The World's #1 Renewable Energy Network for News, Information, and Companies.

China's Wind Power Sector Struggles with Rare Earth Price Hikes

While an increasing number of wind power equipment manufacturers in China have started to adopt direct-drive permanent magnet technology, rare earth minerals, some of the core raw materials used to produce wind turbines, are becoming a significant barrier to their development.

The recent price surges have forced many industry players to halt production or create a complete industry chain by expanding into the upstream sector. The price hikes are expected to intensify the already fierce competition in the sector, causing those who lack capital and expertise to be squeezed out altogether, according to an industry insider.

Rare Earth Price Skyrockets

China's rare earth prices have risen significantly since July 2010, exceeding 200 percent since the beginning of this year, with some categories reaching 600 to 1,000 percent.

One of the key reasons for the price explosion is the Chinese government’s introduction of a levy on rare earth resources as of April 1 of this year, said Zhou Jianxiong, Chairman of Hunan province-based Xiangtan Electric Manufacturing. In addition, on May 19th the State Council of China released a document outlining the council’s viewpoint on the sustainability and development of the rare earth sector in a move to regulate the market.

According to a report from Guolian Securities, the price of rare earth is expected to continue the upward trend in the second half of this year.

A Bubble Emerges

Following five successive years of impressive growth, China's wind power sector saw its growth rate decline to 37 percent in 2010. With nearly 100 wind turbine manufacturers in China, total production capacity for 2011 is expected to reach 29 GW, far exceeding the actual demand of 15 to 18 GW. This trend is evidence that the rapid development of the wind power market has led to excessive competition and accelerated formation of a bubble. 

Manufacturers Address the Challenge

In response to the soaring raw material costs, Xiangtan Electric Manufacturing plans to adopt advanced processes to reduce its reliance on NdFeB (neodymium magnet), said Zhou Jianxiong. 

"We are currently evaluating the impact of the rare earth price increases on our company. The Chinese government has become aware of the huge pressure facing the high-tech sector, and is promising to take action to stabilize the market price. Meanwhile, our R&D team is committed to reducing process costs while improving the performance of our products," said Yao Yu, director of public relations at Xinjiang Goldwind Science & Technology

Furthermore, gaining direct access to upstream resources is also proving to be a solution to tackle rising costs.

Privately-held Mingyang Wind Power, for example, recently signed a framework agreement with the government of Ganzhou, Jiangxi province, one of China's major rare earth producers. According to the agreement, Ganzhou’s municipal government will first provide Mingyang with rare earth resources and grant exclusive rights to develop wind farms in the city. 

RELATED ARTICLES

Rooftop Solar Panels

Hypocrisy? While Buffett Champions Renewables, His Company Fights Rooftop Solar

Mark Chediak, Noah Buhayar and Margaret Newkirk, Bloomberg Warren Buffett highlights how his Berkshire Hathaway Inc. utilities make massive investments in renewable energy. Meanwhile, in Nevada, the company is fighting a plan that would encourage more residents to use green power.
Renewable Energy Finance

Clean Energy ETFs Are on a Tear

Eric Balchunas, Bloomberg Green investing used to be synonymous with losing money. But while the S&P 500 Index is up 2 percent this year, and the MSCI All-Country World Index is up 5 percent, clean energy ETFs have double-digit re...

Wheels, Towers and Trees: Unconventional Renewable Energy Technologies in the Pipeline

Andrew Williams, International Correspondent A number of companies around the world are developing novel technologies in an effort to grab a slice of the global renewable energy market.  Although many of these technologies are simple incremental improvements to e...
UK Parliament Clean Energy Leaders

UK Government Names Clean Energy Cabinet Members

David Appleyard, Contributing Editor With the UK general election now over and a majority Conservative Party government in place, the re-elected Prime Minister David Cameron has now named key members of the government charged with steering the UK’s clean energ...
Nanjing Shanglong Communications Liu Yuanyuan is Director of Operations and Co-Founder of Nanjing Shanglong Communications. Liu Yuanyuan previously held the position of office manager at the London Financial Times' China translation and editoria...

CURRENT MAGAZINE ISSUE

03/01/2015
Volume 18, Issue 3
file

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in Brazil – in partnership with GWEC, the Global Win...

Brazil is one of the most promising markets for wind energy.  Ranke...

Energy Storage USA 2015

Energy Storage USA is the leading conference in the United States focuse...

Wind Power Central America

Wind power projects are expected to reach 46GW of total installed capaci...

COMPANY BLOGS

SunEdison Expands Residential Market Offerings with New PPA, Sales ...

SunEdison has largely focussed on the commercial and utility-scale solar...

Are You Ready for a Natural Disaster?

Guest post by Jenna Clarke  Living in the Shenandoah Valley of Virg...

Deadline for Inclusion in Solar Power World's Top Solar Contractors...

UPDATE: The official deadline for the Solar Power World T...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS