Europe Invested €43 Bn in 2020 to Cover 20 GW of new Wind Farms

Europe invested EUR 43 billion in new wind farms in 2020, the second-highest annual amount on record, to fund 20 GW of new projects.

Europe invested EUR 43 billion in new wind farms in 2020, the second-highest annual amount on record. The investments cover 20 GW of new capacity that will be built in the coming years, 13 GW of it in the EU. However, according to the trade group – WindEurope, this is much less than what Europe needs to deliver its 2030 climate and energy goals. 

The EU needs to build 27 GW of new wind energy a year to deliver its new 55 percent emission reduction target. The main problem according to the analysts is the slow rate of permitting of new wind farms. The money’s out there, but not enough new projects are coming through.

The confirmed EUR 43 billion of investments in new wind farms in 2020- the second-highest amount on record- was a 70 percent increase on the funds allocated towards wind projects in the preceding year i.e. 2019. Of the total amount, EUR 17 billion was for onshore wind, covering 13 GW of new capacity. EUR 26 billion was for offshore wind, covering 7 GW of new capacity. Large projects boosted the offshore numbers, including Dogger Bank in the UK which will be Europe’s largest wind farm when completed and Hollandse Kust Zuid in the Netherlands.

“Wind energy remained an attractive investment despite the pandemic. Given the right revenue stabilisation mechanisms are in place, there is plenty of capital available to finance wind. This confirms wind energy is perfectly positioned to support Europe’s economic recovery from COVID. Each new turbine generates EUR 10m of economic activity in Europe. And the expansion of wind energy envisaged in the National Energy and Climate Plans can create 150,000 new jobs by 2030”, says Giles Dickson, WindEurope CEO.

The UK accounted for EUR 13 billion of the EUR 43 billion investments. The Netherlands were next with EUR 8 billion. Then France (EUR 6.5 billion) and Germany (EUR 4.3 billion). Germany and France invested the most in onshore wind. France also financed its second and third offshore wind farm. Turkey was the 5th biggest investor with EUR 1.6 billion, Poland 6th with EUR 1.6 billion.

The EUR 43 billion total investment in new wind farms may be the second-highest annual amount on record and a strong sign of resilience. However, it is not enough to deliver Europe’s climate and energy targets. The EU’s new 55 percent emissions reduction target for 2030 requires 27 GW a year of new wind energy in the EU. But last year’s investments cover only 13 GW of new wind capacity in the EU.

The analysis found that permitting remains the main bottleneck. Permitting rules and procedures are too complex, which delays projects and adds costs – this results in fewer projects being developed. And there are not enough staff in the permitting authorities to process the applications, not even the existing volumes let alone the higher volumes needed for our climate and energy goals. Most Member States are not meeting the permitting deadlines set out in the EU Renewable Energy Directive.

“Europe wants more wind energy to deliver its climate and energy goals. The technology is available. So is the money. But the right policies are missing, notably on the permitting of new farms where rules and procedures are too complex. The revision of the EU Renewables Directive in the ‘Fit for 55’ package needs to tackle this. Governments need to simplify their permitting and ensure there are people to process the permit applications. Otherwise there’s no point having a higher renewables target”, added Dickson.

Another important trend is the growing role of corporate renewable Power Purchase Agreements (PPA) in supporting the financing of wind farms. Corporate and industrial energy consumers are increasingly keen to source power directly from wind farms. 2020 saw 24 new wind energy PPAs covering more than 2 GW of capacity, signed across a range of sectors including chemicals, pharmaceuticals, telecoms and ICT. PPAs provide stable long-term revenues for wind. They make it easier to raise debt at low interest. The same applies to the Contracts for Difference (CfDs) which Governments increasingly offer in their wind energy auctions: as revenue stabilisation mechanisms, CfDs reduce financing costs and therefore reduce the total costs of wind energy.