Season 6, Post 13: Winds of change in Spain
Despite only a gentle breeze coursing the Spring skies in Bilbao last week, there were notable gusts of optimism at Wind Europe, the industry’s largest conference, which your author attended. He was one of some 12,000 people who descended on the city, along with over 250 high-profile speakers and 500 exhibitors, to learn about latest trends in the wind industry.
In contrast to the mood two years ago, when your author last visited, the mood felt palpably different. There was a sense of the wind industry having emerged on the other side after several prior tough years, characterised by the pandemic, supply chain issues, inflation and higher interest rates. One speaker highlighted how “things have improved both politically and economically” for the industry. Additionally, it was evident to your author from touring the conference hall that there was much less hubris and greater a greater sense of realism from exhibitors. The story is less about size of turbine – they won’t get much bigger – and more about what role they can play in the broader electrification story.
It won’t, of course, be plain sailing for the industry going forward. Two notable discussion topics occurred with regulatory: permitting and transmission. Over 80GW of wind projects are currently stuck in permitting limbo, awaiting approval before construction. Delays are typically a function of bureaucracy. For context, in a typical year, about 30GW of wind is built in Europe. Next up was the recurring comment, “there can be no transition without transmission.” Put another way, over 50% of Europe’s 11m kilometres of grid infrastructure is more than 40 years old and will be in need of upgrading, both to accommodate new energy sources (such as wind) and growing electricity consumption.
There are no easy solutions to either of these challenges, but it was reassuring to see no shortage of industry innovation on display in Bilbao. Inevitably, much of the focus was on how AI and machine learning can help the industry. Use cases such as predictive maintenance, analysis of remaining battery life and early warnings about extreme conditions were cited. New data tools could also be used to assess better project feasibility from the outset. Cyber was another important topic. In light of Russia’s invasion of Ukraine, all industry players seem keen to secure their wind assets better against possible hacking.
26 March 2024
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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