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Overcapacity and new players keep wind turbine prices down

Contracts signed for wind turbines in the second half of 2011 for delivery in 2013 fell 4% to €0.91 million/MW from 6 months earlier, with overcapacity and new players keeping prices for utility-scale wind turbines down, according to Bloomberg New Energy Finance's Wind Turbine Price Index (WTPI).

By Kari Williamson

This is significantly lower than the five-year high of €1.21m/MW in 2009.

Prices dropped most sharply for older turbines to €0.85m/MW on average, down 10% from 6 months earlier. Newer wind turbine models are more efficient and offer improved capacity factors, but also these are experiencing price pressure.

Chinese competition

The fall in prices come as Chinese manufacturers competed strongly for orders, even in developing markets such as Brazil, Chile, Ecuador, Pakistan, Ethiopia and Australia.

The WTPI shows that procurement officers and turbine manufactures are sharing a generally negative outlook on prices with most anticipating further moderate declines in wind turbine prices in 2012 and 2013 – and prices are not expected recover until at least 2014.

Improves competitiveness

Despite the gloom, it should not be forgotten that lower equipment prices make wind more competitive with fossil-fuelled forms of generation.

Michael Liebreich, CEO of Bloomberg New Energy Finance, says: “Short-term pain among wind manufacturers is now undeniable and unavoidable. But the current price slump is good news on the demand side as wind is more competitive with coal and gas on a dollar-per-megawatt hour basis, which is vital given ever-lower levels of subsidy and support. Those manufacturers which can achieve leading cost positions are going to be in a good strategic position when the market enters its next expansionary phase in a few years.”

Bloomberg New Energy Finance has previously shown that power generated by the world’s best new wind farms can achieve costs of US$0.065/kWh, compared with the same per kWh for coal-fired power stations. By 2016 the firm expects the median new wind farm worldwide to be competitive with coal-based power with no subsidies.

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Comments

ANUMAKONDA JAGADEESH said

09 May 2012
Very good article. I entirely agree with the contention that Wind Turbine prices should come down. There were many research developments in Wind in the last decade and why the price of wind turbines have not come down? In India depreciation benefits for Wind energy have been slashed from 80% to 15% from April 1, 2012. In fact depreciation was the main driving factor for wind energy for installers. Now that the depreciation is almost gone, the wind energy has to survive only on the cost reduction of the wind turbines. Moreover Chinese Wind machines are available at a lower price. Even South Korea and Taiwan want to go in for manufacture of wind turbines in a big way. What puzzles me is when solar PV prices are on the decline steadily why Wind Turbine prices remain constant?
Dr.A.Jagadeesh Nellore (AP), India
Wind Energy Expert
E-mail: anumakonda.jagadeesh@gmail.com

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