10 key wind investment trends for 2022

Last month, we were lucky enough to talk to 11 for our video series Wind Investment Trends 2022. We spoke to experts across our membership community, from investors and bankers to developers and advisors.

We turned these insights into a 12-page special report that we released last week. A Word About Wind members can click here to see the videos and go here to read the report.

Here are the biggest issues we discussed:

1. The impact of inflation: Instability in the wind supply chain and the rising prices of everything from turbine components and energy to raw materials and transport has been a drag on wind farm developers and investors in the last year.
   
   Turbine prices went up 15%-20% in 2021 to put “enormous pressure” on returns, according to one speaker, and are reducing participation in government wind tenders. If interest rates rise this year then this would increase the pressure on business cases even further. Russia's invasion of Ukraine is also set to further push up energy prices in key markets.
   
   
2. Expansion of floating wind: We covered this in our write-up of our interview with Carlos Martin, CEO of BlueFloat Energy, two weeks ago — but 15GW of floating projects among the 25GW winners of the UK’s ScotWind tender in January tells its own story. There is a long way for the sector to go, but it is moving.
   
   
3. Biden seeks to replicate offshore success: The Biden administration secured huge growth in the US offshore wind pipeline in 2021, with projects totalling 30.7GW now in motion. But the US government has had less success with other parts of its renewables agenda, not least due to the fact its flagship Build Back Better legislation has stalled. Grid infrastructure and the domestic supply chain will be high priorities.
   
   
4. Asset prices remain inflated: Permitting problems in key wind markets plus high investor demand for assets are causing an imbalance between supply and demand of projects. The result has been asset price rises over the last two years and, with little change in the market dynamics, that will only continue throughout this year.
   
   
5. Power-to-X momentum: Another trend we have seen since the start of the Covid-19 pandemic has been the increased attention on power-to-X projects, and especially green hydrogen. Our interviewees predict no slowing in the momentum because of the importance of power-to-X as a solution for hard-to-abate sectors.
   
   
6. More firms become IPPs: Competition is forcing more wind developers to widen their business models to be an independent power producer (IPP) as well. We spoke to one company that became an IPP last year so it had more ways to take part in the energy market, where companies increasingly have to to take more merchant risk.
   
   
7. Skills gaps keep widening: The renewables workforce may be growing, but not fast enough for the energy transition to be a wholehearted success. The International Renewable Energy Agency warned in 2021 that skills shortages will increase in wind globally unless more proactive steps are taken. Our interviewees agreed.
   
   
8. Offshore expands quickly in APAC: China now has 26GW of the world’s total installed 54GW offshore wind capacity, an increase of almost 17GW in 2021. This makes it comfortably the world’s largest offshore wind market, and our interviewees expect the strong growth to continue in the Asia-Pacific region through 2022.
   
   
9. More focus on local content: Governments have found it harder to pick between bidders in recent offshore wind auctions. The Crown Estate Scotland got around this in ScotWind by putting greater emphasis on bidders’ plans for local investment — but one interviewee warned that this is a form of protectionism that may lead to supply chain investments that are not in the sector’s best interests.
   
   
10. Increased focus on the health of OEMs: We started this list by discussing the impact of inflation on developers and investors. But we also expect more attention about the health of original equipment manufacturers (OEMs) this year, and the impact that pressure on their business models will have on turbine quality and project execution.

You can hear more from our 11 expert interviewees by watching the full videos. And, if you want to let us know what we missed, get in touch.

If you’d like to be interviewed for a future series, please contact our team.