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Brazil has one of the world’s fastest-growing wind sectors: it wasfourth-largest for total installations last year.

Projects totalling 2GW were completed in 2016, which is higher than the five-year average of 1.9GW, and the nation is set to maintain similar levels for 2017 and 2018 according to forecasts from Abeeolica, the Brazilian wind energy association.

But Brazil has also spent the last three years in a deep recession, which this month turned into a depression. The South American nation's economic downturn has already curtailed growth in the sector, and those steady installations are set to drop.

Abeeolica has forecast that installations could fall to 1.3GW in 2019 and 555MW in 2020; and, if current growth levels are to continue post-2018, the sector will rely on Brazil’s leaders. The government is planning new set of renewable power auctions – but even the detail around these may carry a big cost to investor confidence.

Now, the government is right to take seriously the impact of the recession on wind. It has resulted in high unemployment and inflation that have affected the sector’s growth.

Brazil’s power consumption fell 2.1% in 2015 and 0.9% in 2016, weakening demand for new sources. In addition, to fight high inflation, Brazil’s central bank hiked interest rates to a decade-high of 14.25% in 2015, and they are now 12.25%.

Wind companies have hence faced sluggish electricity demand and expensive credit, making some of them unable to build projects. The 2GW in 2016 was good, but it could have been far better.

The Brazilian government is now looking to address this.

Energy minister Fernando Coelho Filho has reportedly said that a ‘reverse auction’ could start within months to provide a way out for financially-distressed companies that hold licences for wind or solar projects but cannot build them. The projects are in limbo and, unless the developer formally cancels them, the government cannot pass on the development rights to other firms. There is also a disincentive for firms to cancel: anyone that fails in their contractual responsibilities can pay fines of up to 15% of the project value.

However, the proposed ‘reverse auction’ would allow them to return licences by making exit payments, which would be lower than the potential fines. The projects would then be made available for fresh bidders that are, in theory, better equipped to build them. That would bring fresh investment to the sector; and clear the way for new licencing rounds later, because the government is not so worried about a huge number of projects that could still be built.

The idea has potential, but we see two main risks.

The first one is related to the country’s sluggish energy demand. Brazil cancelled an auction for new wind and solar generation in December due to lack of demand. This reverse auction would make more projects available, but that is irrelevant if there is little need for new capacity or demand from developers.

Secondly, these auctions could create a vicious cycle in an already-troubled industry. They could be seen as an amnesty for firms that haven’t performed. This could encourage further bids from those unable to build projects, because they feel they will go unpunished even if they breach their contracts. This will further undermine the confidence of firms seeking to invest under such a regime.

It is not clear yet if the companies that have failed to complete projects would be able to participate to future tenders. If government permits this, it looks like a bad move. If a firm has failed to make a project work with subsidies fixed by central government, why should we trust that it will be able to do so with lower market-based tariffs?

It is important that the government uses these auctions to identify competitive bids, but it also needs to ensure that it awards these contracts to credible bidders.

There will be credible bidders. State development bank BNDES has said it is seeing more investors seeking to lend money for infrastructure projects; and developers such as US company AES, China Three Gorges and Engie have all stated an interest in Brazil. Reverse auctions could open opportunities for major players.

But, with depression and sluggish energy demand, they will have to be brave too.

Quotas for women on company management teams and boards can help to boost wind companies’ financial performance – but should be used sparingly.

That was the view of our speakers at the launch of our Women’s Power List, which we published in partnership with Green Giraffe, on Tuesday. They highlighted that there are steps firms should take to boost diversity and improve their returns, but added that there are steps that women in the sector must take themselves.

Juliet Davenport, chief executive at utility Good Energy and co-founder of campaign group Powerful Women, said quotas should be used in a similar way to the way subsidies have been used in the wind sector: as a short-term measure to help “get things started” until market-based mechanisms are able to take over.

She said that quotas for women in top roles should be used where companies want to make a big change quickly, and should only be used for a short period of time.

“My view is that quotas are not the end of the world,” she said. “If they are going to be there then they should short-term to get things moving, and then once you get used to [greater gender diversity] then it becomes obvious and it becomes normal.”

She said that having men and women at all levels of companies ensured that they were fully-functioning organisations. In total, Ernst & Young has reported that only 16% of board level roles in the world’s 200 largest utilities are women, and most of these are in non-executive roles, with only 14% of management roles are women. Davenport said renewables was more progressive, but there is still a long way to go.

Teresa O’Flynn, managing director at BlackRock, added that diversity was good for the financial performance of companies,
but that businesses would only be able to take steps to improve diversity if they have data on the composition of their teams.

“They have something at Weightwatchers: ‘If you can’t measure it, it doesn’t count’,” she said. “Diversity is good, and we do need to change the statistics a little bit, and we have to be very deliberate about how we go about it.”

However, she added that women could help themselves to get more senior positions by being vocal about their achievements and pushing for top roles. O’Flynn said too many women suffered from ‘tiara syndrome’, where they get on quietly doing a good job in the hope of being given a promotion – the ‘tiara’ – but end up being ignored as managers focus on more vocal colleagues.

She said it was very easy to be forgotten in a big organisation, but that she has focused on building her profile in her career.

Barbara Zuiderwijk, co-founder of Green Giraffe, added that quotas could force firms to find talented but modest candidates; and challenged complaints about quotas.

“For me, it’s about why are people against quotas? It’s because they want to have the best person for the job. It doesn’t mean that if you have the quotas, that you’re not going to have the best person for the job. It might mean you’re looking harder,” she said, though added women should also seek to raise their profiles.

Indeed, one striking comment from a headhunter in the audience was that when she was approaching potential candidates, men would answer her calls 80% of the time and women only 20%.

Greater diversity can benefit businesses, but it is not solely up to businesses to address it. Women in wind must play their part.

Wind Watch

Wind Watch is published every Monday and Friday.

In the meantime, have you read our Women’s Power List? We published the report yesterday at an exclusive launch event in London, in partnership with Green Giraffe.

The report is timed to coincide with International Women’s Daytoday, and celebrates the wind sector’s top 100 female power-brokers, deal-makers and influencers. It also contains key market insight in interviews with Christina Grumstrup Sorensen from Copenhagen Infrastructure Partners, MUFG’s Carol Gould and Green Giraffe’s Sophie Cherrier. Can you afford to miss out?

We will have a report from launch in Wind Watch this Friday. It included a great panel discussion with big-hitters Teresa O’Flynn from BlackRock; Jo de Montgros from Everoze; Juliet Davenport from Good Energy; and Barbara Zuiderwijk from Green Giraffe.

Key themes included the business benefits of diversity, and the wider challenges facing the industry. If you weren’t there, here’s a flavour of what you missed...

Our next networking event, on 23rd March, is our first Quarterly Drinks evening of 2017, and our guest speaker is Julia Rhodes-Journeay from Allianz Capital Partners. Sign up today!

Brexit is the bright light on the UK’s horizon, but what that light represents depends on your perspective. Either it symbolises a golden future for the country outside the European Union, or the bright flash of a nuclear explosion that then destroys everything.

Those are the two extreme views, anyway.

