China’s increasingly more cost-effective wind turbines have the potential to open up new markets.
According to an S&P Global report published in late September, China’s ability to consistently manufacture and sell turbines below the European and US market average makes expansion into the often energy-deprived regions of Asia, Africa, Latin America and the Middle East an attractive proposition for all parties.
Chinese firms like Xinjiang Goldwind Science and Technology Corporation and Mingyang Smart Energy Group enjoy massive success at home but have yet to find a foothold in the international market.
China reportedly installed roughly 17 gigawatts of wind energy worldwide, more than the combined global installations over the last five years, according to a 2022 Forbes article.
Despite the domestic appetite for renewable wind energy, suppliers like Goldwind and Mingyang feel the cold shoulder of European and US markets that have pre-existing relationships with established local players like Vestas Wind Systems and Siemens Gamesa Renewable Energy.
At present, Chinese-built turbines cost roughly half the international average, according to S&P analyst, Indra Mukherjee, positioning suppliers well for unobstructed expansion into the African, Middle Eastern and Latin American markets.
Turbine manufacturers in China enjoy the backing of the world’s largest steel industry, seemingly immune to the volatile price swings experienced in the global market.
Prices for other core materials like resin have also dropped significantly, with many western firms opting to source materials and parts from Chinese suppliers, according to Norman Waite, an energy finance expert at the Institute for Energy Economics and Financial Analysis.
Some researchers believe the West’s unwillingness to partner with Chinese suppliers may lie in the European Union’s comparatively prohibitive standards and regulations, and that the relatively young Chinese wind turbine industry is still lagging technologically.
While that may be the case, firms like Mingyang Smart Energy have made massive leaps in their research and development. For example, Mingyang is expected to bring a monstrous 16-megawatt turbine to market – something western competitors have yet to match in terms of unit scale.
According to data released by Xinjiang Goldwind, Chinese suppliers will have a busy final quarter. The firm’s overseas order backlog accounted for roughly 2.6 gigawatt’s worth of installations as of June this year (the same release reported 168 megawatts in Europe and just 4 megawatts in the US).
Mingyang has agreed to a memorandum of understanding with the UK for the construction of a turbine blade manufacturing plant. It follows a recent report that said Mingyang would deliver 30MW to Italy.
Given the economic climate in Western Europe and the US, the Chinese are presented with the ideal conditions to ramp up their international ambitions, believes Waite
https://www.spglobal.com/marketintelligence/en/news-insights/blog/insight-weekly-september-20-2022
