Business digest: Costs down

Wind plant construction costs in North America fell 11% in the first six months of the year, according to the latest Power Capital Costs Index (PCCI) from Cambridge Energy Research Associates (CERA).

The PCCI resembles a consumer price index, but measures a fixed basket of cost inputs - equipment, facilities, materials and personnel - associated with the construction of a diverse portfolio of 30 generating facilities in North America, spanning coal, gas, wind and nuclear. While costs for all have declined thanks to a sharp fall in the price of steel, copper and petroleum, wind plant costs have fallen the most, thanks to a combined drop in turbine costs and demand for them, says CERA.

Costs for combined-cycle and simple-cycle gas plants, as well as coal facilities, fell about 6% over the same period. The June PCCI marks the first time in nearly a decade that the costs of non-nuclear plant have decreased. It represents a "true turning of the tide," says CERA's Candida Scott. "We can expect the downward pressure to continue to build as falling costs work their way through the supply chain."

To date, says CERA, substantial order backlogs have allowed equipment manufacturers to maintain their price position, but as the global order pipeline slows they are likely to pass along more of their cost savings.

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