And us? Well, I would call us ‘patriotic sceptics’. We are patriotic enough to want the UK to thrive after Brexit, as long as we can keep strong relations with our neighbours and friends in Europe. Some firms will profit. But we are also sceptical, and realise the ensuing uncertainty will also damage some parts of the economy.

And, as yet, we cannot say for sure what Brexit means for wind, though we have a few ideas. In this Wind Watch we will focus on the offshore sector, where prospects look good post-Brexit.

In January, the government announced a wide-ranging industrial plan in which it committed to keep supporting the construction of offshore wind farms. The UK needs new electricity capacity, and will continue to do so after Brexit completes in 2019.

The need for new capacity may even be more acute after Brexit. The government backed the Hinkley Point C nuclear project last summer, but existing UK nuclear capacity looks less secure. Last week, one senior nuclear lawyer raised the prospect that nuclear plants in the UK could be forced to close if the UK exits the European Atomic Energy Committee treaty as planned in 2019.

The treaty ensures that nuclear power stations in Europe meet global standards, and the UK would be in breach of these standards if it left Euratom. If the UK government does not act pragmatically then it could harm nuclear – and leave it up to sources like offshore wind to fill the gap. Highly speculative, of course, but it would still be good for the sector.

Another result of the referendum is that the depreciation of the pound has made it costlier for developers in the UK looking to sign deals with firms that operate in euros. That includes with contractors, manufacturers and other specialists.

This could open up opportunities for British firms who can provide similar services as European rivals, and put more pressure on those European firms that want to retain access to the UK market. They will want to win work on large UK developments.

But let’s not overstate this. Yes, the UK is now the world’s largest offshore market, but that does not mean it will retain that status. We would expect those European firms to also target growth in offshore wind in Belgium, Denmark, Estonia, France and the Netherlands, as well as Asia and North America. The UK will remain a big market, but it may not be one of the most dominant.

Developers in UK waters might also get a boost if the UK can do away with some of the more onerous rules for developers. For example, developers today must carry out environmental impact assessments for new schemes in line with EU standards. After Brexit, developers might be freed from these obligations.

That’s the theory, anyway – but we don’t see it happening. The UK will still want to do business with European companies that are subject to EU law, and it makes no sense to get rid of sensible regulations on environmental protection.

Upheaval is coming. It’s impossible to have Brexit without it. But, in the offshore sector, we would expect changes in the UK over the next few years to be focused on the finer details of legislation, pricing and deal terms.

We do not expect government to make a major move away from supporting the sector as it seeks to fill the gaps in the UK power system, while protecting an industry in which the UK is a leader.

But new markets are opening all the time. The UK is a pioneer and leader now, and businesses will have to fight to keep it so.

Tomorrow, we will finally publish our Women’s Power List. I joined A Word About Wind just four months ago, and working on this project has been a great opportunity.

We have been in touch with the women who hold the greatest influence in wind, and have discussed some of the issues around gender imbalance in business – including whether it is really an issue, and what companies can do to attract and retain more women.

So, with that in mind, I felt like I wanted to give my contribution too. In my view, one of the big issues here is about social dynamics, as the family and country you grow up in can have a significant influence on the success of your career.

In Italy, where I come from, it is quite normal for both men and women to be asked in a job interview which are your life’s priorities. You then have to put the words ‘family’, ‘money’ and ‘work’ in order. And you can find tonnes of articles on the Internet that strongly advise you that, in particular if you’re a woman, the best thing to say is: “work, money, family.”

Many of these articles go on to explain the unspoken reasoning behind this: it’s a risk to hire a woman who wants to get married and could potentially get pregnant after a few months or years after she has been hired. This means that they will have to pay her to stay at home.

So, especially for your first job, you must demonstrate that you want just to work and make money. Nothing else. Even having a stable relationship can be seen as a threat sometimes, and one of the questions that you find yourself to answer to is also if you have a boyfriend and which are your future plans with him. In the UK, it is illegal to discriminate in this way under the Equality Act 2010, but that doesn’t mean that it doesn’t happen, however subtly.

How do women in Italy react to this? Well, statistics on Italy’s employment conditions draw a clear picture. Latest figure shows that unemployment rate in Italy is 10.9%, while female unemployment rate is 12%. In the south of the country, this rate rises to 21%.

Strikingly, you also have 8million women who have completely stopped looking for a job. This means that 13.5% of the Italian population is too discouraged even to look for work.

I believe that in some countries there is a kind of invisible and unspoken barrier for women. Nobody is going to stop you if you want to go to the university or work for big companies or banks, but you have to be prepared to deal with a certain amount of pressure.

This is why I have enjoyed working on Women’s Power List. It helped me realise even more that if you want to see women in senior roles, companies and governments have to start to encourage them when they are young. This can help inspire more of us to do our best.

Japan is a major player in energy. It is the world’s third-largest oil importer, and is a leader in the power technology sector. Despite this, it has struggled to grow a strong wind industry – even though wider political shifts should be in wind’s favour.

For six years, Japan’s energy policy has been dominated by efforts to overcome the impact of the 2011 Tohoku earthquake and tsunami, and the resulting Fukushima nuclear disaster. This prompted Japan to abandon plans to expand nuclear power.

That left the nation with an energy gap and forced the Japanese government to look at renewables. However, building wind farms in Japan is challenging. The country’s high population and density, and mountainous geography, have constrained land for onshore wind, though the country has great offshore potential.

A major turning point for renewables was the introduction of feed-in-tariffs in 2012, which allowed the government to establish incentives in favour of wind and solar. But, unfortunately, the system worked better for solar than for wind and, as a result, the growth in wind has been relatively disappointing.

The Global Wind Energy Council has reported that 700MW of wind capacity was installed in Japan in the five years to the end of 2016 to take total capacity to 3.2GW. Of that, 300MW was last year.

In comparison, nearby South Korea has seen new wind capacity of around 630MW over five years, but with a significantly smaller population – 50million people versus Japan’s 127million – and a far smaller land mass. The pace may be picking up in Japan, but it is nothing special compared to other countries nearby.

Despite this, the Japan Wind Power Association has not lost its optimism. A JWPA study from January forecast that Japanese policies would enable wind to grow at a far faster pace until 2030. According to its projections, installed wind capacity should triple to 10GW by 2020 and grow twelvefold to 36.2GW by 2030.

But there is a catch: these forecasts rely on favourable conditions for environmental assessments and grid capacity.

The government is still publicly taking a positive view on wind. Last May, it relaxed its rules for building turbines offshore nearby harbours and ports, for example. Also, the Ministry of Economy, Trade & Industry (METI) and Environment Ministry have joined up to reduce the time it takes for environmental assessments for wind projects. This is a longstanding issue for developers and investors in Japan, where environmental impact studies for wind projects can take as long as five years to complete.

This means the JWPA’s ambitious forecasts rely on the government to speed up environmental assessments and to further ease rules in favour of wind farms. However, we know governments often fail to cut bureaucracy, so we would not base any investment forecasts purely on that. Should investors trust Japan's leaders?

