This month the Chinese government formally released a new set of rules and restrictions for wind power equipment manufacturers relating to energy, land, in-house capital and technologies. The standards had been under review for a year.
In particular, two new standards for wind power equipment manufacturers will certainly result in a shake-up of the industry:
In addition, they are required to have a minimum installed generating capacity of 0.5 GW before any expansion.
Harbin Air Conditioning, an air cooler provider in China, announced on that the company will abandon its efforts in the research and development of wind power equipment, due to a combination of fierce competition and the stricter standards for market access. In 2009, the company’s board of directors had approved a proposal to invest RMB30 million (approx. US$4 million) into the research and development of wind power. Its exit is likely to signal the beginning of further consolidation across the wind power sector this year.
China is home to approximately 80 wind power equipment makers, hierarchically divided into three classes. At the top, the three “Class I” wind power equipment gurus including Sinovel, Goldwind and Dongfang Electric Corporation. In the middle, the “Class II” segment, are the leading manufacturers such as Shanghai Electric Group and XEMC Windpower. The wide array of small and medium-sized players falls into the bottom or “Class III” rung. According to Ma Xuelu, deputy director of Chinese Wind Energy Association, at most only ten of them are capable of meeting the new requirements.
Twelve wind power generator makers are listed on China’s A-share market, and expansion remains one of their priorities this year. Some of these industry players however may have to exit the wind power sector, due to difficulties in meeting the requirements. The top 15 wind power equipment makers in China now make up 95 percent of the country’s total production capacity, while dozens of manufacturers have vied for the remaining 5 percent.
Given the relatively high industry consolidation, a good number of the small manufacturers will be forced out or acquired by their larger rivals.
China has overtaken the US as the world's largest wind power generator, installing 16 GW of wind power capacity in 2010 bringing the country's total installed capacity to 41.827 GW.
But Chinese wind power equipment makers still have to tackle several issues, among them, their high dependence on imported equipment, overheated investment activities, repetitive introduction of outdated technologies and lack of core technologies. Quality remains another issue especially if the local producers wish to establish a solid footprint in the sector.
Several equipment makers including Hauneng Tongliao Wind Power have reported quality issues over the past few years.
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