The EU Renewables transition

Rystad Energy at Intersolar May 10

Meet Rystad Energy at Intersolar in Munich! You will find us at the Norwegian Pavilion at booth A4.254 (hall A4). You can also get an update from Vegard Wiik Vollset when he is presenting on "Solar in the Nordics - the overlooked growth opportunity?" in the European PV Markets session Tuesday afternoon.
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Networking briefing after closing of Intersolar
We are inviting all our partners to a networking briefing after the doors are closing at Intersolar. We will give you a brief market update and focus on networking after that. Continue the discussion and get to know Rystad Energy better. There will be light food and local beer.
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American Clean Power May 16-18

Clean Power brings together the most knowledgeable minds in the clean energy industry and creates a collaborative platform for discussing issues that are important to industry professionals and their companies.

Clean Power’s mission is to not only bring together the different technologies that make up the renewables mix; onshore wind, offshore wind, solar, storage, and transmission but also the different segments within the industries; manufacturers, construction firms, owner operators, utilities, financial firms, corporate buyers and more. Join Geoff Hebertson, an analyst on our Renewable Energy team and other team members from Rystad Energy at the conference.
>> Learn more and register here

Rystad Energy Press Releases

Offshore wind capacity additions in Europe to break records in 2022, driven by UK developments. >> Read here

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Removing hurdles: Germany set for major reforms to boost renewable share

Germany has released the much-anticipated Easter Package, which will remove hurdles impeding the advance of renewable energy across the country. The new Ukraine-accelerated plan includes the biggest comprehensive energy package in two decades, unveiled amid the strong resolve of the German government to achieve energy independence. The use of renewable energy has been declared a public interest matter and vital to the public’s safety. The targets set under the package are undoubtedly ambitious, but the make-or-break moment is the speed at which Germany will be able to implement proposed reforms, particularly relating to permitting and approval procedures. Permitting issues have been a big problem for annual renewable energy additions in Germany. Currently, an onshore wind farm permit could take between three to five years – a significant stumbling block for capacity installations in the country.

The Easter Package proposes increasing the share of renewables in the country’s energy mix to 80% by 2030 and close to 100 % by 2035. That would translate to annual installations of 22 gigawatts (GW) for solar PV, 10 GW for onshore wind, and 2.5 GW for offshore wind from 2025. To make this target achievable, annual auction volumes are also expected to be raised to 12 GW per year. To put it into perspective, Germany installed 1.9 GW of onshore wind, 5.6 GW solar PV, and no offshore wind capacity in 2021. Thus, the proposed target from 2025 poses huge challenges albeit, Germany has three years to ensure its reforms are implemented swiftly and achieve targets.

Make money to spend money: Quarterly earnings of top renewables developers

Large-scale integrated developers started spending capital from legacy generation on new renewable generation in 2021. Developers invested heavily in solar, wind, and storage generation to meet public sentiment and demand, and to move towards cleaner power generation. Capital expenditure (capex) reached a three-year high with $88 billion invested by a Rystad Energy peer group of public global renewable energy developers. Furthermore, operational cash flows, net income, and earnings before interest, tax, depreciation, and amortization (ebitda) reach three-year highs in 2021 with $79 billion, $36 billion, and $100 billion, respectively, as demand for electricity spiked to previously unseen levels. Our analysis covers the top 10 public developers outside of China and excluding majors. According to Rystad Energy’s RenewableCube, the selected group of companies account for approximately 20% of the estimated renewable energy installed capacity in 2021 (outside of China).

We note that the numbers reported in this commentary include figures for the entire business, such as income and debt related to other segments (e.g., gas or nuclear generation).

At the end of 2021, 565 gigawatts (GW) of renewable energy capacity in the development pipeline was announced amongst the peer group. Italian developer Enel leads the group with 114 GW of total capacity in its project pipeline, including 39 GW of wind, 57 GW of solar, 14 GW of storage and 4 GW of other renewable capacity, according to the company’s latest report. Enel also announced the largest amount of solar and storage in its development pipeline amongst the peer group last year. Meanwhile, French player Engie boasts 44 GW of wind capacity in its 65-GW development portfolio. Development capacity at the end of last year increased by over 69 GW since 3Q21 (496 GW) and by 194 GW since 4Q20 (371 GW).