We are sceptical. We have seen slow growth in wind since 2011, despite the rise last year. Right after Fukushima, Japan’s leaders said they would incentivise growth of the renewable energy sector, but made slow progress until now – and things may get worse.

For example, the METI has decided to cut the feed-in-tariff for large wind farms to ¥21/kWh ($0.18/kWh) from 1 October, from the current ¥22/kWh ($0.19/kWh). This may not represent a massive cut to the subsidies but the wind industry is struggling already and a cut in feed-in tariffs could be off-putting for wind investors. This would be a shame because there is private sector interest.

Last month, utility Kyushu Electric Power announced it would lead a group of Japanese firms to build the 229MW Hibikinada scheme, which is set to be Japan’s largest offshore wind project.

And, in January, US firm Pattern Energy reached financial close on a 33MW project, due to completion in March 2018, and it is also planning another 126MW scheme.

Investors are interested in Japan’s wind sector, but we remain to be convinced that the government’s plans will be enough to allow them to follow up their interest and actually build projects. Fukushima didn't make fast growth happen, so will this?

Wind Watch

Wind Watch is published every Monday and Friday.

In the meantime, here is another in our series of Q&As profiling members of the A Word About Wind community. To find out more about being profiled in A Word About Wind, please contact Joe Gulliver or Matt Rollason on our team.
__

Name: Alex Woodward
Job: Head of Product Development
Company: ZephIR Lidar

How long have you worked in renewables?
I started in 2002 with QinteQ, and since then I have worked with Natural Power, Fred Olsen, and now ZephIR Lidar, delivering wind lidars to a growing, exciting market.

In ten words or fewer, what does your firm do?
We measure the wind, remotely, with ZephIR lidars.

In which markets do you see the biggest opportunities?
Measuring the wind remotely, without needing to deploy tall structures (met masts), offers many advantages. The biggest opportunities can be found where the cost differential is greatest between the high-cost installation and maintenance requirements of a mast versus the low-cost installation and limited maintenance requirements of a lidar.

For ZephIR, at the moment we see significant demand in the offshore market, where lidars are deployed on floating platforms
for wind resource assessment projects, and installed on substations
or low-cost platforms during construction and operation in replacement of met masts. Onshore, increasingly we see operational site masts being replaced with lidars too.

A further significant opportunity is the testing and acceptance of new turbine installations where a turbine-mounted lidar can be used for an IEC-equivalent power curve test. This can be replicated on multiple turbines in the wind farm without the need for temporary masts and their associated health and safety requirements, or planning permits. The opportunity for lidar is truly global.

What is wind's biggest challenge, and how would you fix it?
As support mechanisms change, we can use lidar to help project owners address significant challenges. One area where we are working with customers is the extension and upgrade of operational assets. Here, sites must give that little bit more, or be fit for another ten years’ energy production, and lidar can help optimise individual turbines, or tune them to the site conditions. For example, being aware of neighbouring turbine wakes or aligning turbine yaw.

Furthermore, as turbines are upgraded through rotor extensions, loads can be better managed by ‘seeing’ the approaching wind and protecting the turbine so its stands the best possible chance of delivering over the next ten years.

What do you enjoy most about working in wind?
From the beginning, one the most enjoyable parts of working in wind has been working alongside a group of like-minded individuals in the industry, trying to deliver clean energy through innovative solutions: the design and development of sites, the turbine technology, the financing structures, positive community engagement. Everyone is working to grasp the opportunities that are available to us and that’s really rewarding.

Why did you join A Word About Wind?
A Word About Wind helps to bring those like-minded individuals together, in forums where you can just get on and discuss what’s important. Regular communications from the AWAW team help to educate and provide insight. This is our second year ‘in’, and we look forward to increasingly being a partner in relevant projects and events to become better connected.

A surreal, nightmarish and illogical world.

This is what “Kafkaesque” means, and it is how Iberdrola’s chairman Ignacio Galán described Europe’s energy regulations in an interview with the Financial Times last week.

He criticised the current regime because it encourages utilities to invest in technology to cut carbon emissions, but at the same time
ensure that energy prices don’t rise. Also, as a reaction to power shortfalls when there is little sun or wind, governments have kept providing subsides to keep polluting coal plants open instead of investing in renewables in the long-term.

To Galán, this is illogical, and we have to agree. It also has a direct impact on Iberdrola. The Spanish group is one of Europe’s biggest utilities, where it also owns Scottish Power in the UK, and has a large presence in countries including the US, Brazil and Mexico.

Galán said the UK is one country where this illogical situation is particularly evident. The UK has not built new power stations for many years because no incentives have been offered, while instead subsidies have been given to old coal-power stations.

In the capacity auction concluded by National Grid this month for power contracts to cover electricity needs next winter, coal-fired power generators won around 20% of the contracts, worth £378m in total. The UK government says they are necessary to the UK’s short-term security of electricity supply as a partner to renewable technologies, at times when there is little sun or wind.

But it makes little sense in the medium- or long-term. The UK
plans to phase out coal power by 2025, so continuing to provide subsidies to keep coal power stations open just looks odd.

It looks even stranger when the UK is under pressure from the European Union to raise the proportion of renewables in its energy mix from 20% now to 30% by 2020 – although we still have to see how these targets will be affected by Brexit.

The UK government must decide. If it really wants to eliminate coal within eight years then it should stop awarding subsidies to the coal sector now, and instead look at how to direct funds to sectors such as onshore wind, which it stopped subsidising last April. That could be a campaign to help local councils understand the benefits of wind, assuming it finds subsidies politically unpalatable.

It must also be more public in backing low-cost renewables, such as onshore wind, next to more expensive options like Hinkley Point C or Moorside nuclear power stations. It is bizarre to argue that the latter are better for consumers. Nuclear and wind can both be part of a low emissions system that balances cost with reliability. This approach certainly makes more sense than coal.

This would make the system simpler for all, including Iberdrola.

During the interview, Galán said that the firm is still committed to its investment plans for the UK, which amount to £2bn a year between 2016 and 2020. Its focus is on commissioning of 1GW of new offshore wind power and 450MW of new onshore wind power.

Iberdrola’s latest financial results showed a net profit of €2.7bn, posting an increase of 11.7% from 2015. However, the increase was driven mainly by investments in the US, while earnings in the UK from renewables were down 31% at £219m from the previous year’s £318m, suffering in particular from the steep depreciation of the pound after the Brexit referendum.

UK’s government and regulators need to be careful, then. An unfavourable economic and regulatory environment can easily discourage big players like Iberdrola to invest in the country. And push them to look elsewhere instead.

Guilty! In recent years we have not given France the recognition it deserves. With small projects, it seemed solid but little more.

But the latest annual statistics from the Global Wind Energy Council show that is dead wrong. In 2016, wind farms with total headline capacity of over 1.5GW were completed in France, which put the country second only to Germany in terms of Europe’s most active wind markets. It was also the sixth most active globally.

There are three main reasons it has avoided our gaze.

First, the projects tend to be quite small. For example, this month Innergex paid €35m for the 44MW Yonne wind farm in northern France. That is not a huge headline-hogging deal, but it is still notable: Yonne is three times bigger than the average wind farm completed in France. There were 102 wind farms completed in the country in 2016, with an average size of 15MW.

