The Global Wind Energy Council (GWEC) forecasts that, by 2030, installed wind capacity will only reach just over 2 TW globally.

This falls significantly short of the projections outlined by the International Renewable Energy Agency’s (IRENA) World Energy Transitions Outlook, which anticipates 3.04 TW cumulative onshore wind and 494 GW of offshore wind, totaling about 3.5 TW wind installations by 2030.

Similarly, the International Energy Agency’s Net Zero by 2050 Scenario calls for 2.75 TW of cumulative wind installations by 2030, emphasizing the need for a substantial scale-up, roughly 3-3.5 times the current capacity, over the next seven years.

The disparity between these forecasts and the actual wind energy deployment highlights a considerable gap of 650-1,500 GW, posing a challenge to align with the 1.5°C pathway.

Factors impacting the wind supply chain

The Council found that market volume and power price volatility are increasing in many markets. Failed auctions, project cancellations, inflationary impacts on supply chain components, shipping, and logistics – as well as the rising cost of capital – all impact the investment case for wind energy.

Policy signals are preventing the industry from adjusting and scaling production capacity. Supply chain companies in many areas of the world have been rightly hesitant to adjust their capacity downwards, given the anticipated uptick in wind demand.

Rapid innovation has led to a stage where larger turbines are specialized for specific markets but less suited to the global market. At the same time, the core industry challenges created by the rapid increase in turbine sizes are becoming increasingly evident, including a shortened product development lifecycle that can lead to defects stemming from untested new technology deployments. Large R&D spend for OEMs that they have been unable to recuperate, and a lack of industry standardization are pushing up costs.

Bottlenecks

Current supply chains only have enough capacity to deliver on growth scenarios that fall short of net zero.

GWEC suggests that supply chains must scale across all activities and markets to allow the industry to achieve 2.75 TW of installed capacity by 2030. Addressing the key challenges within the wind supply chain directly is essential, or they might pose bottlenecks before 2030.

The wind supply chain is highly focused on China, representing approximately 64% of the global value chain and an expected 58% share of planned near-term (2023–2025) global wind installations.

Concentration is strongest for rare earth elements, refining and manufacturing gearboxes, converters, castings, and generators, for which the rest of the world is heavily dependent on continued imports. There are clear signals that China intends to keep growing its role as the leading component manufacturer for the global wind industry and further extend its involvement to providing finished wind turbines to international markets.

Mining for the most important raw materials, such as iron, zinc, and copper, is heavily centralized in a handful of countries. At the same time, the refining of critical rare earth minerals for wind turbine permanent magnets is handled almost exclusively by China.

While concentration risk in China is not as high in the wind industry as it is in the solar industry, the concentration of component manufacturing is a significant concern due to a historical tendency in Europe – and to an even greater extent in the U.S. – to outsource gearbox, converter and generator manufacturing.

For resilient wind scaling, the Council recommends efforts be made to ensure local supplies of these components. Europe must at least double its existing capacity by 2030, while the U.S. needs to establish local industries from scratch to meet domestic demand.

Nacelle assembly capacity will be insufficient in all regions except China and India, with the thin margins currently experienced in the industry deterring the necessary capacity expansion.

Recommendations

The report found that in many places, policy and financing environments are not fit for a 1.5°C pathway that results in wind generating one-fifth of the world’s electricity by 2030 and one-third by 2050. As a key energy and political priority, the wind energy industry must work with government and civil society to urgently address policy and regulatory barriers to help improve its outlook.

The wind sector must industrialize and scale, with designs to become global and modular. To achieve this, turbine platform growth will need to slow down towards 2030 to the extent needed to avoid serial damages in the field, ensuring that OEMs can capitalize on their R&D investments while allowing for the supply chain to use equipment for more than a few years and achieve economies of scale, said the report.

Markets must develop credible build-out trajectories in the shape of concrete and transparent targets, a key to supply chain investment. These must be stable, bankable, and much stronger than they are today. By stating clear targets stretching beyond 2030, policymakers can grow wind power demand as needed through communicated targets for electrification, decarbonization, sector coupling, and storage, involving the broader industry in building renewable ecosystems.

Supply chain capacity utilization remains key to cost reduction and is only possible if resources can be shared across regions with competitive cost positions and limited trade barriers. Markets will benefit from public investment into workforce skills and infrastructure, while prescriptive regulation against cross-border trade could reduce industry growth and increase costs.

Rather than pursuing defensive mechanisms that could enhance trade barriers, governments should focus on incentivizing strategic segments of the domestic industry, creating a more attractive market environment by ensuring adequate pricing and returns, making competitive finance available, and removing bureaucratic barriers.

The offshore wind industry achieved notable growth by adding 8.8 GW of new capacity to the grid in 2022, which was its second-best performance ever, according to the GWEC’s Global Offshore Wind Report for 2023.

According to an earlier GWEC report, India will likely have a cumulative wind energy capacity of 63.6 GW, with a potential range spanning from 59.3 GW to 68.1 GW, by 2027.