manush-Nikolske project is valued at USD 1 billion, however, due to the war the construction process is halted.
Due to Russia’s war against Ukraine, half of the RES facilities are under threat of complete or partial destruction that endangers clean energy transition. Therefore, the damage caused by Russian invasion to the property of Ukrainian and international business must be compensated through international litigation.
Overall, Ukraine has sufficient potential for further wind energy market development to become a platform for new business models and attract foreign investment when the war ends.
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