In terms of renewable energy generation, Spanish giant Iberdrola leads with 14.3 terawatt hours (TWh) of reported solar and wind generation in 4Q21. Enel follows closely with 12.8 TWh of renewables generation. Seasonality plays a big role in the generation mix – companies with higher concentrations of wind in their portfolio will see dips in generation in the fall.

Europe set for groundbreaking wind capacity additions in 2022

Europe, the most mature offshore wind region, is expected to drive offshore wind capacity additions towards 2030. While 2021 was a record year for capacity additions, most of the additional wind installations were in China, which contributed around 85% of last year’s total. Europe, meanwhile, had a slower year, providing only 10% of the total additional capacity. This is set to change this year as the region is lined up to have a record-breaking 2022 led by the UK – forecast to have unprecedented wind capacity additions. In this commentary, Rystad Energy will analyze the main contributing countries, projects, and developers, as well as the capacity additions in Europe towards 2025.

Europe has not crossed the 4-gigawatt (GW) mark in terms of annual wind capacity additions in the last five years. However, the region is expected to add around 4.2 GW by the end of this year, making 2022 a record-breaking year. Less than 1.8 GW of capacity was added in 2021, and the previous record of over 3.7 GW was set in 2019. The UK has been driving capacity additions in Europe, and the country is expected to add almost 3.2 GW of capacity in 2022, beating its 2018-record of around 2.1 GW. France is forecast to be the second largest contributor to capacity additions in Europe this year as the country is expected to commission its first commercial offshore wind project. After adding no wind capacity in 2021, Germany is now set to re-start installations, while Norway is anticipated to commission the 88 MW Hywind Tampen floating project this year, which will be the largest of its kind in the world. Italy will see its first operational wind farm this year, with the 30-megawatt (MW) Taranto project coming online, while Spain is expected to contribute capacity additions with its floating demonstration projects.

Pay to sell: Developers line up for floating solar PV in Portugal

Seven floating solar PV projects have been awarded in Portugal’s latest auction totaling 183 megawatts (MW) of capacity, with 103 MW awarded under the contract for differences (CfD) model and 80 MW by compensation to the national electricity system (SEN). Noteworthy is that – for the first time ever – a developer will be paying $4.5/MWh into the system to sell 70 MW of floating PV power for 15 years. Portuguese player EDP Renewables (EDPR) was the major winner of this year’s auction after offering the world’s lowest ever tariff to develop a floating solar PV project on a dam in the municipality of Alqueva. Our analysis suggests EDPR is set to make a profit by selling hybrid power connected to the same grid at a market price of $45.16/MWh. In addition, the lowest recorded prices in this auction and the removal of environmental impact assessment (EIA) procedures will drive solar PV growth in Portugal and reduce consumer energy prices in the future.

The auction held by Portugal’s Directorate General for Energy and Geology (DGEG) attracted bids from 12 developers for a total of 263 MW across dams in Alqueva, Castelo de Bode, Cabril, Alto Rabagao, Paradela, Salamonde, and Tabuaco. Of the capacity offered, the 50 MW Castelo de Bode (Lot 2) project remains to be awarded as it had only one bidder, which was given a five days period to make an improved bid. If the offer is improved, then DGEG must assign the bidder the quoted capacity.

Under the CfD model, two projects totaling 103 MW were awarded compared to only one 10-MW asset awarded in the 2020 auction. EDPR’s - $4.5/MWh bid was 136% below the lowest tariff recorded in the 2020 solar auction ($13.3/MWh). Voltalia was the second biggest winner with $44.62/MWh to develop 33 MW project in Cabril. Meanwhile, Endesa and Finerge were awarded 42 MW and 38 MW, respectively, under the compensation to the SEN model. The weighted average contribution was approximately $58,218/MW (EUR 47,400/MW) per year.

Our articles and commentaries

The above are samples and extracts from the full commentaries we offer in our Client Portal, which is part of our comprehensive energy intelligence offering. You may also find relevant content of interest in our press releases, freely accessible here.