By Kari Williamson

Wind turbine contracts signed in the second half of 2011 for 2013 delivery fell to €0.91 million per MW, down 4% from 6 months earlier and well off their five-year high of €1.21m/MW in 2009.

Prices dropped most sharply for older wind turbines to €0.85m/MW on average, down 10% from half a year earlier. Newer wind turbine models are more efficient and offer improved capacity factors, however, analysis of contracts covered by the Index shows that even these have seen prices coming down.

China increases competition

Part of the fall in prices is due to Chinese manufacturers competed strongly for wind turbine orders, even in developing markets such as Brazil, Chile, Ecuador, Pakistan, Ethiopia and Australia.

The survey reveals that procurement officers and wind turbine manufactures share a generally negative outlook on prices; most anticipate further moderate declines in wind turbine prices in 2012 and 2013 – they don’t expect prices to recover until at least 2014.

A silver-lining for consumers

A significant silver lining, however, is that lower equipment prices make wind more competitive with fossil-fuelled forms of generation.

Michael Liebreich, CEO of Bloomberg New Energy Finance, says: “Short-term pain among wind manufacturers is now undeniable and unavoidable. But the current price slump is good news on the demand side as wind is more competitive with coal and gas on a dollar-per-megawatt hour basis, which is vital given ever-lower levels of subsidy and support. Those manufacturers which can achieve leading cost positions are going to be in a good strategic position when the market enters its next expansionary phase in a few years.”

Bloomberg New Energy Finance has previously shown that power generated by new wind farms can achieve costs of US$0.065/kWh – and the median new wind farm could be competitive with coal-based power by 2016.