The global wind power sector, a cornerstone of the renewable energy landscape, is currently contending with challenges emanating from two major players — the United States and China. The combined impact of weaknesses in the U.S. wind industry and a notable slowdown in China has introduced complexities that are reshaping the overall outlook for the global wind power market

Financial troubles within the U.S. offshore wind industry have cast a shadow on the anticipated growth trajectory of global wind power capacity. Uncertainties surrounding project financing and execution have contributed to a less optimistic outlook. The intricacies of policy frameworks, coupled with challenges in grid integration, have posed hurdles for the industry, prompting a reevaluation of growth expectations. This U.S. weakness is prompting stakeholders to reconsider their strategies and adapt to a shifting landscape.

China, renowned for its significant contributions to the renewable energy sector, is experiencing a slowdown in its wind power growth. Regulatory changes and adjustments to subsidy programs have contributed to a deceleration in project approvals and execution. Given China’s substantial role as the world’s largest consumer of wind energy, the ripple effects of this slowdown are felt globally. Industry stakeholders are closely monitoring how these developments will influence the international wind power market and are adjusting their forecasts accordingly.

The collective challenges posed by the weaknesses in the U.S. wind industry and the slowdown in China have far-reaching implications for the global wind power sector. The anticipated growth in wind power capacity over the next decade is likely to be more subdued than initially projected. Industry players are navigating a landscape that demands resilience, adaptability, and a reconsideration of long-term strategies.

In response to these challenges, the global wind power sector is prompted to innovate and diversify its approaches. Industry players are exploring ways to enhance efficiency, reduce costs, and promote policy frameworks that foster sustainable growth. Collaborations and investments in emerging markets are becoming crucial strategies to counterbalance the impact of weaknesses in established markets.

As the global wind power outlook takes a hit from U.S. weakness and China’s slowdown, the industry is at a pivotal juncture. It is navigating a landscape that demands strategic agility and a commitment to overcoming challenges. While uncertainties persist, the wind power sector remains resilient, driven by a collective determination to advance clean energy solutions and contribute to a sustainable future. Stakeholders are adapting to the evolving dynamics, recognizing that addressing challenges head-on is essential for the continued growth and vitality of the global wind power market.

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Industry super funds have warned the Albanese government that Australia’s energy transition risks falling behind as big funds chase more compelling investment opportunities in the US, UK and Europe.

AustralianSuper, cbus, HostPlus, CareSuper, HESTA and UniSuper have co-authored a new report with Australian fund IFM Investors calling for more favourable investment conditions underwritten by taxpayers to unlock private capital for the domestic transition to net zero emissions.

Ahead of a roundtable on climate finance with the treasurer, Jim Chalmers, on Monday, the funds argue that $12bn a year on average between now and 2050 will be required to transition to renewable energy in Australia and a further $40bn a year to build new export industries and decarbonise the rest of the economy.

The independent Climate Change Authority warned this week that Australia risks falling short of its 2030 climate target, and time was running out for it to make a prosperous transition to net zero emissions on its own terms.

The new report from industry super says “capital is flowing to places with more attractive investment opportunities, strong climate and energy policies and growing demand for clean energy and low-carbon goods and services”.

The funds note the Biden administration’s Inflation Reduction Act has seen eight years’ worth of clean energy investment worth more than US$270bn (A$406bn) pulled in to the United States. “Australia can’t afford to be left behind,” the new report says.

IFM Investors confirmed earlier this week it will sink £10bn (A$19bn) into infrastructure and energy transition projects in the UK by 2027 as part of a new memorandum of understanding with the Sunak government.

The warning from the funds – directed at the commonwealth and the states – has been echoed by the Australian Energy Market Operator and the Clean Energy Council.

Industry super funds manage about $1.2tn and are expected to more than double in size to about $3tn by 2030. The funds are calling on the government to fast-track planning approvals for transmission infrastructure while making domestic investment opportunities more competitive to help keep clean energy capital in the country.

The new report argues that distribution network service providers – the organisations that own grid hardware, like power poles, cables and substations – should be allowed to provide greenfield transmission projects if they have the “right delivery, safety and workforce record”. At the moment, transmission network providers have exclusive access to potential greenfield projects.

It calls for a national plan for the rollout of transmission infrastructure. The elements should include streamlined approvals, early consultation with affected communities, fair compensation for landholders, new opportunities for local communities to benefit from the infrastructure and a skills development agenda.

