Renewable Energy and Related Services: Recent Developments

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Renewable Energy and Related Services: Recent Developments ( renewable-energy-and-related-services-recent-developments )

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Canada Canada has a robust and growing wind energy industry and is reportedly the United States’ largest trading partner for wind energy services.179 Total installed wind capacity has increased steadily over the past five years, growing 27 percent annually from 2007 through 2012.180 Yet, the Canadian market—the ninth largest globally—remains far smaller than the U.S. market; Canada added 935 MW of new wind capacity in 2012 (compared to more than 13 GW in the United States) for a total of 6,200 MW of cumulative installed capacity.181 Overall, however, the Canadian market exhibits more stable growth and fewer year-to-year fluctuations in installations than the U.S. market. Industry representatives attribute this to two factors. One is the existence of long-term policies supporting the development of wind energy—namely, the FIT program in Ontario and wind tenders in Quebec; the bulk of Canada’s wind projects are located in these two provinces. The second factor is the greater transparency in Canada’s planning process, which offers service providers information about future plans for wind energy.182 However, there is reportedly less competition in Canada’s wind services industry than in the United States, and wind energy services in Canada tend to be more expensive, as developers are typically able to secure lucrative price agreements under provincial FITs, resulting in little downward pressure on prices in the supply chain.183 Canada’s more conservative investment environment reportedly means that fewer service providers, particularly smaller firms, are operating in the market. Canadian investors reportedly seek mature, financeable companies and as a result it is difficult for smaller firms to secure financing, particularly given the small market size.184 In addition, industry representatives indicate that local-content requirements may have reduced the level of competition in the market, as noted earlier, because fewer firms have been able to meet these requirements and enter the market.185 Despite these issues, a number of foreign wind service firms operate in the Canadian market, attracted by its growth. In 2012, U.S. service firms developed nearly 20 percent of newly installed capacity, representing the largest share of foreign-developed projects. Services reportedly represent a significant opportunity for foreign firms, particularly EPC services. 186 Nevertheless, opportunities for project development remain somewhat limited, since the small market size and lengthy procurement process mean that many new projects already have PPAs awarded. As a result, many foreign developers are entering the market through acquisition.187 For instance, in 2011, China’s largest project 179 Statistics on trade in wind energy services are not available. Industry representative, telephone interview by USITC staff, February 8, 2013; Bailey, “Building Boom Draws in Global Players,” October 1, 2012. 180 USITC calculations using data from GWEC, Global Wind Statistics 2012, February 11, 2013, and GWEC, Annual Market Update 2011, March 2012, 27. 181 GWEC, Global Wind Statistics 2012, February 11, 2013. The Canadian Wind Energy Association (CanWEA) reports 936 MW of new wind energy capacity installed in 2012, for a total of 6,500 MW. CanWEA, “Wind by the Numbers,” January 2013. 182 Hydro-Québec held wind tenders in 2003, 2005, and 2009, and Quebec has the second highest installed wind capacity among Canadian provinces. Industry representative, telephone interview by USITC staff, February 8, 2013; David and Fravel, “U.S. Wind Turbine Export Opportunities,” July 2012, 12; Canadian Wind Energy Association (CANWEA) website, http://www.canwea.ca/farms/index_e.php (accessed August 20, 2013). 183 Industry representative, telephone interview by USITC staff, February 8, 2013. 184 Ibid. 185 Industry representative, telephone interview by USITC staff, January 30, 2013. 186 Bailey, “Building Boom Draws in Global Players,” October 1, 2012. 187 Ibid. 4-28

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