Cost of producing wind turbines has fallen steadily : IWTMA-GWEC Report

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A recent report on the wind energy industry in India reveals that turbine prices have always been lower than the global average A recent report on the wind energy industry in India reveals that turbine prices have always been lower than the global average due to lower labour and production costs in the country. More than a dozen international companies now manufacture wind turbines in India.

“Over the past few years, both the government and the wind power industry have succeeded in injecting greater stability into the Indian market. This has encouraged larger private and public sector enterprises to invest in wind,” states the report published by the Global Wind Energy Council (GWEC) and the Indian Wind Turbine Manufacturers Association (IWTMA).

“It has also stimulated a stronger domestic manufacturing sector; some foreign companies now source more than 80% of the components for their turbines in India. The current annual production capacity of wind turbines manufactured in India is about 3,000-3,500 MW, including turbines for the domestic as well as for the export markets. However, the actual number of turbines produced is driven by market forces, and high interest rates often do not allow for the accumulation of inventory. Thanks to new market entrants, it is expected that the annual production capacity will rise to 5,000 MW per year by 2015,” adds the report.

Companies operating in this segment in India include Suzlon, Vestas Wind Tech, RRB Energy, Enercon, Vestas, GE, Gamesa, Siemens, ReGen Power Tech, LMGlasfiber, WinWinD, Kenersys and Global Wind Power.

The companies are manufacturing in India either through joint ventures under licensed production, as subsidiaries of foreign companies or as Indian companies with their own technology.

The report indicates that the capital cost of producing wind turbines has fallen steadily over the past 20 years as turbine design has been largely concentrated on the three-bladed upwind model with variable speed and pitch blade regulation, manufacturing techniques have been optimised, and mass production and automation have resulted in economies of scale.

A graduated assumption estimates the costs of 5.35 crore Rs/MW (as per 2008 prices) to decrease to 5.00 crore Rs/MW by 2010 and then stabilize at that level.

“The reason for this graduated assumption, is that the manufacturing industry has not so far gained the full benefits from series production, especially due to the rapid upscaling of products. Neither has the full potential of the latest design optimisations been realized,” states the report.

Now, the industry has entered the “commercialisation phase”, thereby lowering the cost of wind turbine generators during the last few decades. The costs are expected to be driven down further by stepping up the local manufacture of all turbine components in India and substituting imports of more expensive parts from international markets.

According to New Energy Finance, newly launched Wind Turbine Price Index shows an 18% decrease in contract prices for delivery in H1 2010. While the years 2006 to 2008 have seen a marked increase in the price of new wind turbines globally, caused by rising raw material prices and shortages in the supply chain for turbine components, the ramifications of the financial crisis has reversed this upwards trend. As financing for new projects became harder to come by, previous supply chain difficulties were overcome. In addition, decreasing raw material prices also helped bring prices down. As a result, since late 2008, global turbine prices have dropped by 18% for turbines to be delivered in the first half of 2010

The Minister for New and Renewable Energy released the book titled “Indian Wind Energy Outlook – 2009″ on the 9th September 2009 in New Delhi. This report is published jointly by the Global Wind Energy Council (GWEC) and Indian Wind Turbine Manufacturers Association (IWTMA).

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