Price pressure

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Much is being made by wind industry observers of the impact on turbine costs of the world steel shortage and subsequent 40-60% rise in steel prices (depending on market and type of steel) during 2003-04 and a similar increase in the price of resins used in glass fibre for blade manufacture. The impact of the price rises is not likely to be as dire as some pundits have announced, but combined with other pressures, may temporarily slow the annual decline in wind power generation costs over the past ten years (main article).

A typical 2 MW wind turbine contains approximately 200 tonnes of steel. A 40-60% increase in the steel price translates to an extra EUR 20,000, or about 1.7% on the ex-works price of a wind turbine, typically about EUR 600/kW. Since resins are a far smaller part of the whole product, a 40% increase in their price will have relatively negligible effect.

Meantime, however, as the proportion of wind power increases on electricity networks, utilities are demanding that wind plant provide their share of the grid support services required to keep power systems stable, particularly the ability to "ride through" faults on the distribution and transmission networks. The extra demands of the technology mean extra costs for more sophisticated electrical and electronic components.

Separating and quantifying the various influences on wind energy prices is difficult, but the rate at which prices are falling, at 1.3% annually over the past ten years, may be slowing. Although list prices are not a totally reliable guide, prices quoted in The Wind Turbine Market 2004, published by German publication Erneurbareenergien, are only 1-2% lower than those quoted in the 2002 version.

The long term prospects for significant price reductions remain good, driven down by ever larger wind farms and the continuing evolution in wind turbine design. Design advances are explored in the latest issue of WindStats Newsletter, Windpower Monthly's sister publication.

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