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Further drop in wind turbine prices expected

Wind turbine prices will continue to drop as a result of persisent problems in the supply chain, according to a new report.

By Isabella Kaminski

The troubled wind turbine supply chain will continue to experience problems over the next 12 months, according to Make Consulting’s latest supply side report.

The report says that continued low wind power demand, bred by lower gas prices and tougher financial conditions, has turned a seller’s market into a buyer’s market characterised by overcapacity and declining wind turbine prices.

Supply Side 2011 traces the roots of the wind turbine supply chain problem back to 2007-2008, when an unprecedented demand for wind power led to new capacity investments and expansion across global markets.

Turbine prices have dropped since 2008 and, while the recent transition to advanced multi-MW technology and large rotor 1.5-2 MW configurations may allow OEMs to sustain a level of pricing power, a further decline in average turbine pricing over the next 12 months is more likely, according to Make.

The report claims that localisation and cost competition will be the new mantras for the wind turbine supply chain. Cost competition influences original equipment manufacturer (OEM) sourcing strategies for components such as blades, generators, converters and controls, while Make expects the current transitional phase of industrialisation within the wind power supply chain to continue, with lean and automated manufacturing and shorter lead times.

Dan Shreve, Partner and Director at Make Consulting, says: “Turbine vendors and component manufacturers across the globe are readying themselves for a transitional period in the global wind market, where only the strongest industry participants will find enduring success.”

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