This article is part of our special report Wind Energy.
With a smaller dependence on bank loans than other industries, the wind energy sector believes it will be among the first to emerge from the recession, the European Wind Energy Association (EWEA) said at the opening of its annual conference yesterday (16 March).
The European wind sector is less affected by banks' reluctance to finance projects with loans as it can compensate with increased investment from institutional investors, infrastructure funds and power companies with strong balance sheets, EWEA said.
The announcement came as thousands of wind industry representatives from all over the world are gathering in Marseille for the European Wind Energy Conference 2009 this week.
Nevertheless, the sector urged governments and the European Investment Bank to act swiftly to accelerate economic recovery by establishing loan guarantees.
"Whilst many sectors are struggling with falling demand for their products, the European wind power sector is not. Although the sector is doing well in attracting new sources of finance, EU governments should learn a lesson from the US recovery plan, which provides billions of dollars in loan guarantees to renewables. We need all channels of finance, including bank lending and export credits, to be wide open to meet demand," EWEA CEO Christian Kjaer said.
Green MEP Claude Turmes, who was in charge of steering the Renewable Energy Directive through the European Parliament, also spoke in favour of allocating funding from the EU recovery plan to guarantee loans for renewable projects awarded by the European Investment Bank and others. This will ensure that these industries continue to grow and create jobs, Turmes said.
In fact, the wind industry expects the attractiveness of wind as an asset to help it emerge unscathed or even strengthened by the economic turmoil. EWEA said wind energy has become less risky after EU leaders agreed to binding targets for the share of renewables in the energy production of all 27 member states. Moreover, the industry is not exposed to fluctuating fuel and carbon prices.
Kjaer pointed out that about half the institutional investors say they are now more likely to invest in clean energy than a year ago. "Many investors have burned their fingers on high-risk assets, but require a higher return than the 2% they could get from government bonds. The institutional investors are showing the way and the retail investors will follow," he stated.
Wind: The EU's ticket to prosperity?
EWEA also launched its new report on wind energy's contribution to prosperity yesterday, comparing the cost of wind to other power sources. Presenting the findings at the conference, Arthouros Zervos, EWEA's president, stressed that Europe only holds a fraction of the world's proven fossil fuel resources and is going to lose the battle over depleting fuel sources.
In contrast, Zervos pointed out that European companies hold two thirds of the global market for wind power technology, worth €35 billion. "Wind energy is Europe's contribution to peace, progress and prosperity and we should urgently develop, promote and export it to the best of our ability," he concluded.
According to the report, a larger share for wind in producing energy is justified in most European countries, simply because it reduces the risk of fuel price volatility. It argues that current methods of calculating the cost of energy "blatantly favour the use of high-risk options for power generation," calling on governments to correct these market failures.
At the same time, EWEA announced that it had increased its 2020 target for installed wind energy capacity in the EU from 180 GW to 230 GW, 40 GW of which would be offshore. Howeber, Zervos warned that the new target will only be met if all EU member states implement the new Renewables Directive "swiftly and effectively".
The upgraded target should produce energy for the needs of 135 million average EU households by 2020, corresponding to 60% of EU households, EWEA stated. It said this would meet 14-18% of EU electricity demand.
In January, the EWEA's Kjaer told EURACTIV that the Commission's objective of covering 12% of EU electricity consumption with wind energy by 2020 is not particularly ambitious and would not require a huge growth rate (EURACTIV 21/01/09).
According to the Commission, wind energy will represent more than a third of all electricity production from renewable sources by 2020. Wind power is increasing rapidly, and more than 40% of all new electricity generation capacity added to the European grid in 2007 was wind, the EU executive stated.