The average price for utility-scale wind energy equipment hit a new low in the second half of 2011, dipping 4%, according to the latest edition of Bloomberg New Energy Finance's (BNEF) Wind Turbine Price Index.
The price drop was due to excess capacity and new low-cost competitors. According to BNEF, contracts signed in the second half of 2011 for 2013 delivery fell to 910,000 euros/MW ($1.21 million/MW) – down 4% from six months earlier and well off the five-year high of 1.21 million euros/MW in 2009.
Prices dropped most sharply for older turbines to 850,000 euros/MW ($1.38 million/MW) on average – down 10% from six months earlier. Newer wind turbine models are more efficient and offer improved capacity factors; however, analysis of contracts covered by the BNEF index found that even the new models have seen prices coming down.
The BNEF index shows prices falling in the second half of 2011 in all parts of the world as Chinese manufacturers competed strongly for orders, even in developing markets such as Brazil, Chile, Ecuador, Pakistan, Ethiopia and Australia.
In addition, the survey revealed that most procurement officers and wind turbine manufacturers anticipate further moderate declines in turbine prices in 2012 and 2013, and do not expect prices to recover until at least 2014.
Notably, lower equipment prices make wind more competitive with fossil fuels.
"Short-term pain among wind manufacturers is now undeniable and unavoidable," notes Michael Liebreich, CEO of BNEF. "But the current price slump 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.
"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 adds.
BNEF's analysis has previously shown that power generated by the world's best new wind farms can achieve costs of $0.065/kWh, which is comparable to the cost for coal-fired power stations. The firm expects that, by 2016, the median new wind farm worldwide will be competitive with coal-based power with no subsidies.
The BNEF index represents aggregated data collected on a confidential basis from 38 of the world's largest buyers of wind turbines. The sample includes information on more than 230 turbine contracts totaling nearly 10.6 GW of contracted capacity, with a main focus on Europe and the Americas.