Europe, by far the most active wind region, increased its capacity by more than 35 percent or 4,500 MW in 2001 while the United States installed nearly 1,700 MW and total capacity incresed by more than 60 percent.

India, the third-largest market after Europe and the U.S., installed around 240 megawatt and exceeded 1,500 MW of total installed capacity.

Analysts and market players say activity in the U.S. will be lower this year as an extension of the U.S. production tax credit, which expired by the end of 2001, is still pending. Therefore global wind power installations might decline slightly in 2002, they say.

The tax is an important factor for financing new wind power projects in the U.S. as wind energy is not fully competitive with more conventional energy sources such as gas and coal.

"Over the past two decades the cost of generating wind power has dropped more than 80 percent," said the European Wind Energy Organisation President Arthouros Zervos.

GLOBAL WARMING WORRIES

Though still well under one percent of worldwide demand, growing concerns about the impact on climate change of traditional energy production methods and government action to offer financial subsidies and push through planning permission have raised the industry's profile.

"With the ever increasing threat of global warming, developing countries, countries in transition, and the developed countries have to address the issue of climate change," said Rakesh Bakshi, Chairman of RRB Consultants & Engineers and chairman of a wind energy conference that takes place in Paris in April.

Wind already accounts for 18 percent of demand in Denmark and 3.5 percent in Germany, and the pro-wind lobby in Britain says the seas around the the island nation could in theory supply all its power needs several timess over.

Turbine manufacture is already a multi-million dollar industry and many established power and energy groups are investing significant amounts of money.

But critics have said the high cost of installation and local planning resistance to noise will ensure that the sector will always be a minority power supplier.