A 15MW project will rarely attract major headlines, but when you have enough happening together it equals a sizeable market.

The benefit of smaller projects like that is that they enable an active asset manager to build a portfolio of projects across the country. It may take more work that managing one big project of 100MW, but it also allows an investor to spread their risk.

The second reason that France has missed out on wider attention is that its leaders have been quietly putting in place laws to improve investor confidence. Grenelle 2, introduced in 2010, set a goal that 23% of France’s energy should come from clean energy sources by 2020. Meanwhile, the Brottes Act of 2013 simplified the planning process to give local authorities more freedom on where wind farms can be located.

In addition, France has had a stable support mechanism in place since 2014. These three sets of regulations have played a key role in supporting investor confidence.

And the third reason France’s wind market has failed to gain the recognition it deserves is that so much discussion about French energy policy is dominated by nuclear, which makes up 75% of its energy mix. That is now changing, and we expect more wind firms to find opportunities in France over the next few years.

This month, energy minister Segolene Royal announced that the government would support 3GW of new onshore wind farms over the next three years, with auctions for 1GW of capacity annually.

We could even see up to 2GW of onshore wind capacity completed each year as France seeks to achieve its long-term targets; and we also expect final investment decisions on large projects that will kickstart the offshore market in the next two years.

If that level of activity materialises then it will mean opportunities for all of the usual suspects: developers, investors, manufacturers and those across the supply chain. That has been enough to attract entrants such as Envision, which bought Velocita’s French arm in December, including a 500MW development portfolio.

It should also mean growth in number of workers in the country’s wind industry, which currently employs 14,500 people according to the wind association France Energie Eolienne.

The big risk for all of this is, of course, the country’s looming presidential election in May, and the parliamentary elections one month later. The country could lurch to the right if the Republican candidate Francois Fillon or Front National’s Marine Le Pen wins, with the rise in anti-renewables policies that could bring.

But neither is guaranteed to win with Emmanuel Macron, Jean-Luc Melenchon and Benoit Hamon in the frame too. We will get a better idea of this when the race gets to its final two.

And, for whoever wins, energy will be a big challenge as the country has to reduce its reliance on an ageing stock of nuclear power plants. The economics of wind and the variety it brings to the energy mix should help wind even with a right-leaning leader.

Until then, the country has stable rules, big ambitions and a growing wind industry. If smaller projects interest you then it could be a good time to get involved.

Germany’s issues with its grid capacity have not made the country less attractive to wind companies. Swedish utility Vattenfall’s strategy is a good example of that.

This week, the company has announced a partnership with German developer Abo Wind, to help it install up to 200MW of onshore wind by 2020 from its current 13.9MW. It has also called Germany “the most advanced and interesting ‘transformation lab’ in Europe”, as the country is transforming its energy transition to a system which heavily relies on renewables, investing in particular on wind energy – and Vattenfall hopes to profit.

But this transition comes with challenges. The German grid has not been able to keep up with the fast growth in renewables and wind in particular. On very windy days, wind farms in north Germany produce more energy than the system can support.

Because of the inefficiency of its grid though, Germany is in the situation that its excess wind power is not being used by individuals and businesses in the south of the country. To address these grid issues, the network regulator Bundesnetzagentur has recently confirmed plans to limit onshore wind's growth in northern Germany to 902MW annually.

This follows from the Renewable Energy Act, which will see new auctions for onshore wind capacity, limiting annual expansion to 2.8GW until 2019.

Despite all that, Vattenfall’s interest in Germany has not diminished. It is not new to the German energy market, although historically it has been involved in fossil fuels rather than renewables. Vattenfall expects its partnership with Abo Wind to help drive this change.

In the last quarter of 2016, the Swedish utility completed the sale of all its lignite assets in Germany, which amounted to SEK 15bn (€1.6bn), to a Czech consortium, and announced plans to invest €3bn into the “Energiewende” – the German energy transition – in the next few years. This deal with Abo is the first part of that strategy.

Vattenfall has set an ambition to become the greenest utility in the world by 2050, and Germany has a renewable energy target of 60% by 2050. The utility is likely to struggle to achieve the former target – it is a crowded market, after all – but the latter changes will help to support it.

Ultimately, Vattenfall’s deal with Abo is not only of a strong business relationship, but also a renewed commitment by Vattenfall to Germany.

Estonia has total wind capacity of 310MW and added only 7MW last year. It also has a small population (1.3million) and met its national targets for renewables ten years early. Those three points suggest there should be little here of interest for investors.

But, in our view, it would be premature for investors to ignore the country. If we look beyond those few statistics we can see that Estonia has ambitious plans to grow its wind market.

To date, wind farms in Estonia have been installed solely onshore. However, the country has shallow waters, 3,794km of coastline and moderate sea conditions, which mean lower costs of installations and maintenance of offshore wind farms. These should be the ideal conditions for developing the offshore sector.

At the Windforce Baltic Sea conference in Estonia’s capital Tallinn this month, its minister of economics affairs & infrastructure, Kadri Simson, pointed out that the time is ripe for Estonia to become a significant player in offshore wind. It may not need the electricity itself, but is hoping to be able to sell it to other EU nations.

Estonia achieved its 2020 target of having 20% of its final energy consumption from renewables in 2011, but it sees the potential to build offshore wind farms and take advantage of energy trading mechanisms in the EU’s Renewable Energy Directive.

The directive has three cooperation mechanisms – statistical transfers, joint projects, and joint support schemes – to allow countries to work together to exploit their renewable resources in order to meet their renewable energy targets. These enable countries to trade certificates that show they get their power from clean sources, in much the same way that companies can.

This could help other countries to meet their own renewables targets – but why is Estonia interested? Of course, the reason behind this is not altruism.

This strategy would enable the country to grow the offshore wind market and support the growth of its wind industry, with all the benefits that brings for jobs and economic growth, and to cut its reliance on fossil fuels from Russia.

Currently, Estonia has a series of large projects in prospect, with over 3GW of offshore schemes in the early concept phase.

Estonian developer Baltic Blue Energy submitted an application in early 2016 to the Ministry of Economic Affairs & Communications for the installation of 388 turbines with a total capacity of 2.7GW, with a plan is to build initially just 1.9GW of capacity, over five sites located between Saaremaa and Hiumaa islands. Since then, we have seen little further progress on the schemes.

Meanwhile, fellow Estonian firm 4Energia started to develop an up-to-1.1GW scheme off the island of Hiiumaa in 2006, but the project is awaiting approval after its environmental impact assessment.

And finally, utility Eesti Energia is planning up to 960MW of wind schemes off the coast of the Gulf of Riga.

So it has the projects, and businesses in the country also have some knowledge about offshore wind. For example, most of the wind generators produced globally by ABB are made in Estonia; and Estonian shipbuilding firm BLRT already manufactures and exports various structures for offshore wind farms.

EU countries that have not reached their renewables targets yet – among them UK, France and Luxembourg – could also see benefits here, as doing deals with Estonia could help them achieve their own renewables targets. And potential investors would benefit from backing schemes where the power deals have support from countries seeking to hit their targets.

