WEBVTT - Gone With the Wind: Turbine Additions Still Fall Short 0:00:00.560 --> 0:00:03.560 This is Dana Perkins, and you're listening to Switched on 0:00:03.920 --> 0:00:07.240 the B and EF podcast, and today we're talking about 0:00:07.280 --> 0:00:10.319 the state of the global wind industry. Now, one could 0:00:10.400 --> 0:00:13.440 say that wind has been stuck in the doldrums. For 0:00:13.520 --> 0:00:15.960 those of you who are not familiar with this term, 0:00:16.040 --> 0:00:19.920 the doldrums is actually a nautical term referring to parts 0:00:19.960 --> 0:00:22.799 of the ocean where sailing ships could get stuck for 0:00:22.960 --> 0:00:25.960 long periods because of a lack of wind. Apart from 0:00:26.000 --> 0:00:28.680 it being a clever pun, maybe this is an apt 0:00:28.680 --> 0:00:31.480 description of where the wind industry has been for the 0:00:31.520 --> 0:00:32.640 past few years. 0:00:32.960 --> 0:00:33.440 To put this. 0:00:33.479 --> 0:00:37.800 Idea into numbers, year on year wind capacity installations grew 0:00:37.920 --> 0:00:40.760 by six percent in twenty twenty four. This is far 0:00:40.880 --> 0:00:43.840 short of the average annual growth rate of twenty five 0:00:43.880 --> 0:00:47.080 percent that is needed between now and twenty thirty to 0:00:47.159 --> 0:00:50.280 stay on track with net zero goals. Wind is simply 0:00:50.440 --> 0:00:53.680 not moving fast enough. But on the other hand, the 0:00:53.720 --> 0:00:56.560 one hundred and twenty four gigawatts of wind that we 0:00:56.760 --> 0:00:59.200 expect to see installed by the end of this year 0:00:59.480 --> 0:01:03.080 represents an annual record, So arguably, if wind has been 0:01:03.080 --> 0:01:05.880 in the doldrums, maybe now it's coming out of them. 0:01:06.120 --> 0:01:09.520 The answer to this question really lies and what has 0:01:09.560 --> 0:01:13.039 been done by policymakers to accelerate the market and how 0:01:13.120 --> 0:01:16.360 the wind industry is evolving, and then what role technology 0:01:16.400 --> 0:01:20.120 can play and unlocking new opportunities so that record breaking 0:01:20.200 --> 0:01:24.200 years are also aligned with net zero goals on policy. 0:01:24.400 --> 0:01:27.280 Certain countries are beginning to figure out the puzzle of 0:01:27.360 --> 0:01:30.600 how to scale wind and overcome barriers such as permitting 0:01:30.640 --> 0:01:33.240 that has held many markets back. On the topic of 0:01:33.280 --> 0:01:36.560 evolution of the industry, we look to China which is 0:01:36.640 --> 0:01:40.960 not only pioneering onshore wind it previously unheard of scales. 0:01:41.120 --> 0:01:45.480 Their turbine manufacturers are also increasingly becoming a factor in 0:01:45.520 --> 0:01:49.400 the global market, and in India, wind manufacturers are beginning 0:01:49.440 --> 0:01:52.320 to achieve traction on a significant scale. When it comes 0:01:52.360 --> 0:01:56.440 to technology, the prospect of floating wind could unlock opportunities 0:01:56.480 --> 0:02:01.559 to expand capacity in previously inaccessible location. So on today's show, 0:02:01.680 --> 0:02:04.600 Tom Rowland's Reese takes over hosting duties where he is 0:02:04.680 --> 0:02:08.920 joined by bnaf's head of Wind Oliver Metcalf. Oliver talks 0:02:08.960 --> 0:02:11.280 about some of the work his team has been doing, 0:02:11.320 --> 0:02:16.160 particularly in recent reports titled Unlocking Investment to triple renewables 0:02:16.200 --> 0:02:19.600 by twenty thirty, alongside the third quarter twenty twenty four 0:02:19.840 --> 0:02:24.639 wind turbine ordered data set, volume surges and floating offshore 0:02:24.639 --> 0:02:28.680 wind Big Potential but Big Price tag. BNF subscribers can 0:02:28.720 --> 0:02:32.120 access these reports at BNAF go on the Bloomberg terminal, 0:02:32.280 --> 0:02:35.480 or at BNF dot com. Right now, let's hear Tom 0:02:35.639 --> 0:02:38.760 and Oliver's conversation about wind. Where we are now and 0:02:38.800 --> 0:02:40.639 where the wind is blowing. 0:02:50.440 --> 0:02:54.040 Ollie, Hi, Hi Tom. So I'm going to start by 0:02:54.520 --> 0:02:58.120 maybe putting a little bit of pressure on you as 0:02:58.280 --> 0:03:01.600 the head of wind. And so I was looking at 0:03:01.680 --> 0:03:05.160 some of the output from our new energy outlook, which 0:03:05.200 --> 0:03:08.720 of course is not a forecast, it's a scenario modeling exercise. 