Yves here. This article offers only a superficial look at how China has come to dominate the wind turbine market. China has made green technologies one of its priority areas. But interestingly, we don’t see any of the typical whinging that subsidies played a role in China taking the lead position. To the extent that this piece fingers a cause, it’s greater profit expectations by US and UK/European players, aka short-termism, and concerns about volatility of input prices.
Reader insights welcome!
By CityAM.com, the online presence of City A.M., London’s first free daily business newspaper. Cross posted from OilPrice
China is quietly dominating another major global sector, wind power.
The country accounted for two-thirds of the entire global build in 2023 and now boasts a 77GW portfolio, more than ten times that of the US, the next largest market.
Data from Bloomberg’s specialist research unit NEF out today shows that Europe added a record 15.3GW last year, 16 per cent more than the amount installed in 2022, but still only 40 per cent of the required annual volume to meet the 2030 500 GW target.
China is strengthening its wind project stock both off its coasts and on land.
Onshore installations hit 69.4GW last year and 7.6GW offshore, the latter making up 67 per cent of global offshore project deliveries.
Meanwhile, the West can only sit back and watch.
The US hit 7.2GW of installed onshore capacity in 2023, while the UK registered just 0.6GW.
The UK maintained its offshore lead ahead of everyone but China, building out 1.1GW of capacity, narrowly beating out the Netherlands, Germany and Norway.
The scale of China’s lead ahead of the pack in terms of wind development is being driven, literally and figuratively, by its burgeoning turbine manufacturing capabilities.
Beijing-headquartered Goldwind built 16GW of onshore and offshore turbines in 2023, nearly equvialent to the UK’s entire wind farm stock, while second-place Envision, also based in Beijing, grew installations year-on-year to 15.4GW of new projects in 2023.
Danish firm Vestas, the largest Western turbine manufacturer and supplier, ranked third globally for the third year running with 13.4GW while US-based General Electric came in sixth with 8.1GW.
Out of the top 15 firms providing turbines, ten are Chinese and delivered 78.4GW out of the 116GW of total global wind power delivered in 2023.
And essentially all of this power is being kept within the country’s borders.
Bloomberg’s report shows that 98 per cent of the capacity added by Chinese turbine manufacturers was used for domestic projects, as opposed to the broad geographical spread of projects fed by US and European manufacturers.
Vestas commissioned wind farm projects in 33 countries last year and is also the only European provider to have secured contracts for Chinese projects.
The US is employing more of an isolationist policy with its development pipeline, with 43 per cent of capacity remaining within its own borders.
China appears perfectly content and capable of fulfilling its own wind needs and ignoring outsourcing opportunities.
This is mostly down to Western manufacturers by and large failing to match competitive pricing and thereby failing to win orders.
That cost-benefit squeeze is the headline issue that has and continues to plague the West’s efforts to drive offshore wind production, with material inflation and project costs still incredibly volatile.
The UK is entering arguably the most critical phase of its net zero journey.
With Labour and Conservatives divided on how much wind power is feasible to be delivered by 2030, the target of 50GW by 2030 is looming larger than ever.
With just 22GW currently installed, the next auction round, where developers and the government haggle for contracts to build UK wind farms, begins today and all eyes will be firmly on its progress as it reaches its expected conclusion later this year.