This is an extract from a recent report “Global Wind Report 2024” by GWEC. In this we specifically focus on Brazil and the US.

Brazil

2023 was a pivotal year for the renewables industry in Brazil, characterised by the resumption of post-pandemic activities, a new national government and acceleration of offshore wind planning. However, it also presented significant challenges, including a major blackout in August and difficulties in restoring energy supply in São Paulo. These events highlighted the urgent need for Brazil to improve aspects of its electrical system, such as reliability and flexibility. The country has garnered significant attention from the international community by placing the energy transition at the centre of its growth and diplomacy strategy. It is now preparing to host the G20 presidency and Clean Energy Ministerial in 2024, followed by COP30 in Belém in 2025. COP30 is expected to focus on nature conservation/restoration and implementation of mitigation targets.

Market status 

For the third consecutive year, Brazil achieved new wind records, reaching 4.8 GW of new installed capacity, more than 1,000 wind farms in operation and surpassing 30 GW of total installations. The electricity matrix reached the mark of nearly 84% from renewable sources, establishing the country as an international reference in clean energy transitions. Wind has been recognised across government ministries as a vector for Brazil’s new energy economy, endorsed by important ministries such as the Ministry of Mines and Energy, Ministry of Finance and Ministry of Development, Industry and Foreign Trade. The Brazilian wind production chain in the last three years, has been showing signs of weakening. Manufacturers have relocated from the country or downgraded production, due largely to a stop-go cycle of development in the country and challenging macroeconomic conditions. However, over the last year, macroeconomic variables such as inflation, job creation and GDP projection, have begun to improve. 

The evolution of offshore wind 

The year 2023 was also marked by important progress regarding the Offshore Wind Power Bill, which aims to build a regulatory framework for offshore wind. The bill has been approved by the Chamber of Deputies and is expected to pass final approval in the Senate in the first half of 2024. In addition to the bill, Brazil sent important signals to the market by joining the Global Offshore Wind Alliance forming an inter ministerial council to discuss offshore wind regulation and signing up to the sideline pledge to triple global renewable energy capacity by 2030 at COP28. According to the Brazilian Institute for the Environment and Renewable Natural Resources offshore wind projects have requested environmental licensing, representing the strong appetite for development in Brazil. 

What to expect in 2024 

After one year of the new government, the executive branch has created the Energy Transition Plan for Brazil led by the Minister of Mines and Energy, Alexandre Silveira, as well as the Ecological Transformation plan led by the Minister of Finance, Fernando Haddad, and the industrial plan called “New Industry Brazil” led by the vice-president and MDIC Minister Geraldo Alckmin. In parallel, the legislative branch rushed to advance discussions on important issues for the country, such as the proposal that regulates the carbon market in Brazil (PL 2148/15), the bill which regulates production of low-carbon hydrogen (2308/2023) and the fuel of the future program (PL 4516/23). 2024 needs to be the year of implementation, where planning for the energy transition is put into practice. It requires close collaboration between the public sector and the private sector, as well as universities and civil society, to ensure that the wind industry, and renewables in general, can contribute with its full potential to an economic, ecological and social transformation in Brazil. 

The United States

The historic Inflation Reduction Act (IRA) package has propelled the US to the forefront of the energy transition, creating a ripple effect throughout the world, impacting supply chains and the renewable energy investment landscape. Domestically, the IRA is transforming the American energy system, from grid modernisation to highlighting the need for permitting reform and transmission expansion. While it is clear the IRA – and its significant investment incentives – cannot be replicated by most countries in the world, its present and future achievements serve as real-time case studies for the socio-economic benefits of deploying more clean energy. Tracking its progress and its pitfalls, including what effect a potential Trump presidency would have, is an essential exercise when analysing the future of the wind industry

Taking stock of IRA-related progress 

Due to the IRA, power market consultants now expect 408 GW of utility wind, solar and storage to be built in the US over the next 7 years, compared to the expected 390 GW in February 2023. Breaking this figure down, onshore wind represents 23% of the market, growing from 7.5 GW in 2024 to 16 GW in 2030 and offshore wind expectations are approximately 14 GW by 2030. 

One of the primary objectives of the IRA is to develop domestic renewable energy supply chains. To date, 123 new manufacturing facilities or facility expansions have been announced since the passage of the legislation. This includes 12 onshore wind power manufacturing facilities, 9 offshore wind facilities, along with 78 solar facilities, 20 grid-scale battery storage facilities or facility expansions and 4 grid connection facilities. From this total, 44 facilities have either completed or are currently under construction. Once all in operation, these 120+ facilities will support nearly 42,000 new manufacturing jobs

Focusing on the US’ domestic wind market shows the IRA is building on a solid foundation. At present, there are 16 active primary (blades, towers, nacelles) wind manufacturing plants located across 12 states. Moreover, there are over 450 wind-related manufacturing facilities in the US supporting more than 20,000 manufacturing jobs. GE Vernova, Siemens Gamesa and Vestas have a combined capacity to assemble approximately 15 GW annually. This is 15% higher than the previous year, primarily due to GE Vernova’s newly inaugurated nacelle manufacturing facility in Schenectady, New York, from where the company’s largest onshore turbine will be rolled out for the US onshore wind market.