0:03:08.880 --> 0:03:11.680 And we have two main scenarios. One is the economic 0:03:11.680 --> 0:03:15.960 transition scenario, where if there's no new policies and economics 0:03:15.960 --> 0:03:19.799 plays out what happens. And then there's our net zero scenario, 0:03:19.880 --> 0:03:22.640 where we add this constraint that the world has to 0:03:22.919 --> 0:03:26.840 get to net zero by twenty fifty, consistent with heating 0:03:27.040 --> 0:03:30.560 of one point seventy five degrees. So I looked at 0:03:30.680 --> 0:03:33.000 the role of solar and wind, and this is important 0:03:33.040 --> 0:03:35.000 because I know that often the conclusion of these kinds 0:03:35.000 --> 0:03:37.240 of studies is like, oh, there's no silver bullet to 0:03:37.280 --> 0:03:40.120 climate change. It's an all of the above solution. And 0:03:40.160 --> 0:03:43.440 I think it's not that that's wrong, but everything relies 0:03:43.480 --> 0:03:46.640 on the decarbonization of the power sector because so much 0:03:46.680 --> 0:03:50.560 of the other stuff requires clean electricity. And clean electricity 0:03:51.000 --> 0:03:53.040 the bulk of the heavy lifting is that's going to 0:03:53.080 --> 0:03:55.320 be done. There is going to be done by two technologies, 0:03:55.480 --> 0:03:58.040 wind and solar. This is I don't think this is controversial. 0:03:58.120 --> 0:04:01.040 So wind and solar, it is an all of above world. 0:04:01.040 --> 0:04:03.080 But wind and solar are like lynch pins to the 0:04:03.080 --> 0:04:05.440 whole things. If they don't deliver what they need to deliver, 0:04:05.520 --> 0:04:08.480 then the whole pack of cards falls down. So I 0:04:08.520 --> 0:04:12.160 looked at the neo net zero scenario and it says 0:04:12.240 --> 0:04:14.840 that in that world of net zero, by twenty to 0:04:14.920 --> 0:04:18.560 fifty on an annual basis, we should be generating twenty 0:04:18.680 --> 0:04:22.320 nine percent of our electricity from solar, and in our 0:04:22.360 --> 0:04:26.360 economic transition scenario, actually twenty eight percent of our electricity 0:04:26.520 --> 0:04:28.880 will be getting generated by solar. So this is if 0:04:28.880 --> 0:04:31.520 the economic transition scenario is saying that's the track we're on, 0:04:31.600 --> 0:04:34.000 and we're almost on the right track for solar. Solar 0:04:34.080 --> 0:04:37.680 is doing its bit wind net zero scenario forty four 0:04:37.720 --> 0:04:40.720 percent of our electricity generated by wind, so a bigger 0:04:40.800 --> 0:04:43.880 role than solar, but in our economic transition scenario only 0:04:43.960 --> 0:04:46.440 thirty one percent. That's telling us that we're not on 0:04:46.520 --> 0:04:49.800 track for wind. So it would seem that wind, on 0:04:49.880 --> 0:04:52.599 the trajectory we're on, is the weak link in the 0:04:52.720 --> 0:04:56.080 energy transition. I suppose my first question to you with 0:04:56.120 --> 0:04:59.760 that framing is where is the wind industry today and 0:04:59.800 --> 0:05:02.799 the wind market today, And with this kind of thought 0:05:02.800 --> 0:05:06.520 in mind, that it's not on track, what needs to change? 0:05:06.240 --> 0:05:10.280 We've seen a difficult couple of years for the wind industry. 0:05:10.400 --> 0:05:13.720 I think given the cost inflation we saw after the pandemic, 0:05:14.000 --> 0:05:17.840 high interest rates and supply chain bottlenecks that slowed down 0:05:17.880 --> 0:05:21.120 the growth of the wind sector on shore and offshore. 