Wind power developers face price challenges

New York, 3 June: Increases in wind turbine prices are beginning to hinder development and could undermine the competitiveness of wind power compared to other energy sources, according to Emerging Energy Research.

The Boston-based consultancy also notes that the fluctuating nature of federal tax support for wind power does not only affect wind farm developers, but also equipment manufacturers.

"Part of the problem is not having enough local [turbine] production," says William Ambrose, EER president. "It takes a year to really get enough capacity in place to be able to produce, but if things are on-again, off-again every other year, there's not enough time to provide the components."

This is not just affecting wind development in the US, where the federal production tax credit's variable status has spawned boom and bust cycles. Prices are rising globally – spurred by rising steel and other commodity prices, Ambrose says. Market leader Vestas of Denmark recently announced that it would no longer sacrifice margins for market share in the US, and would therefore hike prices for its wind turbines.

"Most of the [wind energy] players are global players," Ambrose notes. "Opportunities in the US [this year] are taking away from opportunities elsewhere."

And, according to Ambrose's talks with a wide variety of market participants, GE has raised prices "sharply", though he declined to give a precise figure. "Every deal is negotiated separately," he explains, making it hard to provide industry-wide figures.

This could prove damaging to long-term wind development if the overall cost of the energy source were to make it less cost competitive. "If [PTC issues] were to be worked out, it would reverse a lot of these problems," Ambrose says. "This needs to be a short-term issue because, in the longer term, it's not going to be a good trend for wind power."