Chinese Wind Companies Turn to Emerging Wind Markets
Recently, the Financial Times reported that while Chinese wind turbine manufacturers have grown rapidly in the last five years, they are shifting their focus to developing markets, and away from Europe and the United States.
As noted in the FT article, in 2011, Chinese wind companies accounted for more than 30 percent of global turbine sales whereas Bloomberg New Energy Finance (BNEF) recently reported that clean energy investment in China jumped 92 percent in 2011, with several large solar photovoltaic parks and wind farms securing hundreds of millions of dollars in financing. “These figures underline the pivotal role China is playing in the clean energy sector,” Michael Liebreich, BNEF’s Chief Executive Officer said in a statement.
And yet, Chinese turbine companies seem to be expanding abroad rather than in China. The reasons cited by the FT for this international rather than domestic growth are delays in the certification process for new turbines as well difficulties in accessing the electricity grid.
!m[](/uploads/story/180/thumbs/pic1_inline.png)Chinese wind turbine makers are facing problems in western markets as well, particularly with regards to the US market. At the end of May 2012, BusinessGreen reported that the Obama administration set taxes of up to 26 percent on Chinese wind turbine imports following a complaint from a coalition of US wind turbine manufacturers concerned that subsidised Chinese wind turbine components were harming the American industry through unfair competition, or ‘dumping’. In addition, despite the EU’s renewable energy targets, Europe currently does not offer the best environment for Chinese wind manufacturers either due to the Eurozone crisis.
Subsequently, Chinese companies are increasingly turning toward emerging markets such as India, which is among the fastest growing markets in the world when it comes to wind and solar energy. The FT quotes Sebastian Meyer, a Beijing-based research director for the energy consultancy Azure, who noted that the established wind markets in Europe and North America were no longer projected to see much growth. “The developing world is going to be the main area of growth in the coming decade in wind power,” he notes.
When it comes to the fierce competition for niche emerging wind markets, the main weapon of Chinese wind turbine makers are their competitive prices. The FT notes that Chinese turbine makers tolerate higher risk than their western peers, and are able to take advantage of state-backed financing. According to Eduardo Tabbush, onshore wind analyst at BNEF, the bids of Chinese turbine makers are 20 to 30 percent below those of their western counterparts.
On the other hand, there is a “technology gap” between Chinese manufacturers and the more advanced turbines produced by US and European companies such as Vestas of Denmark (VWS), for instance. In addition, there are certain intellectual property concerns regarding some Chinese manufacturers such as Sinovel (601558), which is involved in an intellectual property dispute threatening some if its overseas contracts.
And yet, it seems that competitive prices will continue to determine the success of Chinese manufacturers on emerging wind markets. “I really haven’t seen a downturn at all in Chinese wind turbine sales abroad,” points out Caitlin Pollock, Asia wind analyst at the energy consultancy company IHS Inc (IHS), as quoted by the FT. “They seem to be targeting markets with financial problems, and seem to be very successful, partly because of low prices,” she says.