Wind in Estonia has three P's: projects, political support and a few relevant producers. That means there's a fourth P: potential.

What’s happening in Australia? The contradictory stories about its wind sector are enough to make you coin a lazy stereotype: strewth!

On one hand, Prime Minister Malcolm Turnbull is facing controversy after making unsubstantiated claims on the wind sector, and putting it on trial in the court of public opinion.

But, on the other, the industry is embarking on the biggest programme of renewables investment in Australia in the last 50 years. This means we must think things are either great or dire. But which is it?

Let’s start with the bad news. Turnbull has been embroiled in a public spat this week over claims that he sought to scapegoat the wind sector over severe blackouts in the state of South Australia in September, which were really caused by storms. The fact the state gains 40% of electricity from renewables makes it an easy target politically.

That isn’t new. We reported this at the time. However, this week it was revealed that he made these statements despite being told by the grid operator that wind schemes were not to blame. We were initially positive about Turnbull, but now it’s clear that he is doing little to change the culture of political hostility to wind and other renewables.

But there has been a change. That’s where the good news comes in. This week, the Clean Energy Council in Australia reported that the renewables sector in the country is set to see almost 2.3GW of new wind and solar schemes in the next few years.

It has highlighted that there are currently 22 renewables projects under construction or ready to begin this year, including 834MW of wind on-site now. These wind schemes include RES’s 240MW Ararat in Victoria; Neoen and Megawatt Capital’s 209MW Hornsdale 2 & 3 in South Australia; and RATCH’s 180MW Mount Emerald and Goldwind Australia’s 175MW White Rock Stage 1 in New South Wales.

There is also a further 627MW ready to start, including the 270MW Sapphire scheme by Partners Group and CWP Renewables; and the 200MW Silverton scheme by the Powering Australian Renewables Fund. Both of these are in New South Wales.

This activity is happening against a background of major falls in the support available under the renewable energy targets; with hostility from the top of the political system; and with a series of public-angering blackouts. There have again been blackouts this week in South Australia caused by hot weather and problems with the grid.

But investors are taking the plunge anyway. Why?

We think this is largely the result of pent-up demand. Turnbull’s predecessor Abbott turned Australia into a clean energy laughing stock, and caused such upheaval for the wind sector that he made it impossible to invest. Turnbull’s bluster has not been as damaging as that, which means developers and investors may as well build now while they are able to do so. Nobody knows when that might change.

There is demand from customers and grid operators too. It has become clear that the blackouts in South Australia this week were caused as much by failing software and historic underinvestment in the grid as by lower-than-expected output from wind farms. There is a need to invest in new power capacity in states across Australia, and wind is part of the solution. There is nothing intrinsically wrong with the sector.

And finally, the Clean Energy Council says that state and territory governments have been instrumental in restoring investor confidence, even though national government has been seeking to undermine it. The upshot is that investors are doing deals while they can, and that this is set to be a major economic benefit for the country to 2020.

Turnbull might bluster, but investors are sick of doing nothing.

Wind Watch

Wind Watch is published every Monday and Friday.

In the meantime, have you checked out the latest posts on our blog? If not, you should. This is where we put the analysis that we can't fit in our newsletters and special reports.



Here is a taste of our latest post...

What 2016 investment figures tell us about China
By Ilaria Valtimora

New investment in renewables fell 18% worldwide, from $349bn in 2015 to $287bn in 2016. And it is largely China’s fault.

Last week, Bloomberg New Energy Finance published its annual report on clean energy investment, which showed how the performance of renewables on a global level in 2016 was highly influenced by the slowdown of Chinese investment in the sector.

Green energy investment in China in 2016 was $87.8bn, down 26% on the all-time high of $119.1bn reached in 2015. In other words, half of the global decline was due to China.

Was last year just a one-off or a signal of a downward trend that will keep going this year? If we look at the signals from the Chinese economy, we think... [Click here for the full article]

New investment in renewables fell 18% worldwide, from $349bn in 2015 to $287bn in 2016. And it is mainly China’s fault.

Last week, Bloomberg New Energy Finance published its annual report on clean energy investment, which showed how the performance of renewables on a global level in 2016 was highly influenced by the slowdown of Chinese investment in the sector.

Green energy investment in China in 2016 was $87.8bn, down 26% on the all-time high of $119.1bn reached in 2015.

Was last year just a one-off or a signal of a downward trend that will keep going this year? If we look at the signals from the Chinese economy so far this year, we think the latter.

In 2016, the Chinese economy grew by 6.7% compared with 6.9% a year earlier, according to the government’s often-disputed official data. It was the slowest growth since 1990. And while government and central bank have spent the last two years focusing on steadying the economy, investment is still dropping in every sector.

Massive cashflows from China have represented one of the country’s biggest issues. Having limited domestic investment opportunities and very low returns, Chinese investors carried out a series of overseas deals in 2016. Chinese corporations are looking for cross-border merger and acquisitions and high-profit deals, especially in Europe, including in wind.

In June 2016, state-owned power company China Three Gorges acquired an 80% stake in German offshore wind farm operator WindMW for $1.9bn. Earlier last year, Chinese state-owned investment holding company State Development and Investment Corporation acquired Spanish firm Repsol's offshore wind business for €238m ($252m), including a 25% stake in the 588MW Beatrice project in Scottish waters.

Following on from this, last month the Chinese government announced new investment in green energy for 2.5tn yuan ($364bn) by 2020, with 700bn yuan ($102bn) just in wind. This should help to restore annual investment to the level seen in 2015.

While costs in renewables are going down, China needs to stabilise its economy in order to attract again investors, both domestic and international, to its energy sector. However, this doesn’t mean that Chinese investors’ appetite for renewables will stop.

They will still play a big role on an international level.

We must collaborate more. That’s the hoary old cliché in the development world, and it is right. Developers and others must work together to make sure schemes get built.

But there are limits. Collaboration is important on particular projects, but it must also be supported by robust commercial negotiations and business sense. There’s no point getting too cosy if you may need to sue your partner at some point in future.

So where are these limits in relationships between developers and manufacturers? The answer is set to change in the next couple of years, because of the move by more governments to adopt competitive auctions to award support for onshore and offshore wind projects. Vestas raised this point in its results last week.

The Danish manufacturer highlighted that the move towards competitive auctions in more countries will put pressure on developers and manufacturers to drive down the costs of schemes, if they want to win these auctions. That means more collaboration early on, and is likely to mean sharing more information.

It is an important trend. Argentina, Brazil, Chile, Mexico, Peru and South Africa have all adopted auctions, and now established markets like Germany are joining in. These auctions will be “the new normal” and commercial relationships will change.

And it is not just auctions putting pressure on these companies.

Manufacturers and developers will not be able to rely on a growing market to help them grow in the next few years. Vestas highlighted that annual wind installations rose from 32GW globally in 2013 to 55GW in 2016, and are now set to carry on at 53GW-60GW each year to 2020. This means that firms will be trying to grow in a market where activity is steady – and so will be fighting hard to win a bigger slice of the same size cake.

That means being more competitive on cost, and for Vestas the solution is more collaboration. It says entering partnerships with developers in the project planning stages will help them deliver projects more cheaply and win more in auctions.