0:05:21.120 --> 0:05:24.840 It's still having effect today. So equipment costs are still 0:05:25.120 --> 0:05:28.839 much higher for wind turbines, for example, when you compare 0:05:28.839 --> 0:05:32.160 it to solar or battery technology, where we've seen costs 0:05:32.160 --> 0:05:34.280 start to fall again after the cost inflation we saw 0:05:34.320 --> 0:05:38.080 after the pandemic. So the wind sector is still stumbling 0:05:38.120 --> 0:05:40.520 through this period of higher costs there are some kind 0:05:40.520 --> 0:05:43.400 of non economic factors that are really hitting the sector hard. 0:05:43.520 --> 0:05:47.360 So some grid connection constraints, permitting constraints tend to affect 0:05:47.400 --> 0:05:51.080 wind more than it affects solar. So that means that 0:05:51.240 --> 0:05:55.239 we've seen more sluggish growth for wind technology compared with solar, 0:05:55.279 --> 0:05:57.320 where we're seeing this boom and like you say, solar 0:05:57.440 --> 0:06:00.040 is roughly on track for net zero. We did a 0:06:00.080 --> 0:06:03.279 bit of modeling recently looking at the tripling renewables pledge 0:06:03.320 --> 0:06:04.840 that was outlined at the end of the COP twenty 0:06:04.880 --> 0:06:08.440 eight summit in twenty twenty three. The result of that analysis, 0:06:08.480 --> 0:06:11.720 where we were contextualizing that goal and then benchmarking progress, 0:06:11.880 --> 0:06:14.400 was that if we do manage to triple renewables by 0:06:14.400 --> 0:06:17.120 twenty thirty, that puts us roughly in line with our 0:06:17.240 --> 0:06:20.520 net zero scenario from our New Energy Outlook analysis. Or 0:06:20.560 --> 0:06:22.880 tripling renewables by twenty thirty would put us on a 0:06:22.920 --> 0:06:25.000 path to net zero by twenty fifty. 0:06:25.240 --> 0:06:26.560 So that's the right goal. 0:06:26.880 --> 0:06:31.760 Solars on track for that tripling renewables, and we're predicting 0:06:31.800 --> 0:06:33.880 that the wind sectors only just going to just of 0:06:33.960 --> 0:06:37.280 a double by twenty thirty, and that speaks to those 0:06:37.440 --> 0:06:40.520 economic constraints that we're seeing those continued high costs, but 0:06:40.600 --> 0:06:43.040 also some of those non economic factors that in some 0:06:43.120 --> 0:06:46.760 markets with significant support that's available to wind, it's not 0:06:46.800 --> 0:06:49.040 the economic stuff that's this holding the sector back, it's 0:06:49.080 --> 0:06:52.279 these non economic factors like grid connections and permitting. They're 0:06:52.320 --> 0:06:55.120 kind of boring regulatory stuff that needs to get sorted 0:06:55.120 --> 0:06:57.560 from a policy perspective to see the kind of growth 0:06:57.560 --> 0:06:59.080 that would be required for the wind sector. 0:07:00.240 --> 0:07:03.039 Like your answer, because you know, I was talking about 0:07:03.080 --> 0:07:05.800 a twenty fifty horizon and actually you've bought it much 0:07:06.000 --> 0:07:10.200 closer with this tripling renewables and twenty thirty, so expecting 0:07:10.200 --> 0:07:12.080 a doubling of wind where what we need is a 0:07:12.080 --> 0:07:16.320 tripling of wind. So these issues that you've highlighted definitely 0:07:16.320 --> 0:07:20.320 carry through and effect the market through to twenty thirty. 0:07:20.560 --> 0:07:24.040 Do you think they're chronic problems? Is there a way 0:07:24.080 --> 0:07:26.120 that these might get resolved in the longer term? 0:07:26.280 --> 0:07:28.880 I think that the good news is that we are 0:07:28.960 --> 0:07:31.520 expecting growth in the wind market. So in terms of 0:07:31.680 --> 0:07:35.280 annual installations by twenty thirty, we're expecting seventy percent more 0:07:35.480 --> 0:07:38.520 annual installations of wind than we're expecting this year. At 0:07:38.520 --> 0:07:40.680 the moment in terms of the really hot markets, we're 0:07:40.720 --> 0:07:45.120 kind of seeing star markets rather than a growth geographically 0:07:45.160 --> 0:07:47.520 spread around the world. The good news is that we're 0:07:47.520 --> 0:07:50.600 seeing examples of markets that are beginning to resolve these constraints. 0:07:50.880 --> 0:07:54.080 So looking at a market like Germany is really starting 0:07:54.120 --> 0:07:56.800 to resolve. It's on shore wind permitting constraints that really 0:07:56.880 --> 0:07:59.080 hit the market a few years ago, and now Germany 0:07:59.120 --> 0:08:01.880 is permitting an increase amount of onshore wind capacity every 0:08:01.960 --> 0:08:04.320 year and we're really seeing the result of that in 0:08:04.400 --> 0:08:06.640 terms of the amount of projects the government is willing 0:08:06.640 --> 0:08:09.560 to support, getting closer to their goals, and we're expecting 0:08:09.600 --> 0:08:12.480 really strong growth over the next few years. India is 0:08:12.480 --> 