Page 5 - EurOil Week 03 2021

EurOil COMMENTARY EurOil

European wind, solar

see solid growth

EUROPE CORONAVIRUS (COVID-19) has had little Electrification of energy-intensive sectors,
impact on the growth prospects for wind and such as manufacturing and the building envi-
Up to a third of power solar, with European wind and solar markets ronment, is not expected to lift power demand
came from wind and expected to provide solid growth of 8% and 13% considerably before 2025. COVID-19 has tem-
solar in Ireland, Spain in 2021 in terms of capacity additions. porarily put a brake on this decoupling process.
and Portugal, the UK This will require €60bn of investment, ING Lockdowns, and the resulting recovery
and in Germany. Bank said in a recent report. phase, are causing power demand and economic
On the supply side, wind and solar continue growth to move in tandem again.
to benefit from policy support for green local
power systems. Power supply: Ireland, the Iberian region,
On the demand side, “we expect power UK and Germany are most dependent on
demand to increase by 3% in 2021, although the wind and solar
extension of lockdown periods and delays to the In 2020, up to a third of power came from wind
vaccine rollout could lead to stagnation,” the and solar in Ireland, Spain and Portugal (the Ibe-
bank’s Gerben Hieminga said. rian region), the UK and in Germany.
Throughout the year, on a daily or hourly
Power demand: on the rise again basis, shares can range from almost zero to over
Eurozone power demand took a hit of 5% in 100% depending on local weather conditions
2020 as a result of the lockdown measures. and power demand.
Heavy power users in manufacturing, transpor- Countries so far have adopted different strat-
tation (notably railways) and commercial real egies regarding wind and solar. In the Benelux
estate (offices) required less power as a result. countries and Ireland, much more power comes
Increased power demand caused by working from solar panels than from wind turbines. In
from home could only partially compensate for the Nordics and the UK – and even in sunny
these declines. countries such as France, Spain and Portugal
The shape of the economic recovery will – more power is generated with wind turbines
determine power demand in 2021. Economic compared to solar panels.
growth depends critically on the evolution of the Globally, the wind market is an onshore
coronavirus and the vaccine rollout. market, as around 80% of wind power is gen-
ING’s base-case scenario assumes that lock- erated on land, but again this varies from coun-
downs are alleviated in 1Q21, but social distanc- try to country. In Europe, onshore wind power
ing remains the norm for much longer in 2021. dominates in Germany, France, Italy, Ireland
“We believe a handful of vaccines will be availa- and the Iberian and Nordic regions. In the UK
ble and rolled out in 1H21,” said Hieminga. and the Netherlands, wind comes equally from
In this scenario the eurozone economy is on- and offshore wind farms, whereas in Bel-
anticipated to expand by 3.5% in 2021 and power gium, almost all the wind power is generated
demand by 3%, mostly driven by the manufac- offshore.
turing sector.
Currently, downward risk is mounting with €60bn investment in wind and solar antic-
the emergence of a virus mutation in the UK ipated for 2021
that is more contagious. If the virus lengthens The European wind and solar markets are pre-
the current lockdown period, reignites a third dicted to provide solid growth of 8% and 13% in
lockdown later this year, or if the vaccine roll- 2021 in terms of capacity additions.
out takes longer, the eurozone economy could In absolute terms, capacity additions are larg-
shrink by 0.5% in 2021. est in the onshore wind sector (13 GW) and for
In that case, power demand would be flat in small-scale solar projects (12 GW).
2021. On the upside, rapid testing capability and In the offshore wind sector c.2 GW of capac-
faster vaccine availability could boost economic ity will be added in 2021. That is relatively small
growth to 6.1%, resulting in power demand compared to the other segments, but policy-
growth of c.4%-5% in 2021. makers in the Nordics, UK, Ireland, Germany
Power demand increasingly decoupled from and the Netherlands continue to work on spe-
economic growth in the years before the out- cial planning for offshore wind farms and grid
break of the COVID-19 pandemic. infrastructure.
In 2018-2019, power demand fell, while More is about to happen in the coming years
the eurozone economy grew by 1.3 to 1.9%. for offshore wind farms. All in all, we expect to
Increased energy efficiency and the large share see about 35 GW growth in the combined wind
of services in the economy made the economy and solar market, which will require €60bn of
less power-dependent. investment. ™

Week 03 21•January•2021 www. NEWSBASE .com P5