Is Solar Trumping Wind, Again?

Between 2017 and 2021, you wouldn’t be blamed if you thought the whole burden of adding renewable energy capacity had fallen on solar energy. Thus, even as wind turbine capacities were going up, actual wind capacity deployment, particularly onshore wind, was slumping, leaving in its wake a slew of firms struggling to survive. Dominated by mostly European and American firms, the period allowed Chinese firms in this sector too, to gain marketshare and add financial muscle, as they addressed rising demand in China, and now, globally. The wind cycle seemed to have turned in early 2022, with the nonstop announcements of new farms being planned, especially in the US and China, besides the strides being made in offshore wind. So much so that even India, a holdout to offshore wind until then, finally took its first real steps towards adding offshore wind capacity, even as those are likely to generate any energy only post 2028.

Now, just when the wind cycle seemed to have turned, comes trouble again. For Europe, it is the well documented issues of safety and resilience of the large new models with Siemens Gamesa in particular in focus, as the firm’s parent firm makes new disclosures about the scale of the problems almost every month in 2023. GE’s Wind division has also struggled with maintainance issues, and now even Chinese firms like Goldwind, facing the most intense price competition since it began, has reported a drastic 98$ drop in profits. Xinjiang Goldwind Science & Technology Co, the parent firm, booked $1.28 million in net income for the third quarter of 2023, down by a massive 98% compared to the same period of 2022.

Troubles With Offshore Wind

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For Siemens, the latest has been a price crash of over 30% in shares of the parent firm after the company warned investors that its wind turbine business is grappling with quality issues and offshore ramp-up challenges. The company said it’s evaluating various measures to strengthen its balance sheet and is discussing state guarantees with the German government.

The US, where the industry was galvanised with prospects of a 30 GW target from the Biden administration, the troubles seem never ending. Even as the costs associated with U.S. offshore wind projects have risen by 57% since 2021 due to inflation in components and labor costs, as well as rising interest rates, they have led to a large number of canceled or renegotiated deals. Analysts estimate that 9.7 additional gigawatts of offshore wind projects in the U.S. are at risk.

The India Story

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In India, wind energy projects were tripped up by multiple issues, none more so than the reverse auction methodology for tenders, which pushed many developers to eventually opt out from projects leading to a drastic fall in fresh capacity additions between 2019-22. Even as solar finally overtook Wind in installed capacity in 2022, it is now projected to almost twice as much as wind in capacity and share of generation by 2030.

Source: CEA

Even as the government woke up to the issue and amended rules for wind auctions, a recovery is still tentative and counting on many other factors. Also, like much pf the world, good sites for onshore wind are becoming harder to find, leaving the policymakers to grapple with the best possible way to repower old sites. On top of it all, the sector has to contend with long term challenges like possible slowing down of wind speeds in the subcontinent, with a high impact on overall productivity. Chinese competition here is also making an impact, with Envision emerging as a market leader, even as domestic players like Suzlon work on a recovery plan.

Energy Crisis To The Rescue

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A version of energy crisis that has impacted virtually every part of the world, driven the Russia-Ukraine war, and next by self inflicted decisions like shutting nuclear power plants in Europe, has meant that despite falling well behind solar in terms of price competitiveness, Wind energy prices are not as poor as they used to look in comparison, when compared to alternate fossil fuel sources like coal and gas. More importantly, storage costs have been dropping (not fast enough though), further making the case for round the clock supply using a mix of solar and wind in sectors used to pay a higher cost for their energy needs. However, the risk remains that even this opportunity may go abegging of the wind energy sector does not take the right steps soon.

By Contrast, solar continues to grow, in areas where it was never really expected to also. From Floating solar to BIPV to distributed solar (again) and many other applications that are sturdier and more efficient than ever, the possibilities for solar will explode with a further drop in storage costs. Global manufacturing capacity is headed towards 1200 GW, even as annual capacity additions are also seeking the 600 GW mark by 2029-30, after testing 200 GW in 2022. Wind energy by contrast could add barely 85 GW in 2022, with even the best case scenarios projecting a TOTAL increase by 600 GW by 2030.

Even the International Energy Agency (IEA), in its much awaited World Energy Outlook Report for 2023, says that “the balance of clean energy technologies used to achieve emissions reduction goals has also shifted. Solar PV takes a more prominent role in the 2023 NZE Scenario, though reductions in projected wind capacity additions mean that the combined 40% share of wind and solar PV in total generation in 2030 is very similar to that projected in 2021.” For a sector that led the renewable energy stakes in terms of generation till as recently as 2019-20, that would be a huge fall indeed.