0:08:15.760 another market that was mired in many difficulties, whether that 0:08:15.880 --> 0:08:19.200 was land use issues and fragmented land ownership in the country, 0:08:19.240 --> 0:08:23.000 permitting constraints, under investment in the grid. There again, we've 0:08:23.000 --> 0:08:26.600 seen regulation go in to resolve some of those constraints 0:08:26.640 --> 0:08:29.280 and now we're expecting really strong growth in the market 0:08:29.320 --> 0:08:32.040 over the next few years. So there are countries that 0:08:32.080 --> 0:08:34.080 are beginning to resolve some of these issues, but it 0:08:34.160 --> 0:08:36.400 is a chronic issue around the world because we're seeing 0:08:36.480 --> 0:08:41.000 a lot of governments and officials announcing really high targets 0:08:41.200 --> 0:08:45.240 plans to install more wind capacity, but the chronic issues 0:08:45.240 --> 0:08:48.440 they're not putting in the supportive legislation that's required, the 0:08:48.679 --> 0:08:50.760 kind of boring regulatory stuff that I was talking about 0:08:50.800 --> 0:08:53.600 before to realize those goals. It's easy to say a number, 0:08:53.720 --> 0:08:56.760 it's less easy to put in place that regulation to 0:08:56.800 --> 0:08:58.560 cut the red tape that needs to be cut to 0:08:58.840 --> 0:09:01.760 realize fast growth for the wind sector globally. 0:09:01.840 --> 0:09:04.160 I mean, this is, by the way, just a reflection 0:09:04.480 --> 0:09:09.319 a classic example of the dilemma when you're working in 0:09:09.400 --> 0:09:12.000 a climate related sector of how to feel because I 0:09:12.000 --> 0:09:14.120 don't think most industries are expecting. What did you say 0:09:14.160 --> 0:09:17.080 it was seventy percent growth? Did I hear that right? 0:09:17.160 --> 0:09:20.320 Was it seventeen in terms of annual installations seventy percent 0:09:20.400 --> 0:09:23.240 higher in twenty thirty compared with twenty twenty four. 0:09:23.400 --> 0:09:25.480 Yeah, I mean that's huge, and then you know, doubling. 0:09:26.320 --> 0:09:28.280 Most industries don't get that. So on the one hand, 0:09:28.320 --> 0:09:30.640 if you're sort of a cheerleader for the wind industry, 0:09:30.679 --> 0:09:33.599 you'll be out celebrating, But then you have people like 0:09:33.679 --> 0:09:36.760 me saying, oh, that's not enough. From a climate perspective, 0:09:37.160 --> 0:09:39.480 it's really interesting to hear that there's these countries like 0:09:39.559 --> 0:09:42.000 Germany and India who beginning to figure it out. I 0:09:42.040 --> 0:09:44.280 know we're both based in the US, and I think 0:09:44.280 --> 0:09:47.480 the US has had some success with wind in certain 0:09:47.559 --> 0:09:50.280 markets and is still figuring it out in other regions. 0:09:50.360 --> 0:09:53.240 Do we see any evidence where there's some sort of 0:09:53.440 --> 0:09:57.000 global harmonization, like different countries are learning on what does 0:09:57.080 --> 0:09:59.280 work and doesn't work in resolving these issues. 0:09:59.480 --> 0:10:03.200 I think victually there is a wide consensus, and it's 0:10:03.280 --> 0:10:05.560 what the wind industry has been saying for a long time. 0:10:05.640 --> 0:10:08.120 But I think policymakers are beginning to notice that these 0:10:08.160 --> 0:10:10.640 are common problems in many markets around the world, these 0:10:10.720 --> 0:10:15.560 issues around transmission, issues around permitting. Progress has been patchy 0:10:15.840 --> 0:10:19.320 in many cases. The EU has been encouraging member states 0:10:19.320 --> 0:10:21.840 to resolve some of these issues, in trying to implement 0:10:21.960 --> 0:10:25.560 some targeted changes in order to resolve some of these constraints. 