Noting that the cost of building new transmission is ultimately passed on to energy users, the funds say that impact can be reduced through concessional finance or “availability payments” – a form of public-private partnership – for new projects.

The funds welcome the Albanese government’s recent decision to radically expand a taxpayer-underwritten scheme to support new clean power generation and storage capacity. But they say extending the capacity investment scheme should be completed by power purchase agreements “to provide long-term stable revenue streams for renewable electricity”.

Aviation is considered to be a hard-to-abate sector because it is emissions-intensive and the cost of reducing emissions is high. The funds say the government could accelerate the development of a sustainable Australian aviation fuel industry with a production tax credit, a new certification scheme and the market allowing credits to be recognised and traded.

To drive the decarbonisation of the economy, the funds say the national net zero roadmap, now under development, requires plans for emissions reduction objectives for specific industry sectors, backed by a policy framework developed with the investor community.

“Governments’ efforts to make Australia a renewable energy superpower should be ambitious about the scale of opportunity and proportionate to the imperative to ensure Australia can lead in the global competition for capital,” the report says.

“Policy and investment support for new and emerging net zero industries, including advanced manufacturing of generation and storage technologies, refining and processing critical minerals, renewable hydrogen and green metals like green iron, steel and aluminium will help grow a pipeline of investment opportunities and grow demand for low-carbon good and services.”

After expanding the capacity mechanism to help meet the objective of Australia running on 82% renewable energy by 2030, the government this week has also settled the investment mandate of the National Reconstruction Fund. The prime minister, Anthony Albanese, characterised this fund as “money in the bank, ready to invest in new jobs, new skills, new technologies and new industries”.

The climate change minister, Chris Bowen, hopes to expand the government’s $2bn Hydrogen Headstart program and apply that same model to other industries, as part of a specific response to the challenges posed by Joe Biden’s Inflation Reduction Act.

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New Hampshire’s Department of Energy has requested a $70 million federal grant to expand community solar programs for low-income residents, an infusion of funds that supporters said could lower energy bills, accelerate decarbonization, and perhaps even catalyze the development of much-needed affordable housing. 

“It’s just going to be life-changing for the communities we do this with,” said Jeannie Oliver, a senior director at the New Hampshire Community Loan Fund, which partnered with the state on the proposal.

The request is part of the Environmental Protection Agency’s Solar for All competitive grant program, created under the umbrella of the 2022 Inflation Reduction Act. The goal of the $7 billion program is to increase access to solar for people living in low-income and disadvantaged communities. Up to 60 grants will be awarded.

Community solar is a model in which energy consumers own a stake in or subscribe to a share of output from a solar development. They then receive credits for a portion of the power sold back to the grid, offsetting their utility bill. Community solar is often considered an option for consumers who can’t or don’t want to install solar on their own home, but who still want to participate in the environmental or financial benefits of renewable energy.

New Hampshire authorized community solar in 2013, but it hasn’t gotten much traction. In the state, larger, non-municipal solar projects are only credited for generation on projects up to 1 megawatt in capacity. At that size, however, the finances just don’t work for developers, said Sam Evans-Brown, executive director of the nonprofit Clean Energy New Hampshire. It’s not until an array reaches around 3 megawatts – with net metering – that the economics start to make sense. 

Reaching lower-income residents with community solar is even trickier. There are no easily available lists of what households qualify as low or moderate income, so acquiring customers can be prohibitively difficult. 

An influx of federal money could change that equation. The grant money would be used to expand the existing program and to create new ones targeting affordable housing and resident-owned manufactured housing communities. The proposal calls for funding to be split between the state energy department, the New Hampshire Community Loan Fund, and New Hampshire Housing. 

‘Meeting people where they are’

If the grant is awarded, these partnerships will be key to maximizing the impact the funds can have on low- and moderate-income residents, said Joshua Elliott, director of the division of policy and programs at the New Hampshire Department of Energy. 

“It made sense to leverage existing relationships,” he said. “We thought meeting people where they are rather than having them come to us whenever possible would make for an attractive proposal.”

The portion of the money going to the state energy department would be used to expand the existing program for low-to-moderate-income community solar. The program will fund some of the project if a majority of the power generated benefits low-income households and up to 100% of a new development if at least 80% of the participating households qualify as low-income. 

The state program has awarded $1 million each of the last two years. Last year, it funded four developments with a total of 61 households participating. More money could help both by funding more projects, and making it easier for potential developers to plan, Elliott said. 

“Having additional funding available consistently helps these organizations as they are trying to sketch out a project and figure out if it works,” Elliott said.

