Greentech Lead America: Wind turbine prices dropped by as much as 20-25 percent in western markets, and more than 35 percent in China (compared with the 2008 peak prices) before stabilizing in 2012, says BTM Consult’s preliminary report of world’s wind turbine OEM makers.
Turbine vendors are taking on more risk under tough market conditions in an effort to increase their market share of the growing turbine maintenance market which will ultimately provide more stable margins and recurring revenues, the report said.
While the steadily expanding offshore wind sector has seen the increased availability of financing from institutional investors, it still needs utilities with project development and management experience to take on construction risk.
The wind turbine market is driven by China and the U.S. Together both countries now contribute for more than 60 percent of the global market.
GE Wind has emerged as the market leader pushing Vestas to the second position.
According to BTM Consult, the policy uncertainty that plagued several European and Asian markets has impacted the wind turbine market. Despite this, 2012 saw record global installation mainly from China and the U.S.
Key Asian markets (China and India) were impacted by delayed payments. India delayed payments from utilities to power generators, up to 14 months in some cases.
Severe delays in payment of surcharge subsidies for renewables in China, in cases up to two years, have tightened cash flow throughout entire value chain.
A lack of transmission build-out has constrained development in both land based (e.g., China, Brazil, Mexico, Germany, and the U.S.) and offshore development (namely Germany).
Other trends that affected wind turbine market include a shift in technology back to traditional doubly-fed induction generators and towards medium speed hybrid drives, a global shift in energy systems, with a resurgence of oil and gas (driven by shale), continued nuclear withdrawal, and a growing focus on energy efficiency.
While capacity factor improvements have continued to bring down wind’s levelized cost of energy, the announcement of new shale gas extraction plans have brought the natural gas prices down to lowest level since 2002, making the generation cost of wind power less competitive.
Emerging markets such as Latin America and Eastern Europe are being closely watched as meeting pricing and local content requirements are becoming decisive competitive parameters.