0:10:25.640 --> 0:10:27.560 I think the difference between Germany and many of the 0:10:27.559 --> 0:10:30.480 rest of the EU countries is Germany almost immediately started 0:10:30.480 --> 0:10:33.439 implementing some of those EU suggestions and turn that international 0:10:33.559 --> 0:10:36.079 level policy, whereas many other markets around the EU have 0:10:36.120 --> 0:10:39.240 been dragging their heels. Other markets like Brazil are facing 0:10:39.280 --> 0:10:43.719 significant transmission constraints, but they've held very successful transmissional auctions, 0:10:43.840 --> 0:10:47.040 bringing the private sector in to build really long distance, 0:10:47.120 --> 0:10:51.920 high voltage transmission lines. So while those transmission issues are 0:10:52.120 --> 0:10:55.800 hitting the market today, we're expecting increasing installations towards the 0:10:55.840 --> 0:10:58.240 end of the decade as they begin to resolve. Some 0:10:58.280 --> 0:11:02.120 of those constraints are very well understood, and we're beginning to, 0:11:02.200 --> 0:11:04.720 like I say, see some markets resolve some of those issues, 0:11:04.760 --> 0:11:09.240 but it really takes active policy making because these issues 0:11:09.280 --> 0:11:11.440 just don't fix themselves on their own. And so I 0:11:11.480 --> 0:11:13.640 think those markets where we're really seeing that growth are 0:11:13.640 --> 0:11:15.920 the ones that have set those targets, but now they're 0:11:16.000 --> 0:11:21.400 really doing the additional work to build the regulation so 0:11:21.520 --> 0:11:24.520 that those targets turn into reality, rather than arriving at 0:11:24.559 --> 0:11:26.360 twenty thirty way off that goal. 0:11:26.600 --> 0:11:29.960 What's really interesting here as well, is there's this perception 0:11:30.120 --> 0:11:34.360 that pushing renewables, pushing a cleaner agenda is all about subsidies. 0:11:34.559 --> 0:11:36.679 This is a problem that has nothing to do with subsidies. 0:11:36.679 --> 0:11:39.199 You can't subsidize your way out of this issue. It's 0:11:39.240 --> 0:11:43.280 a non economic factor. It's to do with untangling a 0:11:43.360 --> 0:11:47.120 lot of local regulations and laws and having to do 0:11:47.160 --> 0:11:49.559 it over and over again in not just different countries, 0:11:49.600 --> 0:11:51.520 but even within the same country. Probably a lot of 0:11:51.559 --> 0:11:52.440 those laws are different. 0:11:52.800 --> 0:11:56.280 Yeah, a really good example is the US, which has 0:11:56.679 --> 0:11:59.960 very generous subsidies in the Inflation Reduction Actor extended those 0:12:00.080 --> 0:12:02.559 subsidies until at least the end of the decade. The 0:12:02.640 --> 0:12:06.160 problem in the US isn't an economic one for wind projects. 0:12:06.400 --> 0:12:10.680 It's around project supply, so it's getting more expensive and 0:12:10.720 --> 0:12:13.280 you have to wait longer for a grid connection agreement. 0:12:13.320 --> 0:12:17.120 In many US markets, permitting is incredibly fragmented, so some 0:12:17.240 --> 0:12:20.199 permitting is done on a federal basis, some permitting rules 0:12:20.360 --> 0:12:22.360 are on a state level, and in some cases it 0:12:22.400 --> 0:12:24.480 goes right down to the county level, and there's different 0:12:24.520 --> 0:12:27.720 permitting requirements depending on which county the wind project is 0:12:27.720 --> 0:12:30.800 getting built in. That's really difficult if you're a developer 0:12:30.920 --> 0:12:33.880 trying to navigate all of these different systems, some of 0:12:33.920 --> 0:12:36.680 which are stricter than others. In some there may be 0:12:36.760 --> 0:12:40.280 moratoria against new wind development, and in a county next 0:12:40.320 --> 0:12:42.400 door that might not be the case. And so yeah, 0:12:42.640 --> 0:12:45.360 those things are non economic. They're these really general federal 0:12:45.400 --> 0:12:48.360 subsidies available, but they make no difference if there aren't 0:12:48.400 --> 0:12:50.720 projects coming through the pipeline to use those subsidies. 0:12:50.960 --> 0:12:53.400 It's really interesting hearing about, you know, some of the 0:12:53.440 --> 0:12:55.880 developments in Europe, some of the developments in India and 0:12:55.920 --> 0:12:58.000 the US. Of course, we can't really talk about the 0:12:58.000 --> 0:13:02.000 global picture without talking about what's happening in China with 0:13:02.080 --> 0:13:05.440 regards wind, So how are things developing there? 0:13:05.760 --> 0:13:08.880 So China is by far the largest wind market globally. 