Wind turbine prices are expected to increase by up to 10% over the next 12 to 18 months due to increases in commodity prices, logistics costs, and coronavirus-related challenges, according to Wood Mackenzie on Monday.
A recent Wood Mackenzie report noted that a rise in steel, copper, aluminum, and fiber prices, coupled with a four-fold increase in logistics costs, have increased turbine prices over the last six months, a trend that is now expected to continue over the next four to five quarters.
“Turbine original equipment manufacturers (OEM) 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,” said Shashi Barla, a principal analyst at Wood Mackenzie.
Turbine manufacturers are experiencing increased cost pressures as the US-China trade war shows no signs of abating. As a result, companies like Vestas, SGRE, and Nordex have been compelled to look for alternate supply centers like India.
The “India for India” and “India for Global” supply chain strategies are encouraging leading turbine component suppliers to follow their turbine OEM customers into the Asia-Pacific nation, Barla said.
According to Wood Mackenzie, as market conditions continue to evolve, OEMs and turbine suppliers must adopt next-generation technologies and materials because supply chain bottlenecks for important materials will emerge over the next four to five years.
Barla warned that the wind turbine industry could face supply restrictions if essential capital components and raw material capacity do not increase in the next two years, which might jeopardize country-level decarbonization objectives.
“Offshore nacelle capacity, carbon fibers, pultrusions, permanent magnet generators, large diameter main shaft bearings, gearbox bearings, semi-conductors, and specialized castings are at risk of future shortages, he added.
By Sibel Morrow