Bloomberg New Energy Finance analysis shows that wind turbines prices peaked at EUR 1.22m/MW for contracts signed in 2008 for delivery in H1 2009. Nevertheless, current over-supply in the global wind power market – mainly due to financing issues for wind farm projects – has led to a sharp fall in pricing for wind energy contracts signed in 2010 for delivery in H2 2010 and H1 2011, with average prices coming at EUR 1.04m/MW. The Index shows no signs of a price recovery in the near future.
The Wind Turbine Price Index (WTPI), published twice a year, is based on confidential data provided by 22 wind turbine buyers – amongst them utilities/power players, independent power producers and project developers, as well as financial investors. The sample includes nearly 110 individual contracts totaling 5.6 GW of contracted capacity – or 25% of the annual wind energy market – the most authoritative reference for wind turbine pricing in the wind power industry. The sample also includes contracts in 24 different wind power markets, with 14 manufacturers represented in the analysis.
Key findings include:
• Global wind turbine contracts signed in 2010 for delivery in H2 2010 and H1 2011 average EUR 1.04m/MW, down by 15% from peak values of EUR 1.22m/MW. This is close to the figure reported in the last WTPI, in December 2009. Contracts currently under negotiation for delivery in H2 2011 show identical pricing at EUR 1.04m/MW, with no signs of a price recovery in the near future. Prices quoted in this report include the turbines plus transport to site (marine and overland) excluding VAT and all other construction costs.
• Markets with exposure to electricity prices display the largest decrease – especially in the US where power purchase agreement prices have softened and those agreements are hard to secure. Average pricing in the Americas for contracts negotiated in 2010 for delivery in 2010 and 2011 falls in the range $1.36m/MW-$1.48m/MW. Pricing in Eastern European markets also showed a significant decrease, with average pricing slightly above EUR 1.00m/MW for deliveries in 2010, down 24% from peak values of EUR 1.32m/MW.
• Several contracts for Tier 1 (leading) manufacturers with over-capacity in 2009-10 and large inventories showed values significantly below average – in some cases well below the EUR 1.00m/MW benchmark.
• Full service operation and maintenance prices displayed a slight decrease, averaging EUR 29,000-35,000/MW per year for the first five years of operation, down from EUR 34,000-42,000/MW. More importantly, an increasing number of contracts are being agreed for 15 years of O&M, as manufacturers attempt to capture these revenues and make more competitive offerings.
• Procurement officers for some of the main wind turbines buyers expect a further decrease in pricing in 2010 and 2011, of 4% and 1% respectively. They only expect price increases from 2013, a significantly more conservative attitude than in the previous report.
William Young, manager of the Wind Insight Service at Bloomberg New Energy Finance, said: “Expectations for turbine prices have never been so low, and the current market oversupply will continue for quite a while longer. That may not be great for wind turbine manufacturers, but the good news for the sector is that it will improve the competitiveness of wind with gas, coal and nuclear as a means of generating electricity.”
Bloomberg New Energy Finance (BNEF) is the world’s leading independent provider of news, data, research and analysis to decision-makers in renewable energy, energy smart technologies, carbon markets, carbon capture and storage, and nuclear power. Bloomberg New Energy Finance has staff of more than 130, based in London, Washington D.C., New York, Beijing, New Delhi, Hyderabad, Cape Town, São Paulo, Singapore, and Sydney.