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As the world increasingly faces energy shortages and climate changes, clean energy has become a hot spot for investment around the globe. Wind energy—with its mature technology, low cost and convenience for large-scale commercial development—is gaining a prominent position in the world’s new-energy landscape.
Thanks to strong government support, China’s wind-power sector has made rapid progress during the past decade. Wind-power equipment manufacturing is enjoying particularly explosive growth. However, constraints on long-term development have also begun to emerge, and the industry is seeing extensive consolidation.Production capacity is soaring, and the technology gap between Chinese companies and their foreign counterparts is shrinking. However, power-grid systems are having difficulty accommodating large numbers of wind-power devices.
China’s wind-power industry started in the late 1980s, but scaling began in 2003. This represents a late start on fast growth compared to growth patterns seen in Western countries. But with the explosion of installed capacity, China now leads the world’s wind-power industry and is pioneering wind-energy development.
During 2003-10, China’s cumulative installed capacity for wind power grew from 1.4 percent to 22.7 percent of the world total, and the compound average growth rate (CAGR) of the country’s installed capacity reached 87 percent. In 2010, China’s installed capacity rose by 18,928 MW, accounting for 49 percent of the world’s total and enabling China to outpace the US.
By 2010, China’s cumulative installed capacity had doubled for four consecutive years, a year-on-year growth of 73 percent to reach 44,733 MW. By contrast, the US had a capacity increment of only 5 million KW in 2010, owing to climate legislation that affected investor confidence in the renewable-energy industry. Meanwhile, China transcended the US and ranked first in the world–for the first time—in cumulative installed capacity.
The lack of core technology has curtailed the development of China’s wind-power industry overall, keeping it dependent on others. This constitutes the biggest obstacle to Chinese wind-power equipment manufacturers’ ranking among the world’s leading players.
As the wind-power market continues maturing, customers are stepping up their requirements. For example, wind-farm operators seek reliable, long-term equipment providers who can deliver expertise as well as global support across the value chain. Therefore, R&D and services will be essential for Chinese wind-power companies striving to win on the international stage.
As much as wind power is still a new industry filled with challenges, China is emerging as a destination of choice for foreign investment in wind power. The world’s leading wind-power equipment manufacturers—including Gamesa, GE Wind, LM, Sulzon and Vestas—are racing to build plants and put them into operation in China.
With the rise of wind-power equipment manufacturing in China, demand is skyrocketing for raw materials from overseas. This is attracting foreign raw material suppliers of wind-power equipment who want to establish a strong foothold in China. Today, China is the world’s largest market and manufacturing base for wind-power equipment.
Claire Yang, Wei Qian and Cherry Lu Cui
October 5, 2012
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