09 Apr 2020
Posted in Coronavirus
Manufacturing disruptions in China to ramp up wind turbine prices in the US
The US was the second-largest market for wind with a total cumulative installed capacity of 105.5GW, in 2019. Despite being the second-largest market, the US depends on China for numerous components present inside the nacelle, such as transformers, converters, and inverters, which is likely to cause prices to rise, says GlobalData, a leading data and analytics company.
Manufacturing disruptions in China have resulted in concerns from developers worldwide, seeking to complete projects or procure financing. The components for turbine fabrication are mainly sourced from Spain, India, and China, all of whom have or are continuing to experience the significant impacts of the COVID-19 pandemic.
Somik Das, Senior Power Analyst at GlobalData, comments: “The implementation of tariffs on Chinese related products and multi-country imports of steel has placed increasing pressure on US wind projects. This, in turn, has arrested the sharp decline in prices. Between the fourth quarter of the fiscal year 2019 and the fourth quarter of 2020, turbine prices were likely to decline by 1.5%, as per estimates before the pandemic. However, due to the COVID-19 outbreak, turbine prices are expected to increase by 4.4% between Q4 in 2019 and Q4 in 2020.”
In contrast to the impacts of the pandemic on solar module prices, the price volatility of the wind turbine market is more restrained, due to the diversified supply lines and large domestic manufacturing sector. However, during the first quarter of 2020, the price is estimated to rise to $921.8/kW, with the onset of the COVID-19 pandemic. The price is expected to peak in the second quarter, to reach $962/kW, as the impacts within the country are expected to become prominent by then. During the third and the fourth quarter, this increasing price trend is expected to decline but will remain higher than the price of the fourth quarter of 2019.
Das concludes: “There is a risk of cancellation of projects, because of the ongoing pandemic situation. The industry faces potential job losses and derailment of investments, placing capacities in the pipeline under peril. The ongoing lockdown in the US would certainly limit the logistics necessary for the timely execution of projects before the PTC deadline. Moreover, issues in supply markets will further drive up prices and see project development pushed into the second half of the year. Hence the performance of the sector in the second half of the year is going to be critically important.”