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Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN

About discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.

China Leads the Way in H1 Wind Energy Development, India Catching Up

By Vivian Ni

Sept. 5 – Who says wind power is a premium technology only for rich countries? Nowadays, emerging countries are catching up and even leading the way forward in the world’s wind energy development. Over the past six months, China and India – together with the United States, Germany, and Spain – contributed to the lion’s share of the global wind capacity. China’s rapid wind power growth has been met with apprehension among European turbine makers, who are starting to see that Chinese turbine suppliers may eat away at their regional market share.

A recent half-year report issued by The World Wind Energy Association (WWEA) says the world market for wind energy has regained momentum after a weak year in 2010, seeing the global wind capacity increase by 18.4 gigawatts over the past six months and reach a total of 215 gigawatts by the end of June this year.

China alone contributed eight gigawatts to the newly-added capacity and accounted for 43 percent of the world market for wind turbines. The country overtook the United States last year and now has the largest installed wind power capacity (52.8 gigawatts) in the world.

Another fast developing country India is seeing a similar – if only smaller – picture of its wind power development. The country gained 1.5 gigawatts of wind capacity during the first half of 2011 and achieved a total capacity of 14.6 gigawatts.

While some five years ago, wind energy exploitation was still a privilege for developed markets, countries such as China and India are now listed together with the United States, Germany and Spain as the world’s top wind markets. The five countries together represent 74 percent of the global wind capacity, according to the WWEA report.

The Chinese and Indian governments’ strong commitment to developing their national wind resources – mainly driven by the need for increasing power generation capacity to fuel rapid economic growth – have greatly contributed to the two countries’ impressive wind power capacity expansion over a relatively short period of time.

In China, the government’s fiscal and tax incentives (as well as public finance support given to the wind industry) helped double the country’s installed wind capacity between 2006 and 2009, and added a record capacity of 18.9 gigawatts in 2010. In India, as the government announced the target of an additional 10.5 gigawatts of wind power generation capacity between 2007 and 2012, the country’s wind market grew by almost 68 percent from a year earlier with 2.1 gigawatts of new capacity installed throughout 2010.

Although many European wind markets also showed stronger growth in the past six months compared to last year, many top players are starting to worry about competition from their Chinese rivals.

A report by Global Wind Energy Council points out that Chinese wind turbine makers are growing rapidly and expanding into overseas markets. Four Chinese companies – Sinovel, Goldwind, Dongfang Electric and United Power – are now among the world’s top 10 wind turbine manufacturers and their large production is spurring them to accelerate the expansion into overseas markets.

Tao Gang, spokesman of Sinovel – the company that is currently listed No.2 behind Denmark’s Vestas – named “internationalization” as the company’s “top priority.”

“Overseas business deals will play a decisive role in making Sinovel a truly international company” and Europe is “undoubtedly one of Sinovel’s most important markets,” Tao says.

China’s grid connection problems could add to European wind turbine-makers’ competition concerns. China’s rapid development in wind power has put an unprecedented strain on the country’s electricity grid infrastructure and some projects may have to wait for several months before being connected to the national grid. As a result, more and more domestic wind turbine makers are looking to export their machines – which can be 30 percent cheaper than what their Western rivals produce – to the overseas markets.

A recent commentary by the Financial Times cited Colin Morgan – of the renewable energy consultancy GL Garrad Hassan – who believes Chinese wind turbines will still boast a cost advantage even after they are shipped abroad.

The Chinese government’s strong financial support will enable Chinese turbine companies to still have an edge, even if international transportation may increase their costs, Morgan says.

Several Chinese turbine companies have obtained considerable financial support from the China Development Bank, the country’s major policy bank responsible for raising funds for large infrastructure projects. Not only has the bank financed Sinovel’s US$2.2 billion-wind farm deal with the Irish wind farm developer Mainstream Renewable Power that was just announced in July, it has also made a US$6 billion-credit facility available to Goldwind.

Despite all the advantages Chinese companies have to threaten European companies’ current market position, quality still remains an issue that could buy European turbine-makers’ more time to dominate the regional market.

Ruth Brand-Schock, head of Enercon’s Berlin Office, points out that Chinese turbines “are not yet as high-quality as the European ones.” However, at the same time, Brand-Schock also indicates it will not take the Chinese very long time to catch up.

Morgan emphasizes the current differences between Chinese and Western turbines are not huge, because of “a lot of commonality in the supply chains” for manufacturers of both sides.

The Chinese are already acting for a change. In order to improve the quality of wind turbines, the Chinese government has launched an investigation into quality issues in the industry last November and tightened certification requirements for turbines at the beginning of this year.

Related Reading

Foreign Investment in China’s Green Sector
The June issue of China Briefing magazine offering an overview of the country’s renewable energy sector and discussing environment-related tax incentives before concluding with a look at foreign involvement in China’s green building industry.

China 1st, India 10th in Clean Energy Investment Attraction

China’s Power Generation Capacity Surpasses 900 Million Kilowatts

China World’s Top Energy Consumer

Hong Kong Company to Expand Investment in Indian Power and Wind Projects

Renewable Energy Takes a Backseat as Oil Prices Dip

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One Response to China Leads the Way in H1 Wind Energy Development, India Catching Up

  1. steven says:

    If European or US companies infringe into other markets such as China then no issue but when its the other way round – very big issue. Quality and state support are only myths played by the losers.

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