“It’s incredibly expensive:” Global wind giant says turbine prices have peaked, but other costs are high

Global wind giant Vestas says turbine and component prices have peaked, but the Australian industry is facing increased costs in the balance of plant and construction costs.

It is now common knowledge that the Australian wind industry is facing a difficult moment, with wind turbine costs significantly than their levels before the global energy crisis a few years ago, and a surge in civil construction costs.

No wind energy projects have reached financial close in Australia so far in 2025 – although a couple of smaller projects may do so in coming weeks in South Australia and Western Australia.

Standalone battery projects and solar and battery hybrid projects, however, are reaching financial close, largely because their technology costs have come down significantly enough to offset the rise in civil construction costs that has affected all industries.

In an interview on last week’s episode of Renew Economy’s Energy Insiders podcast, Vestas vice president of sales Jan Daniel Kaemmer says wind technology costs appear to be coming down, but the overall project costs remain high.

“You can see it, costs have gone up across the board,” Kaemmer told Energy Insiders.

“But when you look at it, I think the turbine (costs) have actually tapered off. Steel prices … are not anywhere close to the high that where they used to be. And I think also our component costs have, have have come down somewhat.

“Where we really see an increase, a continued increases is on the local parts. So that is a domestic transport, cranes, installation, balance of plant.

“I think you in your own podcast discuss this. It’s incredibly expensive these days to build some of those projects when it comes to the electrical and civil infrastructure. So these are pieces that that have have impacted costs or prices of wind power.”

Energy expects have suggested that wind projects need returns of $100/MWh or more to make ends meet and deliver returns to investors, likely nearly twice the price of five years ago, and Australia’s distance – and lack of local manufacturing capability – count against it.

“Australia always has a pretty significant international transport component,” Kaemmer says. “And when you look at at the equipment and and manpower costs, Australia is one of the highest countries in the world.

“But I think it’s important to always consider that it’s not only the the capex that we’re talking about. It’s how much do we generate. What’s the capacity factor? You know, nowadays we look at lifetime of 25, 30 35 years.

“So how long can these assets, operate? And, of course, how can we support them with an O&M, operation and maintenance strategy for … that lifetime. That is, I think, what determines the cost of wind in Australia.

“And I think on top of that, I would say Australia is pretty complex, if you look at, for example, the grid integration …. so that is, of course, something that our customers look at and factor in.

“And we feel that Vestas with with our track record of more than seven gigawatts in operation, and soon, getting towards the 10 gigawatts, we have, we have demonstrated that we can deliver these projects reliably and mostly on time, and that is probably the biggest cost.

” If you are delayed for a month, two or three months, if it takes you longer to get through the grid approvals, that’s a lot of money that is in there.”

Vestas once contemplated manufacturing in Australia, but a nacelle plant mooted some 20 years ago was abandoned when the then Howard government tore up the then Mandatory Renewable Energy Target.

Policy changes means that that Australia remains “incredibly lumpy”, Kaemmer says, and that makes it hard to justify any local manufacturing.

“So we had a fantastic 2022 for Vestas, where we closed a lot of orders, then a very low 2023, then another great 2024, and now we are almost all through 2025 and the last project that was closed in Australia was actually one that we did between Christmas and New Year last year.

“So of course, that’s not that’s not good. We need, we need consistency.

“We didn’t have any order for a year. So, of course, nobody can really invest in a supply chain locally, if, if it goes up and down.”

And Kaemmer says these lengthy time frames will make it difficult for Australia to reach its renewable energy target of 82 per cent by 2030, given that even projects that go well – such as Australia’s largest, the Golden Plains project in Victoria, which Vestas is supplying, take three years to do.

“So we, we are a little bit concerned seeing that the projects take too long to get to FID. I think we we see that the government is providing the right support. Everybody’s really committed to the transition,” he says.

“Unfortunately, (Australia) has quite a few projects in there that I think are in the thick of their development process and probably will not be ready on time to be constructed by 2030 because, you know, a project, for example, like Golden Plains that took about three years from FID to to full production.

“So whatever project that doesn’t start at the end of 26 will probably not be operational by 2030. It’s a bit like a ketchup bottle. I believe that next year we will get some of those projects that have been stuck in in the EPBC or permit queue, and that will then we will give it a bit of a big, big push.

“We need projects to get quicker through permitting. I think that’s really the critical piece that we see our customers are struggling with. Customers also telling us that some of the projects are maybe, at the moment, difficult to meet the investment hurdles.

“And it might be a little bit messy, I think, but we will have, I think we have quite a few projects that should go ahead next year. They do depend on some massive renewable energy zone build out.”

You can hear the full interview with Kraemmer on this episode of the Energy Insiders podcast: Energy Insiders Podcast: The future of wind energy

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