The US still depends on specific imports to meet domestic demand, trading primarily in the wind sector with Mexico, Germany, India, Spain and Denmark. In 2023, the US onshore wind industry imported $1.5 billion of wind equipment across five product areas: blades and hubs, generation parts, generation sets, nacelles and towers. It is worth noting that blades and hubs hold the dominant share with over $900 million imported in 2023. However, imports fell 34% in 2022 and a further 26% in 2023 – marking the lowest levels of import volumes in the past 10 years as local capabilities have expanded.

Addressing the IRA’s key growth enablers

The US installed 6.4 GW of wind in 2023, just less than half the volume it had installed two years earlier in 2021. Cumulative operating onshore wind power has now reached above the 150 GW mark, but wind installations are experiencing a slowdown due to market saturation in certain areas, and permitting and development delays in others. Recent reports and analysis show rising local opposition to renewable energy projects. According to analysis from USA Today, at least 15% of all counties in the country have effectively halted new utility-scale wind, solar or both. These blocks come as the result of outright bans, moratoriums, construction impediments and other conditions standing in the way of renewables projects, posing a significant barrier to the federal government target to achieve 100% renewable energy by 2035.

Despite financial headwinds, a resilient offshore wind market 

Offshore wind is an essential technology for the country’s clean energy future due to its scale and high-capacity factors. In 2023, several US offshore wind projects under development encountered financial difficulties due to inflation, supply chain constraints, interest rate increases and other macroeconomic factors. Many projects had locked in contract prices prior to the pandemic, the unprecedented inflation that followed it and the higher cost of commodities. Furthermore, the first generation of offshore wind energy contracts did not include inflation adjustment factors, despite being 20- to 25-year contracts. This combination of factors, plus permitting delays, created serious economic issues for contracted projects that had not yet reached construction. 

Despite a tumultuous year for the American offshore wind market, the outlook is still positive. The next tranche of offshore wind contracts will be able respond to today’s economic landscape by including inflation adjusters and taking a regional approach to procurement, as pioneered by the states of Massachusetts, Connecticut and Rhode Island.  The Biden administration has a goal of approving 16 Construction and Operation Plans (COPs) by 2025. As of February 2024, six COPs have been approved. To achieve current market projections of 42.3 GW of offshore wind energy by 2035, 12 COPs need to be approved by the end of 2024. 

New York awarded 4 GW of offshore wind offtake in October 2023 and announced in February 2024 the selection of two ‘shovelready’ re-bid projects in the fourth offshore wind solicitation, sending a positive signal to the industry that a recalibration of expectations between public and private sector has been achieved. New Jersey awarded 3.7 GW in January 2024 and has upcoming solicitations this year. Massachusetts, Connecticut and Rhode Island will award capacity for a joint solicitation in August 2024. Maryland has a solicitation in July 2024. Maine, California, Carolina and Louisiana solicitations have yet to be scheduled.

Investing in a modernised, resilient, renewables-based grid 

The electricity grid in the US is more than a century old and in need of modernisation. Many of the cables, towers, substations and other components are 50-70 years old and past their useful lives. These outdated and stressed systems have left the grid vulnerable to blackouts during increasingly common extreme weather events such as drought, extended heatwaves, wildfires and extreme cold conditions. 

Progress is being made on grid buildout and modernisation in parallel to the significant pipeline of renewables projects. There are at least 22 high-voltage transmission projects in development across the country, such as the Gateway project that will transport electricity from wind energy from Wyoming to Southern California and the Pacific Northwest. The Grain Belt Express project, which was recently awarded ‘FAST 41’ status by the Federal Permitting Improvement Steering Council, will deliver renewable energy generated in Kansas to neighbouring power pools.

Reconciling progress with pitfalls 

The world’s most significant piece of climate legislation in recent years was never going to have an easy road for implementation, but early indicators are positive. The response to the investment signal sent by the IRA has been strong, spurring record investment into wind and renewable energy projects and factories as well as grid infrastructure. The biggest single challenge remains winning over the hearts and minds of the American public, and disentangling an evidence, science and economics-based energy transition from culture wars and identity politics. The coming year, including the election period ahead, will be a true test of the strength of the IRA, and the resilience of the American energy transition. 

Access the complete report here