Crypto News: The world has a wind problem

Today's newsletter looks at why there is a serious risk of missing a global target to triple renewable capacity by 2030. You can read this story — and all of the latest COP29 coverage on Bloomberg.com — for free until the end of the UN climate summit in Baku next month.

By Will Mathis and Josh Saul

The world's green power goal has a wind problem.

At the COP28 climate talks in Dubai last year, leaders from more than 130 nations agreed to triple renewable power capacity by the end of the decade. It was one of the few tangible agreements at the annual meeting and a goal that's crucial to cut dependence on fossil fuels that cause climate change.

While the target remains achievable, current rates of clean power deployment aren't sufficient and the rollout of wind turbines is lagging, according to the International Renewable Energy Agency.

"One of the big problems here is wind," said Oliver Metcalfe, head of wind research at BloombergNEF. "The slow pace of wind progress is affecting the efficacy of that tripling renewables target."

COP29 Reports: Click here for comprehensive coverage of this year's climate summit. Subscribe now.

A decade ago annual solar and wind installations were neck and neck, then solar soared far ahead as massive investments in manufacturing capacity by the industry's leaders in China has driven down the price of panels.

Though global wind capacity has nearly doubled in the past five years, solar has more than tripled. And the trend is set to continue. Solar installations are forecast to jump 34% in 2024, compared to a 5% increase for wind, according to BNEF. And outside China, by far the world's biggest market, wind farm installations may actually fall slightly this year.

There are significant bottlenecks in the wind industry, such as insufficient supplies of equipment, a lack of electric grid capacity and permitting issues, according to Sven Utermöhlen, head of the offshore wind business at Germany's RWE AG.

"There are positive signs in terms of the offshore industry — the market is reacting — but the lead times are long in offshore wind and positive steps take several years to trickle down and have an effect," Utermöhlen said in an interview.

By 2030, BNEF forecasts that solar will have reached over 90% of the capacity that's required to put the world on track to reach net-zero emissions by 2050. Wind will only reach about 77% of the necessary total by the same date.

Solar's growth has been supercharged by convenient installations on home and factory rooftops, including in densely populated cities. That's not an option easily available for the wind sector, which has often faced public opposition to large onshore farms, and even complaints over turbines out at sea spoiling ocean views.

And then there's the cost. While soaring production of solar panels in China has helped slash costs to record-low levels, increasing prices of steel and other critical turbine components as well as supply chain bottlenecks and higher borrowing costs have driven up the cost of wind projects in recent years. By the end of last year, the cost of power from new onshore wind farms had risen dramatically in both the US and Germany, according to BNEF data on the levelized cost of energy. In the US, it was up about 40% from a record low reached in 2021. In Germany, Europe's biggest wind market, there was a 35% increase from its all-time low in 2019.

Solar's surge has kept the possibility alive that the world can reach its renewable target, though the slowdown in wind — which is more efficient — could mean a higher total capacity is needed to achieve the same reduction in power sector emissions.

Are there reasons for optimism about the wind industry? Read the full story on Bloomberg.com to find out. For unlimited access to climate and energy news, please subscribe.

This is the percentage of time a solar farm is expected to generate electricity in Germany. It's about a third as productive as an onshore wind farm in that country, and less than a quarter as productive as turbines offshore, where wind speeds are stronger and more consistent.

"We're hitting the bottom. 2023 was a bit of a reload and reset year, but the promise for onshore wind is very high."

Aaron Barr

Global head of onshore wind at consultancy Wood Mackenzie

Barr is one of the market observers who predicted back in January that the US onshore-wind sector would slowly spin back to life.

By Mark Chediak

While former US President Donald Trump has promised to end what he has called the "Green New Scam" on the campaign trail, a reference to Biden's climate initiatives, the head of solar equipment maker Enphase Energy Inc. said it is "not logical" for a reversal in the policy.

A full repeal of the Inflation Reduction Act, which provides hundreds of billions of dollars in tax credits and other incentives for clean energy projects, would require approval by Congress, where it's supported by Democrats and some Republicans.

"It's a good thing," Enphase Chief Executive Officer Badri Kothandaraman said of the IRA incentives in an interview late Tuesday. "It's creating jobs and its bringing back manufacturing."

The company now ships two-thirds of its solar inverter equipment from US factories and will start making batteries in the country to take advantage of the tax incentives offered through the IRA, Kothandaraman said. "I don't think they are going to recommend things that will kill jobs in America," he said.

Badri Kothandaraman Photographer: Sam Wolfe/Bloomberg

There's a niche corner of dealmaking that's quietly making inroads in the battered market for commercial real estate.

It involves buying buildings with big carbon footprints and investing in green refurbishments. Asset managers Bloomberg interviewed spoke of doubling their clients' money in just a few years by renovating older buildings, adding 20% to rents and then cashing in on gains when they sell.

Speculation on green refurbishments represents a sliver of optimism in a market that not long ago was pummeled by a post-pandemic spike in interest rates and volatile occupancy levels. A new wave of environmental regulations and tenant preferences now has a growing number of CRE fund managers looking to monetize the moment.

Madrid's 'Faro' building undergoing green refurbishments which include rebuilding the entire single-glazed facade. Source: Ardian

This utility-sized battery can run for four days. Form Energy Inc. has developed a battery that can feed electricity to the power grid for 100 hours straight, 25 times longer than most grid-tied batteries today.

New biomass businesses are taking root. A crop of young businesses is turning wood waste into profit in wildfire-prone western states in the US. But the scale of overgrown forests is a challenge.

Deadly floods are becoming more common in Africa. Floods that killed more than 1,000 people this year across Africa's Sahel region will become a regular occurrence because of climate change, according to scientists collaborating under the World Weather Attribution initiative.

By Mary Hui, Andreo Calonzo and Atul Prakash

Tropical Cyclone Trami strengthened to a severe storm that could further dump heavy rain on the Philippines' main island where massive flooding has affected around 150,000 people.

Trami — known locally as Kristine — has intensified, with its top sustained winds of 95 kilometers (59 miles) per hour, up from 85 kilometers, according to the latest notice from the nation's weather bureau. The storm is forecast to cross the Luzon coast late Wednesday or early Thursday over the northern province of Isabela.

Tropical storm Trami on Oct. 22. Source: RAMMB/CIRA

Elsewhere, a severe cyclonic storm is heading toward India's eastern coast, with authorities advising farmers in some areas to immediately harvest mature crops to avoid damage due to strong winds and heavy rains.

Dana is expected to cross Odisha and West Bengal on Thursday night with a maximum wind speed of as much as 110 kilometers (68 miles) per hour, gusting to 120 kilometers, according to the India Meteorological Department. Some places are likely to receive "extremely heavy" rainfall until Friday, it said in a bulletin.

Electric vehicle sales have hit the brakes in Europe and the US in recent months, as cost-conscious drivers have opted for cars with exhaust pipes instead. Bucking the trend is ride-sharing giant Uber, which is not only adding zero emission models to its fleet, but also lobbying regulators to demand more EVs on the road. On Zero, Dara Khosrowshahi discusses the company's short and long-term green goals, and tells Akshat Rathi why he believes electric cars are good for business – not just for the environment. Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.