Dive Brief:
- Wind turbine manufacturers received a record 23.5 GW of orders during the first quarter of 2023 representing a 27% year-over-year increase, according to data from Wood Mackenzie.
- Order activity increased in China, Latin America and the U.S., which saw orders jump to 1.8 GW from 0.8 GW this time last year, according to research and consulting firm Wood Mackenzie. However, China continues to represent the largest renewable energy market, having placed some 15 GW of wind turbine orders during Q1 2023, said Aaron Barr, global head of onshore wind energy research for Wood Mackenzie.
- Wind installations continue to lag in the U.S., but Barr said the uptick in order activity suggests installations will pick up next year.
Dive Insight:
Markets are still rough for renewable energy installers and manufacturers, but the latest data on wind turbine orders suggests that the industry is on the cusp of a turning point.
The first quarter of the year is typically slow for wind turbine orders, Barr said, but this year’s 23.5 GW of orders represents a new first quarter record. Activity is likely to continue to ramp up throughout the year, and this past quarter’s orders should start manifesting as new installations by this time next year, he said.
“Orders are a good leading indicator for installations,” Barr said. “Generally a wind turbine is going to have a year or longer of lead time between order and installation.”
The U.S. wind industry, like the broader renewable energy industry, is still experiencing a five-year trough of activity that Barr anticipates will bottom out this year before growth resumes. First quarter installations were down 50% this year compared to last, according to a quarterly market report by American Clean Power — a development ACP attributes to project delays caused by unclear permitting timelines, policy uncertainty, transmission shortages and interconnection delays, and the unresolved implementation of the Inflation Reduction Act.
Meanwhile, the Chinese market is booming, Barr said. Renewable energy in China has enjoyed more consistent policy support than in the U.S., allowing for more consistent growth. China also acted earlier to support the development of domestic supply chains for renewable energy, and is now looking to export some of its spare wind turbine manufacturing capacity to emerging markets, he said.
Chinese companies originated roughly two-thirds of global wind turbine orders in the first quarter, and it seems unlikely that the U.S. will ever catch up to China’s growth rate, given the size of the Chinese market, Barr said.
However, he said the U.S. seems poised for a new period of growth thanks to the May 12 Notice of Intent issued by the U.S. Department of Treasury clarifying which components of renewable energy projects must be made in the U.S. for the project to qualify for IRA tax credit riders.
U.S. wind turbine manufacturers have struggled financially in recent years, and the Q1 surge in orders signals a potential return to profitability for these companies, Barr said. He noted that U.S. manufacturers have signaled plans to reopen and expand existing factories to support greater demand from developers looking to meet the IRA’s domestic content criteria.
