The wind turbine supply chain continues to face challenging market conditions, and significant shifts in the original equipment manufacturer (OEM) landscape are expected over the next three to five years, according to MAKE Consulting's annual Supply Side report.
Large capital expenditures in 2007-08 were premised on an expectation of sustained and continual growth; however, this failed to endure when the credit crisis of 2009-2010 hit global markets and resulted in a capacity bubble, according to the report.
Continued softness in wind power demand, bred by lower natural-gas prices and tougher financial conditions, has turned a seller's market into a buyer's market, characterized by overcapacity and declining wind turbine prices.Â
From the peak levels of 2008, turbine pricing has fallen by over 25% in western markets and by more than 30% in the Chinese wind market, according to the report, which goes on to say that while the recent transition to advanced multi-megawatt technology and large-rotor 1.5 MW – 2.0 MW configurations may allow OEMs to sustain some level of pricing power, a further decline in average turbine pricing over the next 12 months is more likely.
In the face of such conditions, localization and cost competitiveness will prove to be the new mantras for the wind turbine supply chain, according to the report. The drive for cost competitiveness influences OEM sourcing strategies for key components, such as blades, generators, converters and controls. MAKE expects the current transitional phase of industrialization within the wind power supply chain to speed up, with lean and automated manufacturing and shorter lead times gaining attention.