Working closely sounds fine, but how close is too close?

After all, a developer and manufacturer may only be teaming up on one project. This means there is a limit to how much information the manufacturer will feel comfortable sharing about their turbines. A partner on one project could become a competitor on another, and so giving away sensitive data could compromise future auction wins – or even end up in the hands of rivals. These are big risks.

Such partnerships are not new, of course. Companies have always worked together to achieve shared goals when necessary. A good example in the wind sector is when developers want to enter new markets but need turbines better suited to local conditions, so work with manufacturers to adapt existing machines. As more countries move to auctions, such collaboration will be more common.

It will be up to manufacturers how much information they are willing to share. If they are not comfortable working this closely with developers, there is an alternative.

In our view, this could open up opportunities for firms like Vestas to get involved on the project development side. Well, why not? It has spent the last couple of years getting more involved in O&M, and we see no reason why it couldn’t develop too.

Such an approach would let manufacturers work up plans for new projects with no need to share any secrets about their turbines. There are plenty of developers in the market that would be good acquisition targets.

Then, if their project wins the auction, they could sell it to another firm to crystallise the value created in the pre-planning; or keep the scheme and build itself. Either way, this approach would create a guaranteed source of customers for its turbines.

They may see this as too risky, or too much hard work, but it’s worth considering. Collaboration can be great – but sometimes it’s more profitable to go it alone.

Thailand is known for its tropical beaches, ancient ruins and astonishing temples. It also has some attractive sites for wind farms – but that is no guarantee they can be built on. This is at the heart of a dispute that is currently unsettling wind investors.

In late January, the Asian country’s Supreme Administrative Court ordered that work should stop on a 90MW project by Thepsathit Wind Farm Company in the northeast of the country. The court is enforcing a rule that so-called ‘Sor Por Kor land’ cannot be rented to the developer because it is designated for farming.

Last Monday, Thailand’s agriculture minister Chatchai Sarikulya ordered the land reform office in the city of Nakhon Ratchasima to enforce the court’s order within 90 days, by 24 April. The revocation of the lease is considered final, and Sarikulya says that 21 other wind projects in the surrounding region will also be affected.

The dispute centres on the fact that the site was intended for distribution to farmers under the agricultural land reform scheme, known as Sor Por Kor. However, in 2009, the National Energy Policy Committee sought to overrule this as it decided that the energy and agriculture ministries should work together on wind projects in Sor Por Kor areas, after finding out that those areas were suitable for wind farms. Bad move.

After this decision, the Thepsathit Wind Farm Company was granted a licence in 2010 to build wind projects on Sor Por Kor land. But the Supreme Administrative Court has now ruled that the NEPC’s decision from 2009 contravened land regulations, and has now nullified the project licence.

The positive side of this is that the company had yet to build it and so the financial impact has been limited. But the impact on investor confidence and the future of Thai wind cannot be ignored.

Companies in the area have been granted licences to develop 21 other wind farms on affected land. For example, The Clean Energy Company has rented Sor Por Kor land to build a 260MW wind farm to produce energy in Chaiyaphum province. After the court ruling, those have automatically stopped and firms have raised concerns about developing renewable projects in future.

They are right to do so. Investors are rightly nervous about working in a nation where the government is happy to scrap permission for projects that they already approved.

It is tough to operate in a market when you can’t trust your consent. Uncertainty over legal and political systems is one of the major barriers for investors looking to enter new markets, and developers in Thailand will be poring over their land contracts.

This situation could seriously affect the wind sector in Thailand.

Praphon Wonggtharia, director-general of the Department of Alternative Energy Development & Efficiency, has pointed out that Thailand has limited potential to develop wind farms, with total capacity at around 13GW, as there are few locations that can provide the wind speeds needed to generate power. Many sites on Sor Por Kor land do, but this regulatory hurdle stops that and could put a halt to the sector.

This runs contrary to the country’s ambitions.

In 2011, Thailand’s government put in place a plan to install over 19GW of renewable energy by 2036, with the aim to meet the country’s increasing demand for energy and to be less dependent from importing oil and gas from other countries. However, at the end of 2016, around 3GW of renewable capacity was installed, with only 305MW operational.

If Thailand is serious about making wind a part of this plans then it must bring in clear regulations that give more confidence to investors. If that does not happen then this promising new market will suffer due to a lack of clarity over the legal system, and a lack of appropriate wind sites.

You can’t exactly build on the tropical beaches.

Wind Watch

Wind Watch is published every Monday and Friday.

In the meantime, have you let us know that you’re planning to attend our breakfast launch event in London on 7 March for the Women’s Power List? If not, do so now!

We are publishing this special report to tie in with this year’s International Women’s Day, in partnership with finance specialist Green Giraffe. Our aim is to celebrate the wind industry’s top female power-brokers, deal-makers and influencers.

We will giving attendees at our breakfast launch event on 7 March an exclusive first look at the report, as well as a chance to hear from industry thought-leaders, including:

Juliet Davenport, CEO, Good Energy
Juliet set up renewables-only utility Good Energy in 1999 and it now serves over 72,250 customers. The business is now working on plans for the UK's first subsidy-free wind farm.

Jo de Montgros, Founding Partner, Everoze Partners
Jo co-founded Everoze two years ago, and was previously on DNV GL's global renewables management team. She has led technical teams on 22 offshore deals and 400+ onshore.

Teresa O'Flynn, Managing Director, BlackRock
Teresa has worked in investment for two decades, including 13 years in renewables, and been key as BlackRock has grown to over $2.8bn renewables assets under management.

Barbara Zuiderwijk, Director, Green Giraffe
Barbara is one of the co-founders of renewable energy finance specialist Green Giraffe, which has worked on a host of major offshore wind deals, including the 600MW Gemini.

This special and exclusive launch breakfast, also sponsored by Green Giraffe, is due to run from 8.30am at the London offices of Reed Smith LLP, and you can reserve your place now.

This event is strictly for Silver, Gold and Platinum members. We look forward to seeing you there.

Does it matter why countries and companies choose to invest in renewables? We can read about countries that commit to renewables for environmental reasons; and companies that choose green power because are conscious about their carbon footprints.

But that is not always the case and it doesn’t matter. In fact, it’s good because it shows that renewables make good business sense. You just need to look at Saudi Aramco.

Aramco, the Saudi state-owned oil giant and the world’s largest oil company, is reportedly looking to invest as much as $5bn in renewables. It has appointed banks including HSBC, JP Morgan and Credit Suisse to find potential acquisition targets and also advise on deals, with a first investment expected to happen already this year.

This plan fits into Saudi Arabia’s broader strategy. In January, the country announced that it plans to develop up to 10GW of renewables capacity, mainly wind and solar, by 2023 and would invest up to $50bn to do so.

This commitment to renewables has little to do with the environment. Saudi economy is heavily reliant on oil, and the drop in oil prices in the last two years has posed a serious challenge to the country. The situation shows little sign of changing even though, on 30 November, the Saudi-led Organisation of the Petroleum Exporting Countries cut its output by 2%. This caused a temporary surge in oil prices, but evidence of higher US oil drilling and forecasts of a rebound in shale production have held back oil prices since then.