The Community Loan Fund’s portion would be used to help resident-owned manufactured home communities build solar arrays to service residents. A resident-owned community is a manufactured home park in which the residents have come together as in a cooperative to buy the land on which their homes sit, creating for themselves a more stable housing future. 

The community loan fund has been working on developing community solar with these groups since 2018 when it led the creation of an array in the western New Hampshire city of Lebanon. Today, they have four projects either in operation or under construction. 

“The reason that has been slow is that the financial barriers to low income solar are pretty immense,” said Oliver, who leads the organization’s resident-owned communities program. “What the Solar for All program would do is really help us scale up.”

The remaining money would flow through New Hampshire Housing, a public corporation that promotes housing affordability and access throughout the state. It already works closely with the state’s 18 public housing authorities, so it has relationships and experience with the low-income population the funded programs would be targeting. 

’Giving landlords a carrot’

Much of the New Hampshire Housing money would be used to connect renters in multifamily buildings with community solar. 

Traditionally, bringing solar to renters has been difficult because of what is often called the split incentive – if tenants pay their own electricity bills, landlords have little motivation to spend money on solar panels when the renters will reap the financial benefits. The grant proposal would encourage landlords to take over tenants’ utility bills, and roll the cost into the rent, reflecting the discounts community solar would create. 

“The Solar for All proposal takes a huge step in moving things in a more positive direction,” Evans-Brown said. “It’s giving landlords a carrot to figure this out.”

The EPA should be announcing the grant recipients in March 2024 and distributing the funds in July, Evans-Brown said. Solar projects using the money should start popping up by 2025.

If New Hampshire receives the grant, it could be transformative, supporters said, by both accelerating the state’s decarbonization efforts and making a significant difference for financially struggling households. In concert with other federal programs pouring money into home electrification and energy efficiency, the Solar for All funds could jumpstart significant and much-needed growth in green housing development, Evans-Brown said.

“The thing I am excited about is this influx of money is going to result in a large amount of multifamily, sustainable housing getting built that’s going to be really affordable,” Evans-Brown said. “I am really optimistic.”

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Germany’s producer price index for October slid 11% year-on-year, as expected by analysts, further extending September 14.7% decline. 

This was the fourth consecutive month of weakness, mainly caused by energy and metal prices. The index mainly takes into account mining, energy, manufacturing and water industry products.

The reduction was largely attributed to inflated commodity prices last October, due to the effects of Russia’s war against Ukraine. Since then, prices have been coming down, as the market readjusts itself, along with the help of energy price caps across Europe.

Inflation was another major factor last year, causing upward pressure on prices. However, the aggressive monetary policy tightening cycle adopted by most central banks, including the European Central Bank (ECB), helped bring prices down significantly.

October 2023 saw energy prices plunge 27.9%, with electricity costs dipping 36.2%. Petroleum products inched down 13.2%, while fuel prices were also 12.8% cheaper.

Metal prices dropped 11.7% year-on-year, with ferroalloys, pig iron and steel seeing a slide of 18.9%. Intermediate goods also took a hit, pressurised further by wood prices, which fell 17.9%. Fertiliser and nitrogen prices also tumbled 45.5%, with livestock feed going down 22.3% as well.

However, non-durable good prices increased quite a bit, with preserved vegetables and fruit prices going up 16%. Pork also climbed up 10.4%, with processed potatoes surging 29.4% as well. Durable goods followed a similar pattern, with furniture inching up 4.8% and machinery up 5.4%.

How does this affect the rest of Europe?

Germany’s price producer index is a vital indicator of inflation in Europe’s biggest economy. Thus, the PPI falling for the fourth straight month could be crucial information that the ECB takes into account for its next monetary policy decision.

Currently, the ECB interest rate is set at 4%, as the central bank has halted its monetary tightening cycle for now.

This is especially true as Germany is also currently struggling with a weakening demand across the board, especially when it comes to energy. The International Energy Association estimates that the country may see a fall in oil demand of about 90,000 barrels a day this year, mostly due to naphtha and diesel demand cooling.

German housebuilding has also been considerably subdued, much below chancellor Olaf Scholz’s target of 400,000 new houses a year. Although the reduction in key intermediate materials such as wood, metals and energy may help somewhat, ultimately, lacklustre demand is still expected to weigh the industry down.

However, the European Union is more optimistic about Germany’s growth, estimating a gross domestic product growth of 0.8% in 2024, and 1.25% in 2025.

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