Market Deployment of Wind Energy
Over the last 20 years, growth in the total installed capacity of wind energy generation across the globe has been growing rapidly. Germany was the first country to lead the development of wind power, but the US and China have dominated the growth since 2010. China is especially impressive in terms of its recent growth.
The growth in wind power capacity over the last 20 years. Both China and the US are growing exponentially.
Click here for a text description of the growth in wind power capacity over the last 20 years graph.
The image is a line graph titled "Cumulative installed wind energy capacity, gigawatts," which shows the growth in installed wind energy capacity from 1997 to 2016 for several countries. The y-axis represents the capacity in gigawatts (GW), ranging from 0 to 140 GW. The x-axis represents the years from 1997 to 2016.
- China (green line) shows the most significant growth, starting from near 0 GW in 1997 and rising sharply to over 140 GW by 2016.
- United States (red line) starts with a low capacity in 1997 but increases steadily, reaching around 80 GW by 2016.
- Germany (blue line) also shows steady growth, starting from a low base and reaching approximately 45 GW by 2016.
- Spain (orange line) has a moderate increase, peaking at around 25 GW.
- India (purple line) starts from almost 0 GW and grows to about 30 GW by 2016.
- United Kingdom (light blue line), France (dark blue line), and Italy (yellow line) all show growth, but at a slower pace compared to the top countries, with capacities below 20 GW by 2016.
The graph is sourced from the BP Statistical Review of Global Energy and is provided by Our World in Data. Each country's line is color-coded for easy differentiation, with a legend on the right side of the graph identifying each color with its respective country. The overall trend indicates a global increase in wind energy capacity over the years, with China leading significantly.
Part of the reason for this growth is the steady decline in the cost of wind energy, as discussed in the previous section on solar energy. But government policies are another important factor. The United States has one of the most volatile markets for wind energy in the world, while those in Europe and China have been among the most stable. This is due in part to differences in how governments in these countries treat wind energy. In many parts of Europe, wind energy (and other renewable generation technologies) enjoy subsidies and incentives known as feed-in tariffs. The feed-in tariff is essentially a long-term guarantee of the ability to sell output from a specific power generation resource to the grid at a specified price (typically higher than the prices received in the market by other generation resources). The United States, on the other hand, has favored a system of tax incentives called the “Production Tax Credit” (PTC) to encourage renewable energy deployment. In theory, a tax incentive should not work much differently than a feed-in tariff (both are just payments based on how many kilowatt-hours are generated). But the PTC has historically needed to be re-authorized frequently by the US Congress – this “on-off” policy strategy has been a major factor in the volatility of wind energy investment in the US as shown in the figure below. It is worth noting that the PTC was recently renewed for 2013, but will lapse again at the end of 2019, so it is difficult to say what impact it will have on wind investment going forward.
US wind energy annual installations, showing the relationship between lapses in the Production Tax Credit (PTC) and declines in new installations.
Click here for a text description of the US wind energy annual installations graph.
The image is a bar graph titled "Annual U.S. Wind Power Installation," which shows the amount of wind power installed in the United States each year from 1998 to 2018, measured in megawatts (MW).
- The y-axis represents the installed wind power capacity in MW, ranging from 0 to 14,000 MW.
- The x-axis represents the years from 1998 to 2018.
Key points from the graph:
- From 1998 to 2004, the installation of wind power was relatively low, with figures below 2000 MW each year. There is a notable annotation "PTC lapse" pointing to the years 1999, 2000, 2001, and 2003, indicating periods where the Production Tax Credit (PTC) lapsed, leading to lower installations.
- Starting in 2005, there is a noticeable increase, with installations generally above 2000 MW, peaking around 2008-2009 with over 10,000 MW.
- Another significant peak occurs in 2012, reaching over 12,000 MW, followed by a sharp decline in 2013, again marked with a "PTC lapse" annotation.
- From 2014 to 2018, the installations fluctuate but remain relatively high, with values generally between 6,000 MW and 8,000 MW, except for another peak in 2015.
The bars are colored in shades of red, with darker shades representing higher values. The graph visually represents the impact of the PTC lapses on the annual installation of wind power, showing significant drops in those years.
The above clarifies that government policies are important to the growth of renewable energy production (both wind and solar). In a very real way, you can think about these policies (feed-in tariffs or tax credits) as a form of investment. Governments can also provide investments in the form of funding for basic research related to these technologies. In general, these investments do not add up to a huge amount when seen in the context of a country's gross domestic product (GDP), which is a measure of the size of the economy, as seen in the figure below.
A comparison of some leading countries in terms of the percentage of their gross domestic product (GDP) is committed to the development of renewable energy technologies.
Click here for a text description of the graph of renewable energy investment (% of GDP) for 2015.
The image is a horizontal bar chart titled "Renewable Energy Investment (% of GDP), 2015," which shows the percentage of each nation's gross domestic product (GDP) invested in renewable energy in 2015. The data source is Bloomberg New Energy Finance and the World Bank, provided by Our World in Data.
- Chile has the highest investment at 1.4% of GDP.
- South Africa also invests 1.4% of its GDP in renewable energy.
- China follows with 0.9% of GDP.
- Japan, UK, and India each invest 0.8% of their GDP.
- Brazil invests 0.4% of its GDP.
- Germany and Mexico both invest 0.3% of their GDP.
- United States has the lowest investment at 0.2% of GDP.
The bars are colored in shades of blue, with the length of each bar corresponding to the percentage of GDP invested in renewable energy. The percentages are labeled at the end of each bar for clarity. The chart visually emphasizes the variation in investment levels across different countries.
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