China’s Wind Power Industry Shows Overall Recovery

China’s wind power market is ushering in a second prosperous period after nearly three years in the doldrums, with many publicly listed companies seeing better results.

During the first quarter of 2014, Goldwind Science & Technology Co., Ltd booked business revenue of 1.43 billion yuan (US $233 million), up 50.8 percent year on year, and a net profit of 50.8 million yuan (US $8.24 million), up 56.5 percent year on year. The company also expects to realize a net profit between 324 million yuan (US $52.6 million) and 370 million yuan (US $60.1 million) for the first half of this year, up 250 percent to 300 percent year over year, far exceeding market expectations. 

Along with the improvement in overall performance, Goldwind’s sales price for wind power equipment is also picking up. During the first quarter of this year, the company’s gross margin reached 32.2 percent, up 10 percentage points from the fourth quarter of last year and up nearly 15 percentage points from the first quarter of last year, mainly due to the recovery of the gross margin on wind power equipment.

Bidding prices of wind power equipment in China have also jumped: the average bidding price for a 1.5-MW wind turbine was only 3,600 yuan (US $585)/kW in June 2011, a historic low. However by the end of last year, the price rebounded to between 3,800 yuan (US $617) and 3,900 yuan (US $634) /kW.

Huayi Electric Apparatus Group, a Chinese wind power equipment manufacturer, witnessed business revenue of 361 million yuan (US $58.6 million) during the first quarter of this year, up 56 percent year on year, and a net profit of approximately 28.2 million (US $4.58 million) yuan attributable to shareholders of the listed company, up 1,062.4 percent year on year. Moreover, Huayi expects its net profits during the first half of this year to increase over 1,500 percent year on year.

The significant increase in the number of bids for wind power equipment has heightened the expectation for consistent improvement in the performance of wind power manufacturers. During the first half of this year, bids for the equipment in China exceeded 11.5 GW, including 7 GW during the first quarter and over 4.5 GW during the second quarter, up approximately 30 percent from the 8.8 GW during the first half of last year.

To reach the goal of 18 GW in new wind power capacity for 2014 set by China’s National Energy Administration (NEA) at the beginning of this year, the industry needs to purchase about 60 billion yuan (approx. US $10 billion) worth of equipment. The installation capacity this year is expected to exceed this figure, and may even reach 22 GW, as forecast by some insiders. 

The size of requests for bids being sent out by many power companies reflects confidence in the future of the market, said an industry analyst. Furthermore, the building of cross-regional power transmission lines can lead to far less facility abandonment (turbines that are not connected to the grid) and more grid-connected capacity. During the first half of this year, the average wind power abandonment rate was only 8.5 percent, down 5.14 percentage points year on year, according to NEA statistics.

Lead image: Wind turbine via Shutterstock

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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 editorial bureau in Nanjing overseeing 33 translators, editors and IT support personnel. Ms. Liu brought her many years experience of delivering, under deadline, more than 200 English-language news summaries of articles selected from Chinese-language newspapers and newswires daily as well as supervising the timely completion of 500,000+ word English-to-Chinese translation and localization projects to her role as co-founder and general manager at Shanglong. Ms. Liu joined Shanglong in 2002. In 2006, she added China Business News Service to the product suite – the service provides a continuous flow of well-researched and documented news articles to trade publishers and industry-specific websites looking to supplement their content with the latest news from China in their sector. She manages Shanglong's staff of translators, editors, desktop publishing specialists and support staff, selected from the top universities across China and well versed in the art of translation and in the technology of DTP. Ms. Liu graduated from the People’s Liberation Army Institute of International Relations - China’s elite military academy responsible for the training of the country’s foreign language specialists.

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