Hyper-speed growth has left the Chinese solar power industry in a big mess, and wind power seems to be suffering a similar fate.
A startling article in China Daily this week paints a bleak picture for Chinese wind power manufacturers, with hefty U.S. tariffs (in response to equally hefty Chinese dumping) hindering exports, and massive domestic overcapacity dampening sales at home.
Outside observers have been awed by the massive buildup in China’s installed wind capacity, which rocketed to a world-leading 62.4 gigawatts by the end of 2011. But a Greenpeace report last fall noted that only 76.7 percent of that was connected to the grid, and that 12 percent of the wind energy produced in regions examined – some 10 billion kilowatt-hours – was curtailed. That is, turned away because the grid couldn’t take it.
The government is now being more careful about approving projects, particularly those over 50 megawatts in capacity. That, along with the trouble selling overseas, is putting immense pressure on Chinese wind energy component manufacturers.
The China Daily article also raised questions about the quality of the products produced by the country’s manufacturers. It quotes Goldwind’s Ma Jinru saying, “”The Chinese wind power industry has developed too quickly during the past five years and a large number of companies, some without the requisite experience or skills, have entered the industry.”
The likely result of all these forces at play will be many manufacturers disappearing over the next three years, industry analysts told the paper.
It’s a situation not too dissimilar to the nation’s solar industry, which rose from nothing to dominate the globe in the five years leading up to 2012, flooding fast-growing markets like Europe and the U.S. with cheap solar panels. But many of those markets have begun to tighten as government incentives dry up, and also as the U.S. moves toward duties on Chinese imports and Europe probes price-dumping allegations.
The result, for the Chinese industry, is extraordinary overcapacity. Even China’s biggest panel maker – the biggest panel maker in the world – Suntech Power Holdings, has needed emergency funding from the government in the city of Wuxi, where Suntech is headquartered, to stay afloat. The giant wafer-maker LDK Solar has also gotten state help, selling a 20 percent stake to state-run Hen Rui Xin Energy for $23 million, BusinessWeek reported.