Onshore Wind Energy Market Analysis

Onshore Wind Energy Market (Global, 2024)

Introduction

The onshore wind energy market will play a significant role in the global transition towards sustainable energy solutions, driven by growing concern for the environment and the urgent need to reduce carbon emissions. In the effort to meet ambitious climate goals, the demand for wind power has increased considerably. In this market, technological developments have led to improved efficiency in the design of wind-turbines and increased wind-energy exploitation. In addition, government support and subsidies have encouraged investment in wind energy, driving market growth. Onshore wind energy will play an increasingly important role in the future integration of the energy grid, contributing not only to energy security but also to the resilience of the energy system. The entire value chain, from manufacturers to project developers, is working to optimize performance and reduce costs. This is ensuring that onshore wind energy will continue to be a viable and attractive option in the future energy mix.

PESTLE Analysis

Political

In 2024, the market for wind energy is largely influenced by the government's desire to reduce the carbon content of fuels. In the United States, the government has set a target of obtaining 30 percent of its energy from renewable sources by 2030, which requires a considerable increase in the production of onshore wind energy. In addition, the European Union has allocated a budget of one billion dollars for the development of wind energy by 2027. The governments' political commitment is expected to create a strong incentive for the development of onshore wind energy.

Economic

By 2024 the economic environment for the onshore wind energy market will be characterized by an investment of approximately $100 billion in renewable energy, of which a significant part will be onshore wind. In the last eight years the price of onshore wind energy has fallen by some 70 per cent. Its average cost per kilowatt-hour is now approximately $30, which makes it one of the most cost-effective sources of energy. This shift in the economy has been accompanied by the creation of over 100,000 jobs in the wind industry in the United States alone, indicating the importance of this industry for economic recovery and job creation.

Social

In 2024, public opinion on wind energy continues to improve. According to a survey, 75 percent of Americans favor expanding wind energy production. This social acceptance is important to the development of new wind farms. Community acceptance and support can affect the timetables for such projects. Furthermore, through education and public awareness, people have become more knowledgeable about the advantages of wind energy, which has resulted in a greater demand for clean energy.

Technological

In 2024, advances in wind power technology are accelerating. Windmills have improved in efficiency by a full 15 per cent over the past five years. Onshore windmills now average a capacity of 3.5 megawatts, and some models can produce as much as 5 megawatts. The performance of windmills is being improved by innovations in design and materials such as the use of lighter, more durable composites. In addition, the integration of smart grids makes it possible to manage and distribute electricity better, thereby enhancing the use of wind energy.

Legal

In 2024 the legal framework for the onshore wind energy market is shaped by a number of regulations and subsidies. In the United States the PTC subsidy, which gives a tax credit of $26 per megawatt-hour for wind energy projects, is scheduled to expire in 2025. The National Environmental Policy Act (NEPA) requires extensive consultations for new projects, which affect both schedules and costs. In many states a number of laws on the Renewable Portfolio Standard (RPS) require a certain percentage of the electricity supply to come from renewable sources, and these regulations also support wind energy.

Environmental

In 2024, the significance of the environment is widely acknowledged. Studies show that wind power can reduce annual emissions of carbon dioxide by approximately one billion tons. Windmills produce a life-cycle analysis of 80 percent less carbon dioxide than fossil fuels. Concerns about the use of land and the impact on the natural environment remain. It is therefore important to choose the location and to take precautions. These challenges are being addressed through improved technology and improved planning.

Porter's Five Forces

Threat of New Entrants

The threat of new entrants into the onshore wind-energy market in 2024 is moderate. Despite the growing market due to the rising demand for renewable energy, the high cost of entry and the regulatory requirements can deter new entrants. In addition, the established companies can benefit from economies of scale and brand recognition, which make it difficult for new entrants to compete effectively.

Bargaining Power of Suppliers

Suppliers in the onshore wind-power market have weak bargaining power. The industry relies on a variety of components, such as wind-turbines and materials, that can be obtained from different suppliers. These multiple suppliers reduce the influence of a single supplier over prices and terms and make it easier for manufacturers to negotiate favourable terms.

Bargaining Power of Buyers

Onshore wind energy buyers have considerable bargaining power. With so many suppliers of renewable energy, consumers can easily change suppliers if they find better prices or service elsewhere. Large buyers, such as electricity companies, can also use their scale to bargain for lower prices, which further increases their bargaining power.

Threat of Substitutes

The threat of substitutes in the onshore wind market is moderate. The main substitutes are still the solar, hydro and fossil fuels. Wind energy is still a very competitive renewable energy source. The increasing efficiency and falling cost of these substitutes may challenge wind energy. But the unique advantages of wind energy help to counteract this threat.

Competitive Rivalry

Competition in the onshore wind power market is very strong, as a number of companies are competing for the same share. A combination of rapid technological development and innovation has created a very strong competition between companies. This has led to a constant drive to improve efficiency and reduce costs, which has intensified competition and driven the market forward.

SWOT Analysis

Strengths

• Abundant and renewable energy source with low operational costs.
• Technological advancements improving efficiency and reducing costs.
• Strong government support and incentives for renewable energy projects.

Weaknesses

• Intermittent energy generation dependent on weather conditions.
• High initial capital investment for installation and infrastructure.
• Potential environmental and noise concerns from wind farms.

Opportunities

• Growing global demand for clean energy solutions.
• Expansion into emerging markets with favorable wind conditions.
• Innovations in energy storage technologies enhancing reliability.

Threats

• Regulatory changes and policy uncertainties affecting investment.
• Competition from other renewable energy sources like solar and hydro.
• Public opposition and NIMBY (Not In My Backyard) sentiments impacting project approvals.

Summary

The onshore wind energy market in 2024 is characterized by the strengths of the renewable energy source and government support, but by the weaknesses of the high initial costs and the concerns about the environment. Opportunities for growth are emerging markets and technological developments, but threats are changes in legislation and competition from other energy sources. Strategic focus on innovation and stakeholder involvement is key to overcoming the challenges and seizing the growth opportunities.