Canada

Canada

High turbine price fears voiced at CanWEA conference

Canadian wind project developers who have to compete for turbines with large US firms placing large framework orders should be "cautiously optimistic" that the global supply should start to catch up with demand by as early as 2009 or 2010, said Joshua Magee of Emerging Energy Research. What that will do to turbine prices is not clear, he told delegates, but it should lead to greater cost competition among vendors and allow project developers to shop for the right turbine for a particular site rather than just take what is available. Meantime, off-the-shelf turbine prices have increased by an average of 50% since 2004 and are continuing to rise as 2008 approaches, said Magee, forcing developers to either accept a lower internal rate (IRR) of return or increase the cost of energy. "Both over the long term are essentially unsustainable," he warned. "If you have lower IRR than accurately reflects the risk profile for utility scale wind onshore, it will ultimately trickle down to the capital markets. If you have an escalating cost of energy there will ultimately be a ceiling on where that can go before it erodes wind's cost competitiveness. It is unclear where that level is. It is troubling, however, for several Canadian provinces where you have a very large scale, low cost hydro base. It does influence the political will to support increasingly more expensive wind power."

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