Wind Turbine Prices Fell 4% in Second Half of ’11, BNEF Says

The price for wind turbines fell 4 percent to the lowest since at least 2008 because of competition from Chinese manufacturers and excess capacity to build the machines, Bloomberg New Energy Finance said.

Turbine contracts signed in the second half of 2011 for delivery in 2013 dropped to 910,000 euros ($1.2 million) a megawatt compared with the previous six months, the London-based industry analyst said today in an e-mailed statement. The price was the lowest since the analyst began tracking prices in June 2008 and down from as much as 1.21 million euros a megawatt in 2009.

Competition in the market for wind turbines has depressed prices worldwide, trimming profits at companies led by Vestas Wind Systems A/S (VWS), the world’s largest turbine maker. Vestas, based in Aarhus, Denmark, reported a loss four times wider than analyst estimates in February, squeezed by Chinese competition including from Sinovel Wind Group Co. (601558) and Xinjiang Goldwind Science & Technology Co. (2208)

“Short-term pain among wind manufacturers is now undeniable and unavoidable,” Michael Liebreich, chief executive officer of Bloomberg New Energy Finance, said in the statement. The price drop 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.”

Most turbine manufacturers expect further price declines this year and next and do not anticipate a recovery until 2014, according to the research company. The Bloomberg New Energy Finance Wind Turbine Price Index, which collects confidential data from 38 of the world’s largest buyers of wind turbines, showed prices dropped across the world including developing markets such as Brazil, Chile, Ecuador, Pakistan, Ethiopia and Australia as China competed for orders.

Prices for older turbines fell the most to 0.85 million euros a megawatt, a 10 percent decline on the previous six months. Even more efficient, newer turbine models saw price declines.

“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,” he said. The “median” new wind farm will be competitive with coal-based power without subsidies by 2016, the analyst said in the statement.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.