So, Saudi Arabia has been forced to find a new solution. It has chosen to make its economy less dependent on oil and to invest in renewables. But how to find the money to invest in, once it has become increasingly difficult to rely on oil? Here is when the idea of the Aramco IPO came up.

Saudi Arabia plans to sell shares of its state-owned company to the public to finance its investment in renewables and, if the plan works, the proceeds from the sale would be enough to reform its economy. Indeed, Aramco’s plan to sell stake of about 5% could value the company in trillions of dollars, raising about $100bn for the government.

The purists might sneer that the country is not investing in solar and wind out of concern for the planet, but that doesn’t matter. Its approach shows that renewables make business sense, and it should also represent a tempting opportunity for developers and manufacturers to enter a new and promising market.

And it would do no harm to the environment too.

An economic upturn is under way in the Eurozone. This should be to Germany's great relief, but, instead, German manufacturers are worried. They see a looming threat to the EU’s fragile recovery.

That threat is the protectionism emanating from America.

This is not just an issue for wind, of course. But turbine makers who export their products around the world, as well as those producing smaller parts for turbines, will be among those affected.

Evidence of this negative sentiment came out a couple of weeks ago with the release of the Ifo Business Climate Index, which gives a monthly indication of where German output will go in the near future. Historically, a worsening in the Ifo Index has been followed by a worsening in the German GDP and, as Germany is EU’s economic engine, in the Eurozone’s GDP too.

January’s Ifo Index showed that optimism among German managers regarding their business future has weakened. In particular, in the manufacturing sector the index fell by 11% from December, "due to markedly less optimistic business expectations", the Ifo Institute's president Clemens Fuest said.

And the reason many are concerned is President Trump’s evident desire to push his 'America First' agenda, starting a 'trade war'
whether by raising tariffs or introducing border taxes, or both. He believes that this is the right way to “Make America Great Again” – and those in Germany believe it will be partly at their expense.

The German economy is essentially driven by exports and the US is, since last year, the country’s major trading partner. Now that trading partner is looking inwards.

German manufacturers export 50% of what they produce abroad and this includes turbine-makers. Manufacturing accounts for 23% of German GDP, according to World Data Bank figures for 2015, and some of the biggest turbines manufacturers such as Nordex, Enercon, Siemens and Senvion are German-based. According to figures released from the US Census Bureau, Germany exported goods in the US worth over $104bn in the first 11 months of 2016.

If it becomes more expensive and logistically difficult for those firms to sell turbines in the US, then it would push up the cost of projects in a market where General Electric is the only truly indigenous global player. This should concern the US states that are keen to see further growth in wind, and developers who want to build those projects. In our view this could be a no-win situation.

It would be bad for German turbine manufacturers because it would become more expensive to export in the US. They could then be forced to grow in new markets, pursuing opportunities outside the fast-growing US market.

It could also force those firms to invest more in US factories to ensure the turbines they are make support jobs. It is easy to see ‘protectionism’ as another name for 'local content rules'.

And it would also be bad for the US, because it would lose, or at least limit, the access to expertise and technology, in which German turbine manufacturers are still holding their own in a competitive global market. Last year, German manufacturers occupied four of the top ten spots for largest turbine makers by annual installations.

The biggest potential beneficiary is GE, which is the only US firm in that list of top ten turbine makers. We could see other turbine makers grow up in the US but, in reality, they would need serious firepower to compete with their larger rivals.

Protectionist policies should not only worry German manufacturers, of course. As of 2016, the US had almost 75GW of installed wind capacity, second only by China. If it becomes harder to export turbines or even parts of them in the US, then the entire sector would be affected. We can’t be sure, but with Trump in charge we can't rule anything out.

Still, it could be worse. At least he hasn’t started a nuclear war. Yet.

Oh, come on. He won’t build a wall. He doesn’t want to deport legal migrants. And he won’t want to start a host of trade wars. You take him too literally. He won’t be so bad. He'll be more... presidential.

No prizes for guessing who we're talking about. If you hoped that becoming leader of the free world would encourage Donald Trump – sorry, President Trump – to rein in some his more extreme policies then you might have been watching on open-mouthed since his inauguration on 20 January. He has shown that he is willing to deliver some of these extreme policies in radical ways.

And so it will come as no surprise if, as expected, Trump makes good on his pledge to pull the US out of the Paris climate change agreement, signed in December 2015. He has said he will do it, and we expect he will – almost certainly in bombastic fashion.

He is under pressure to stay in. His secretary of state nominee Rex Tillerson, the former chief executive at ExxonMobil, has said that it would make sense for the US to stay in the deal to cut emissions and address the impacts of climate change. If the two men clash, though, the ‘short-fingered vulgarian’ will be the only winner.

So what does that mean and should we all give up hope now?

In the 14 months since it was agreed, the Paris deal has been heralded as great for the wind sector. The Global Wind Energy Council said if countries met their targets in the agreement then, by 2030, total wind capacity globally would hit 2,110GW – which is a fivefold increase from 2015 – and attract annual investment of €200bn a year. At that rate we'd all be able to afford Trump-style gold lifts... but don't place your order just yet!

Clearly, if Trump withdraws the US then it would be bad for the agreement. If one of the world’s largest polluters pulls out of a global commitment to reduce the amount they pollute then it can only be bad. It will make other nations wonder ‘Why bother?’ and, if other big players pull out too, could render the deal meaningless.

But this should not be a disaster for wind. We have always been sceptical about the Paris deal, and see no reason why its collapse should curtail growth in the wind sector in a major way.

Now don’t get us wrong. It is good that 197 nations agreed to keep global warming to "well below" 2°C, as that should mean more investment in renewables. But this was always a high-level deal that gave little in the way of specifics, and came with little power if one of its major polluters – like the US – decided to walk away.

We wrote in the wake of the deal that it was “business as usual”, and this has been the case.

It did not change the fact that manufacturers and developers need to keep driving down the cost of wind energy so it is more attractive than other sources. It did not force investors to back deals that they would otherwise have ignored. And it did not win over politicians that were otherwise hostile to the wind sector.

The expansion of wind has always been dependent on supportive policies at national level and the industry’s strengthening business case. In the last year, we have seen great progress on reducing costs onshore and offshore, but this would have happened even if those 197 nations had failed to reach an agreement.

That is not to say the Paris deal is meaningless. It is a show of global solidarity that underlines the need for low-carbon power, and it would be a shame if Trump kills it. But wind was growing before that agreement. It can keep doing so afterwards.

Wind Watch

Wind Watch is published every Monday and Friday.

In the meantime, have you let us know that you’re planning to attend our breakfast launch event in London on 7 March for the Women’s Power List? If not, do so now!

We are publishing this special report to tie in with this year’s International Women’s Day, in partnership with finance specialist Green Giraffe. Our aim is to celebrate the wind industry’s top female power-brokers, deal-makers and influencers. We closed to nominationsyesterday and now the hard work really begins!

We will giving attendees at our breakfast launch event on 7 March an exclusive first look at the report, as well as a chance to hear from industry thought-leaders. We will be announcing our speakers for the event shortly, so don’t miss out.

