The United States was the second-largest market for wind with a total cumulative installed capacity of 105.5 GW in 2019. Despite being the second-largest market, the United States depends on China for numerous components present inside the nacelle, such as transformers, converters and inverters, which is likely to cause prices to rise, according to 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 which have or are continuing to experience the significant impacts of the COVID-19 pandemic.
“The implementation of tariffs on Chinese related products and multi-country imports of steel has placed increasing pressure on U.S. wind projects,” said Somik Das, Senior Power Analyst at GlobalData. “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 Q1 2020, the price is estimated to rise to $921.8 per kilowatt, with the onset of the COVID-19 pandemic. The price is expected to peak in Q2, to reach $962-per-kilowatt, as the impacts within the country are expected to become prominent by then. During Q3 and Q4, this increasing price trend is expected to decline but will remain higher than the price of the fourth quarter of 2019.
“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,” Das said. “The ongoing lockdown in the U.S. 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.”
News item from GlobalData
Filed Under: News
