China’s long term plans take the global wind market to new heights

After increasing its installed capacity, China now aims to shift its focus from scale expansion towards quality and efficiency.
Published: Thu 16 Jun 2016

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China’s new wind installations accounted for almost half of the world’s installations last year, according to GlobalData. The country now boasts an annual wind capacity of 30.5GW.  

The next largest wind capacity installer in 2015 was the US, with 8.6GW, followed by Germany, Brazil and India, with 6.1GW, 2.6GW, and 2.6GW respectively. China is expected to maintain its leading position in 2016 with an annual installed capacity of 23GW, aided by a supportive regulatory scenario, low average turbine prices, and transmission infrastructure development.

An interview with Mercatus CEO Haresh Patel last month revealed that renewable markets in Japan, China and India are rivalling the main markets including the US and Europe. This shift is supported by another finding of Mercatus’ study that investment in advanced energy in emerging markets matched that of developed countries for the first time in 2015. Further, the advanced energy projects in emerging countries were bigger on average than in the US and European markets.

Patel explained that returns vary by the market and its drivers. “For example, in Japan the main driver is the pain of the nuclear disaster while in China it is the tremendous pollution problems that have led to a social groundswell for action. [The emerging market opportunity for renewables.]

China’s wind industry O&M market to grow

Ankit Mathur, GlobalData’s Practice Head for Power, states that: “After focusing on increasing its installed capacity, China’s 13th Five Year Plan has raised the 2020 wind target to 250GW, and aims to shift the focus from scale expansion towards quality and efficiency. Indeed, the Operations and Maintenance (O&M) market in China, and all over the world, is poised for a growth phase.”

“Most original equipment manufacturers witnessed an increase in service revenue in 2015 over 2014, as turbine maintenance continued to provide steady revenue. Companies such as Gamesa, Vestas and Nordex performed strongly in 2015 in terms of O&M revenues.”

The analyst adds that revenue opportunities are motivating technological innovations and service improvements to meet the dynamic needs of the wind industry O&M business.

Mathur continues: “This motivating factor seems to be producing results, as O&M revenue has been increasing quarter on quarter, and turbine manufacturers are aggressively targeting this market."

Government’s long term planning helps boost wind development

China’s renewables industry, along with the rest of the world’s, continues to struggle through financial challenges. In 2012, 17% of all wind turbines were unused because they were too expensive to connect to the grid. In some regions, half of all wind turbines remain unconnected to the grid. The 12.3 billion kW of power wasted in 2013 by wind turbines totalled US$1.73-billion in lost revenue — almost double the amount in 2011.[Wind power driving China?]

However, long term government planning for China’s wind industry seems to have redeemed the country’s wind power growth.  

The government’s support of the local wind industry forms part of its plan to stabilize China’s escalating power consumption and increasing carbon emissions. The government aims to generate 15% electricity from renewable sources and reduce emissions by 40–45% by 2020. The government has highlighted wind power to be the most viable source of energy in order to meet its ambitious goals and this is probably reflected in GlobalData’s most recent prediction that the country is on track to boast a cumulative installed capacity of 495GW by 2030.