0:13:09.120 --> 0:13:12.920 For onshore wind, it represents over half of global annual 0:13:12.920 --> 0:13:16.240 additions every year. Wow, offshore wind, it's almost that kind 0:13:16.240 --> 0:13:18.000 of depends on the year, but it's a really really 0:13:18.000 --> 0:13:20.600 big chunk of the market. So yeah, we can't talk 0:13:20.600 --> 0:13:23.559 about the global wind industry without talking about China. The 0:13:23.600 --> 0:13:26.400 sectors moving really fast there. So we forecast that China 0:13:26.600 --> 0:13:30.280 will add seventy one gigawatts of onshore wind capacity in 0:13:30.280 --> 0:13:34.000 twenty twenty four, seventy nine gigawats in twenty twenty five, 0:13:34.080 --> 0:13:36.880 but really really rapid growth in China compared with where 0:13:36.920 --> 0:13:39.480 we were just a few years ago. Part of the 0:13:39.520 --> 0:13:42.480 story in China is they're building these mega projects, they 0:13:42.480 --> 0:13:46.680 call them megabases, So that's really large scale projects built 0:13:46.400 --> 0:13:49.000 in the north of the country, typically for wind where 0:13:49.000 --> 0:13:52.319 it's really windy in desert areas. We're talking about projects 0:13:52.600 --> 0:13:55.160 at the gigawatts scale. Typically, projects we only really see 0:13:55.160 --> 0:14:00.480 offshore in other markets using really large turbines, so they 0:14:00.880 --> 0:14:03.680 getting scale not only on the project side, but also 0:14:03.760 --> 0:14:06.320 the kind of technology scale as well. We recently saw 0:14:06.360 --> 0:14:09.680 a Chinese turbine manufacturer now so fifteen megawatt turbine for 0:14:09.840 --> 0:14:12.560 use onshore in northern China. Now, it's really difficult to 0:14:12.600 --> 0:14:16.360 install turbines that big on shore usually because they're logistical constraints. 0:14:16.400 --> 0:14:19.120 You've got to ship these really long blades for a 0:14:19.280 --> 0:14:21.480 turbine that size, they might be over one hundred meters 0:14:21.920 --> 0:14:25.360 through small towns, up mountains and things like that. They're 0:14:25.360 --> 0:14:27.200 building these projects in deserts, so there are a few 0:14:27.240 --> 0:14:30.400 of those logistical constraints, so they can use those larger 0:14:30.440 --> 0:14:33.520 turbines that when you're using a higher capacity turbines, it 0:14:33.560 --> 0:14:35.400 means you need fewer of them for a project of 0:14:35.400 --> 0:14:38.320 the same capacity. Basically, that means that using a bigger 0:14:38.320 --> 0:14:42.200 turbine cuts costs because you also need fewer foundations, fewer cables, 0:14:42.240 --> 0:14:45.160 fewer days hiring a crane to install the things. So 0:14:45.320 --> 0:14:49.160 China's kind of realizing this scale in terms of project 0:14:49.440 --> 0:14:52.200 and turbines that are driving down the costs. That's really 0:14:52.280 --> 0:14:55.680 helping to drive growth across the market. But also there 0:14:56.360 --> 0:14:59.640 they've really pushed down the price of wind to a 0:14:59.680 --> 0:15:02.960 stop levels. So last time we did an analysis of 0:15:03.000 --> 0:15:06.160 wind turbine prices, the average price of a turbine delivered 0:15:06.160 --> 0:15:08.240 in China in the first half of twenty twenty four 0:15:08.400 --> 0:15:11.680 was three hundred thousand dollars per megawatt. That's around a 0:15:11.720 --> 0:15:15.520 third of the cost of the average turbine price delivered 0:15:15.520 --> 0:15:18.000 in other markets around the world. That's partly due to 0:15:18.000 --> 0:15:20.880 those impacts around scale that I was talking about before, 0:15:20.960 --> 0:15:24.480 but also the Chinese market is very fragmented. There are 0:15:25.000 --> 0:15:28.720 around twelve major turbine suppliers there and over the past 0:15:28.760 --> 0:15:32.040 few years they built up a huge over manufacturing capacity 0:15:32.160 --> 0:15:35.239 for wind turbines. For the the selles of wind turbines 0:15:35.400 --> 0:15:38.800 during this fragmented market, they've got an over capacity and 0:15:38.840 --> 0:15:42.240 these turbine makers are fighting for market share rather than 0:15:42.440 --> 0:15:46.080 necessarily focusing on the profitability of the contracts they're signing. 