HomeNewsRising wind turbine prices put decarbonisation goals at risk

Rising wind turbine prices put decarbonisation goals at risk

The price for wind turbines is expected to increase by up to 10% over the next 12 to 18 months due to three main factors identified in a new report released by research firm Wood Mackenzie.

The three factors include continued increases in commodity prices including steel, copper, aluminium and fibre that are used in manufacturing wind turbines. Logistics costs also continue to increase due to disruptions caused by the pandemic in the global transport sector. In addition, other challenges associated with COVID-19 such as decreases in turbine production are expected to drive an increase in the costs of turbines, according to the study.

The US-China trade war is expected to continue disrupting the supply chain for wind turbines, resulting in the instability of prices. As a result, wind energy market players including Vestas, SGRE and Nordex are expected to seek alternative supply hubs including India.

The prices for wind turbines have been increasing over the past six months. If factors including inadequate capital and the lack of raw materials continue to hinder the market, the wind turbine supply chain will be crippled resulting in a number of countries failing to achieve decarbonisation goals, according to the study.

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Shashi Barla, Wood Mackenzie Principal Analyst, said: “Turbine OEMs and component suppliers face a double whammy of cost increases and demand softening over the coming two years due to the US PTC (Production Tax Credit) and China feed-in-tariff (FiT) phase-outs. Despite this rise in costs, we expect turbine prices to return to normal levels by the end of 2022.”

“As expected, demand increases in India have failed to materialise, therefore allowing OEMs and suppliers to leverage excess production capacity to serve export markets cost-effectively. As OEMs continue to manufacture the latest generation turbines in India, component suppliers are expanding within the market to produce components closer to their clients’ nacelle factories.”

Wood Mackenzie recommends wind energy market players to adopt next-generation technologies and materials to survive changing market conditions and supply chain bottlenecks over the next four to five years.

Some of the materials that are expected to fall short of supply include offshore nacelle capacity, carbon fibres, pultrusions, permanent magnet generators, large diameter main shaft bearings, gearbox bearings, semi-conductors, and specialised castings.

Find out more about the report.