WIND

US turbine prices

ADAM BARBER

April 12, 2013

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Consider this. In 2012, and in installation terms alone, the North American wind energy market had its best year to date.

According to the American Wind Energy Association, in total, a whopping 13.13GW of new capacity was installed.

That’s up more than 25% on the previous twelve months and accounts for more than 40% of all new power generation capacity installed in the United States.

So far, so rosy.

However, scratch beneath the surface and there’s a bigger picture that’s beginning to emerge. And it starts with wind turbine pricing – something that has fallen by a third in the past four years for those purchasing within the US.

That fall has in turn placed significant pressure on manufacturers’ margins, even while demand has soared.

And for all the while demand stays high, that pressure remains a concern but it is by no means fatal.

After all, the plant and facilities continue to churn out the kit and the major players continue to jostle for the manufacturing top spot. A mantle, in the US at least, that is still comfortably held by General Electric; supplying over a third of the new domestic wind power capacity installed.

However, in the final quarter of last year that top spot winner, GE, reported that the number of turbines ordered was less than half the number in the equivalent period of 2011.

And without radical adjustments to its wider commercial and manufacturing strategy – and indeed to other dominant domestic competitors and peers – that’s cause for concern.

Especially so when you consider that the sense of urgency that’s existed within the US market over the past eighteen months has, to a large degree, been driven by the ever-present threat of ending the PTC – a lucrative wind energy tax break.

All in all – without radical action, soon – it will make for some pretty grim viewing. And yet, when you step back and think, perhaps there’s an alternative view?

Perhaps the downward pressure on turbine prices, the subsequent squeeze on margins and the almost inevitable eventual removal of the PTC, point to something new.

Perhaps they point to a US energy market that’s no longer the emergent upstart it once was.

And perhaps, just perhaps, the unavoidable market consolidation that will follow marks a wider market shift towards a more established, independent and stable future power base.

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