0:15:46.120 --> 0:15:47.880 So it means that the profitability of some of these 0:15:47.960 --> 0:15:50.080 Chinese suppliers have really suffered over the last couple of 0:15:50.160 --> 0:15:53.040 years as we've seen this astonishing reduction in price. So 0:15:53.160 --> 0:15:55.120 that is great news if you're a developer of a 0:15:55.120 --> 0:15:58.760 wind project in China. But for the Chinese turbine makers themselves, 0:15:58.800 --> 0:16:01.800 they're now looking at ways to boost profitability, and one 0:16:01.840 --> 0:16:04.160 way they're doing that is looking to export market. 0:16:04.480 --> 0:16:06.680 We're going to come back to the export markets. I 0:16:06.720 --> 0:16:10.360 had so many questions to ask along the way there. Firstly, 0:16:10.560 --> 0:16:12.960 I just want to dive into understand these like mega 0:16:13.000 --> 0:16:15.960 projects a little bit better. What you're describing is almost 0:16:16.080 --> 0:16:20.080 like onore offshore wind in that they're qualitatively different from 0:16:20.120 --> 0:16:23.560 your typical onshore wind, and they're I mean quantitatively as 0:16:23.560 --> 0:16:26.520 well in terms of the scale of the projects. Presumably 0:16:26.520 --> 0:16:31.440 there's a reliance on HVDC infrastructure, which is high voltage 0:16:31.480 --> 0:16:36.520 direct current transmission. Is this a new frontier for wind, 0:16:36.560 --> 0:16:38.920 not just in terms of scale, but because it's suddenly 0:16:39.000 --> 0:16:41.240 qualitatively different. Now you can almost describe this as a 0:16:41.240 --> 0:16:43.640 different category in the same way that your typical onshore 0:16:43.680 --> 0:16:47.240 wind is different from offshore wind. This sounds like something 0:16:47.280 --> 0:16:50.640 else again, this model that is being developed in China 0:16:50.800 --> 0:16:53.160 in the same way that certain markets were pioneers for 0:16:53.200 --> 0:16:55.720 offshore wind. Do you think that they are pioneering a 0:16:55.800 --> 0:16:58.360 model that could be replicated elsewhere. 0:16:58.000 --> 0:17:01.440 Potentially, and these mega based projects are becoming a crucial 0:17:01.880 --> 0:17:04.399 growth driver in the way we see it for the 0:17:04.520 --> 0:17:07.600 overall Chinese wind sector. We're expecting four tyike gig whats 0:17:07.640 --> 0:17:09.760 of these wind projects to come online in twenty twenty 0:17:09.760 --> 0:17:12.640 four and twenty twenty five, but we're expecting a further 0:17:12.680 --> 0:17:14.520 one hundred and six gig what's of these projects to 0:17:14.520 --> 0:17:16.399 come online from twenty twenty six to the end of 0:17:16.440 --> 0:17:19.440 the decade. Part of the reason that China can deliver 0:17:19.520 --> 0:17:22.760 these large projects is that they're building these projects where 0:17:22.880 --> 0:17:25.760 land is ample and there are a few permitting restrictions. 0:17:25.840 --> 0:17:28.520 Usually these are being built by big state owned developers 0:17:28.520 --> 0:17:30.080 as well, so there are kind of fewer of these 0:17:30.119 --> 0:17:34.840 regulatory barriers to building these projects those kind of areas, 0:17:35.080 --> 0:17:37.399 and that situation is harder to come by in other market. 0:17:37.520 --> 0:17:41.800 So we are seeing some really large projects under construction 0:17:41.880 --> 0:17:45.400 in the US. So there's a couple of projects being 0:17:45.400 --> 0:17:48.879 built in the US, one in Wyoming, one in Arizona. 0:17:49.040 --> 0:17:51.040 At the moment that are a similar scale to these 0:17:51.040 --> 0:17:54.560 megabased projects we're seeing in China, And while the turbine 0:17:54.560 --> 0:17:56.720 capacity aren't as large as the project's examples we're seeing 0:17:56.720 --> 0:17:59.760 in China, they're still realizing those economic benefits you get 0:17:59.760 --> 0:18:02.720 from pure project scale. But in other markets, it's hard 0:18:02.760 --> 0:18:05.360 to find those locations in those situations where you can 0:18:05.400 --> 0:18:07.000 build projects of that kind of scale. 0:18:07.080 --> 0:18:09.520 Got it. I mean that's super interesting, and I do 0:18:09.640 --> 0:18:14.199 wonder if if over time there might be other opportunities uncovered, 0:18:14.280 --> 0:18:16.800 you know, because it's it's not maybe as easy to search. 