Wind Turbines

Chinese wind turbine manufacturing at all time high amid global supply chain constraints

What’s happening? In 2023, Chinese wind turbine orders soared to a record high, reaching approximately 100 GW, according to Wood Mackenzie research. The report revealed it is the second consecutive year surpassing 90 GW in annual order intake. Despite a robust order pipeline, only half of the 2022 turbine orders were completed by the end of 2023. Goldwind clinched the top spot among Chinese wind turbine original equipment manufacturers (OEMs) with a 17.7% order intake share. Envision followed closely with 17.4%, also leading in overseas orders at 4.1 GW. Despite strong order intake, intense competition pushed turbine prices to a new low, impacting OEMs’ financial performance with significant profit reductions by Q3 2023. ( 

Why does this matter? Clean energy is now the biggest driver of China’s economic growth, following a year of record investment. However, in 2023, China’s emissions increased by 5.2%, meaning a record fall of 4-6% is now required to meet the government’s 2025 emissions target, according to a new analysis from Carbon Brief. The rise in China’s emissions is partly due to a carbon-intensive post-Covid 19 pandemic response, spurring an increase in coal and oil use. Coal use, for example, increased by 3.3% in 2022, despite the government committing to “strictly limit” coal demand. 

Unprecedented pace – Over the past five years, China has been responsible for 40% of the world’s renewable capacity installation. The US has struggled to keep pace with China, despite significant financial incentives provided in the Inflation Reduction Act. Rather, domestic natural gas infrastructure has been expanded at unprecedented speed amid fears of energy shortages. A 2023 report by the North American Electric Reliability Corporation (NERC) predicts that up to 300 million North Americans will face energy shortages this year due to surging demand from the tech sector and the electrification of buildings and vehicles.  

Global demand growth – On a global scale, energy demand is expected to increase by 50% compared to 2020 levels by 2050. One facet of the increase spawns from the continually expanding demand for digital services, including AI. Currently, data centres and data transmission networks account for 2-3% of global electricity use, according to the International Energy Agency. There is no sign of this figure decreasing – fuelled by the pandemic, the global data centre market is expected to grow at an annual compound rate of 4.5%. 

Supply chain woes – Powering the new digital age sustainably will require the widespread adoption of renewable sources of energy. The US, however, has been hampered by supply chain woes over the past two years, heavily affecting the offshore wind industry. For example, Vestas, the world’s largest wind turbine manufacturer, recorded a loss of €1.7bn ($1.8bn) in 2022. Similarly, Ørsted, the world’s largest offshore wind developer, has weathered a turbulent two years, recently announcing 800 jobs would be cut. Last year, US market constraints and supply chain issues forced the company to abandon several projects, leaving impairments valued at over $5.6bn. These obstacles present a short-term market risk to the US’ green energy sector. 

Regulatory measures – In Europe, efforts to regulate Chinese renewable imports have ramped up. Last year, Chinese solar panels flooded the EU market, collapsing domestic production. The imported solar panels were around half the price with comparable quality. Now, the CEO of Siemens Energy warns that Europe’s wind power sector faces collapse akin to its solar industry if action isn’t taken against “cheap” Chinese wind equipment. Proposals include quotas or qualitative criteria to bolster the EU’s wind sector and counter Chinese competition. Siemens, struggling with losses, recently sought €7.5bn in German government loan guarantees. 

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