London, UK [Power Engineering International] Wind turbine prices worldwide have dropped by 18 percent for contracts signed in late 2008 and 2009 for delivery in the first half of 2010, according to a new price index launched by New Energy Finance.
The firm said the softening represents an unwinding of previous excesses caused by supply bottlenecks and is not a crash brought about by slumping demand.
Wind turbine prices account for some 70 percent to 80 percent of total installation costs. New Energy Finance analysis shows that supply bottlenecks led to a steady increase in turbine prices, which peaked at €1.26m/MW ($1.66m) for contracts signed in 2008 for delivery in 2009. Nevertheless, an easing of turbine demand in 2009 (mainly due to financing issues) coupled with an expanding supply chain, has led to a global oversupply this year.
The New Energy Finance Wind Turbine Price Index is based on confidential data provided by 12 turbine buyers, among them utilities and independent power producers, project developers and financial investors. The sample included more than 60 individual contracts totaling nearly 3 GW of contracted capacity (or 15 percent of the annual wind market) signed in 2008-09. The sample includes contracts in 22 different markets with 11 manufacturers represented in the analysis. Key findings include:
- Oversupply in the global wind market has meant that prices for contracts signed in late 2008 and 2009 for delivery in the first half of 2010 fell by 18 percent, to $1.36m/MW. Contract prices include the towers and transport to the site (overland and marine). Value Added Tax is excluded, as are site works and other construction and commissioning costs.
- The Index also shows a slight recovery in pricing for contracts signed in 2009 for delivery in the second half of 2010.
- The destination market for turbines proves to be a strong determinant of pricing. Contract prices in the Americas and Eastern Europe for delivery in 2008 and 2009 were 15 percent to 25 percent higher than West European contracts, though contracts for delivery in 2010 have seen a significant decrease.
- Contract prices in the Americas for delivery in the first half of 2010 displayed the largest decrease, reflecting mainly contracts for Latin America and Canada, rather than the US.
Index participants expect further turbine price increases as early as 2011 as demand recovers in the main wind markets.
In the years up to 2008, wind turbine prices were pushed upwards despite improving technology. The reasons were rising prices of raw materials such as steel, and bottlenecks in the supply of turbines and key components as demand accelerated.
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