0:18:16.800 --> 0:18:19.240 When you're thinking about offshore wind. You look at coastline, 0:18:19.240 --> 0:18:21.479 you look at water depth, you look at wind speed, 0:18:21.600 --> 0:18:25.040 and you can already, like without too much research, identify 0:18:25.359 --> 0:18:28.240 all of the places where there's decent offshore wind potential. 0:18:28.359 --> 0:18:30.080 We are going to come back to offshore wind as well, 0:18:30.119 --> 0:18:32.200 actually in a moment. But you said made this point 0:18:32.240 --> 0:18:36.240 about Chinese turbine manufacturers. So if I understand correctly, the 0:18:36.640 --> 0:18:41.040 picture painted is the Chinese market is big. It's growing, 0:18:41.280 --> 0:18:43.800 I believe, Or is it always that big? 0:18:44.400 --> 0:18:46.760 No, it's big, it has grown and it will continue 0:18:46.800 --> 0:18:47.240 to grow for this. 0:18:47.240 --> 0:18:50.520 Rest Okay, So it's always been big, it's getting bigger, 0:18:50.600 --> 0:18:52.480 and it's going to get even bigger than that. But 0:18:52.600 --> 0:18:56.359 Chinese turbine manufacturers have maybe got too big too fast, 0:18:56.800 --> 0:18:59.960 and now there's overcapacity. And I remember, whenever I've looked 0:19:00.080 --> 0:19:03.320 at this, it's always seemed like there's two separate worlds. 0:19:03.359 --> 0:19:06.680 There's Chinese wind, which is a Chinese market served by 0:19:06.760 --> 0:19:10.040 Chinese manufacturers, and that's about half the global market. And 0:19:10.040 --> 0:19:12.919 then there's the rest of the world, served by a 0:19:13.000 --> 0:19:16.840 number of international companies, none of which are Chinese. So 0:19:16.880 --> 0:19:19.240 it's kind of been China and everyone else, both as 0:19:19.280 --> 0:19:21.760 a market and an industry. But you mentioned now that 0:19:21.960 --> 0:19:25.560 Chinese manufacturers are starting to make inroads into other markets 0:19:25.760 --> 0:19:27.760 around the world, So tell us a bit more about 0:19:27.840 --> 0:19:30.000 what that looks like and what's actually happening at the moment. 0:19:30.280 --> 0:19:33.360 Yeah, So the Chinese tab i maker's home market has 0:19:33.440 --> 0:19:36.840 historically been huge. It's meant that there was less of 0:19:36.880 --> 0:19:41.240 a drive for them to really target export aggressively. So 0:19:41.640 --> 0:19:44.760 there has historically been some progress that they've made, but 0:19:44.800 --> 0:19:47.800 that's really rapidly started to change over the last couple 0:19:47.840 --> 0:19:50.080 of years as pricing pressure has been so intense at 0:19:50.080 --> 0:19:52.800 home that they're now looking to export markets, where they're 0:19:52.800 --> 0:19:56.240 typically able to sell turbines at a much higher rate 0:19:56.560 --> 0:19:59.520 and earn a higher profit margin on those sales. Still, 0:19:59.800 --> 0:20:03.080 by our calculations, a turbine delivered outside of China, if 0:20:03.080 --> 0:20:05.680 it's supplied by a Chinese turbine maker, that's around twenty 0:20:05.680 --> 0:20:08.680 eight percent cheaper than an equivalent turbine supplied by a 0:20:08.840 --> 0:20:12.040 US or European manufacturer, And in many markets around the world, 0:20:12.119 --> 0:20:15.600 that price difference is very attractive, and particularly in emerging 0:20:15.600 --> 0:20:18.400 markets that are just kind of looking at wind more seriously. 0:20:18.440 --> 0:20:21.719 At the moment, we're seeing the influx of Chinese turbine 0:20:21.720 --> 0:20:25.399 technology and those cheaper turbines begin to drive up installations 0:20:25.400 --> 0:20:28.280 and increase the pace of wind market growth in those markets. 0:20:28.400 --> 0:20:30.959 So Chinese turbine makers are having more success in places 0:20:31.000 --> 0:20:34.359 like Central Asia, Southeast Asian countries like Vietnam, they started 0:20:34.400 --> 0:20:37.359 selling a lot of turbines. Some markets in the Middle 0:20:37.359 --> 0:20:40.200 East and Africa as well are starting to move from 0:20:40.200 --> 0:20:43.160 a situation where the market was completely dominated by US 0:20:43.160 --> 0:20:47.600 and European turbine manufacturers are now pretty much exclusively purchasing 0:20:47.840 --> 0:20:50.639 Chinese turbines in some cases, but there are also some 0:20:51.000 --> 0:20:53.359 kind of more established markets that are now making a 0:20:53.359 --> 0:20:56.000