This special and exclusive launch breakfast, also sponsored by Green Giraffe, is due to run from 8.30am at the London offices of Reed Smith LLP, and you can reserve your place now.

This event is strictly for Silver, Gold and Platinum members. We look forward to seeing you there.

Last year was a record-breaker in terms of offshore wind investment. This shows that Europe has great potential to remain the global leader in this part of the wind sector.

However, it must deliver on this potential, as there is still uncertainty over volumes and regulation in key European offshore markets after 2020.

These are the headlines from the annual offshore statistics that WindEurope published last week. This showed that investments in the European offshore wind sector reached €18.2bn in 2016, in new schemes totalling up to 4.9GW to be built in the coming years. The figure represents a 40% increase from 2015.

The UK attracted the most of the new investment, with commitments totalling €10.5bn for new projects, followed by Germany (€4.2bn), Belgium (€2.3bn) and Denmark (€1bn).

But these good times could end soon. WindEurope raised concerns over the lack of plans for investments in renewables beyond 2020. The organisation has signalled that the number of projects will start to fall already towards 2019 as European member states complete their National Renewable Energy Action Plan under the current Renewable Energy Directive, which covers the period up to 2020.

In fact, only seven out of European Union’s 28 member states have plans for renewables after 2020, and just three of them have specific plans for offshore wind, WindEurope chief executive Giles Dickson has said.

Germany, the Netherlands and the UK are the only three countries to have plans for offshore wind after 2020. Significantly, they are also the only countries where new offshore schemes, totalling 1.5GW, were completed in 2016.

This shows that Europe is still split in two parts going at different speeds within the offshore sector: the market leaders continue to push on, but progress elsewhere is slow or non-existent. Denmark has announced some tender results over the last years, but investors will want to see the likes of France, Italy and Portugal pick up the pace. The more countries that see the potential in offshore wind, the more certainty there is for companies to plan.

More European nations need to set their plans for renewables for the next decade to give more clarity for investors, as a lack of plans might force manufacturers and growing number of companies operating across the offshore wind supply chain to look at whether there are opportunities to grow in emerging offshore markets in North America and Asia instead.

Despite the costs of wind are falling, increasing volumes of installed capacity in the market are required to sustain it. This means that increasing commitment to invest in the sector is needed by EU members if Europe wants to keep its primacy in offshore wind.

Could investing in clean energy in Africa help Europe to address its migrant crisis? One senior African politician speaking at the annual meeting of the World Economic Forum in Davos thinks so.

Guinea’s president Alpha Conde, who also heads the African Renewable Energy Initiative, said in an interview last week that European countries should invest in African clean-power resources to fight problems caused by immigration.

He says investing in renewables would make it more attractive for African people to stay in their own countries, because renewables would create jobs, improve living standards by increasing access to power, and spur economic growth. Fewer would then head to Europe, which would help curb the rise of right-wing populism.

We see some of the benefits of renewables in South Africa. The country’s deputy president Cyril Ramaphosa used Davos to praise the successes of South Africa’s renewable energy industry. And he said the country’s stable macroeconomic environment and developed financial markets would keep providing a solid platform for a stronger growth in the sector. Others could do likewise.

In theory, investing in African renewables to help solve the migrant crisis could be a win-win. European countries could use this to help fix their issues with immigration, Africa could end up with a stronger economy based on renewables, and African people would be able to work in their own countries.

There is a ‘but’, though. Despite progress on major wind schemes in Africa – the 310MW Lake Turkana in Kenya and 225MW Ayitepa Wind in Ghana – investors will need to have confidence in an African energy market has still some issues to address.

Again, we can use South Africa as example, where state-owned utility Eskom is undermining investor confidence.

Eskom has refused to sign power purchase agreements (PPAs) with 37 projects chosen as preferred bidders in the country’s REIPPPP initiative – the Renewable Energy Independent Power Producer Procurement Program. This means that those projects cannot go ahead because they do not have a guaranteed buyer for the power they produce.

The South African Renewable Energy Council, an umbrella body for the various renewable energy technologies, has sought counsel from law firm Webber Wentzel and has signalled that it might take the issue to court to force Eskom to sign all the outstanding PPAs.

This is not the first time Eskom has refused to sign a PPA and it says the reason it is refusing to do so is the high costs of renewable energy, wind in particular, compared to coal. The battle is ongoing – but the fact there is a battle in one of Africa’s most pro-renewables countries will sound warning bells for investors.

If a state-owned utility like Eskom is not willing to enter into any PPA because it thinks that costs of renewables are too high, why would international investors look at that country to invest in?

And if they cannot be confident about their money being safe in South Africa, where would it be safe? Africa may be a continent of hugely varied countries, but the Eskom argument only reinforces a perception – fair or unfair – about instability in the region.

In South Africa, the collaboration of Eskom is essential to make the REIPPPP work properly. South Africa’s renewables industry has the potential to be an example to all other African countries and, one day, it could lead them to make Conde’s proposal reality.

But will not be in time to help Europe fix its immediate challenges.

Last year was a record-breaker in terms of offshore wind investment. This shows that Europe has great potential to remain the global leader in this part of the wind sector.

However, it must deliver on this potential, as there is still uncertainty over volumes and regulation in key European offshore markets after 2020.

These are the headlines from the annual offshore statistics that WindEurope published last week. The report showed that investments in the European offshore wind sector reached €18.2bn in 2016, in new schemes totalling up to 4.9GW to be built in the coming years. The figure represents a 40% increase from 2015.

The UK attracted the most of the new investment, with commitments totalling €10.5bn for new projects, followed by Germany (€4.2bn), Belgium (€2.3bn) and Denmark (€1bn).

But these good times could end soon. WindEurope raised concerns over the lack of plans for investments in renewables beyond 2020. The organisation has signalled that the number of projects will start to fall already towards 2019 as European member states complete their National Renewable Energy Action Plan under the current Renewable Energy Directive, which covers the period up to 2020.

In fact, only seven out of European Union’s 28 member states have plans for renewables after 2020, and just three of them have specific plans for offshore wind, WindEurope chief executive Giles Dickson has said.

Germany, the Netherlands and the UK are the only three countries to have plans for offshore wind after 2020. Significantly, they are also the only countries where new offshore schemes, totalling 1.5GW, were completed in 2016.

This shows that Europe is still split in two parts going at different speeds within the offshore sector: the market leaders continue to push on, but progress elsewhere is slow or non-existent. Denmark has announced some tender results over the last years, but investors will want to see the likes of France, Italy and Portugal pick up the pace. The more countries that see the potential in offshore wind, the more certainty there is for companies to plan.

More European nations need to set their plans for renewables for the next decade to give more clarity for investors, as a lack of plans might force manufacturers and growing number of companies operating across the offshore wind supply chain to look at whether there are opportunities to grow in emerging offshore markets in North America and Asia instead.

Despite the costs of wind are falling, increasing volumes of installed capacity in the market are required to sustain it. This means that increasing commitment to invest in the sector is needed by EU members if Europe wants to keep its primacy in offshore wind.