China breezes to the lead of offshore wind power race

China accounted for 80% of all new global offshore wind capacity in 2021.

New offshore wind power capacity tripled worldwide in 2021, according to industry data, driven by China in a buildup that is transforming the industry.

Last year, 21.1 gigawatts of offshore wind generation was commissioned last year, according to the Global Wind Energy Council, roughly equivalent to 21 nuclear reactors.

The size of the expansion in 2021 alone accounts for about 40% of the total of 57.17 GW of offshore wind power to date.

China is responsible for the bulk of this growth. The country commissioned 16.9 GW of offshore wind capacity last year, or 80% of the total, more than quadruple the volume in 2020.

In comparison, Europe added 3.31 GW in 2021 — a modest 13% gain that was overshadowed by Chinese investment. Japan only installed 50,000 kW worth of offshore wind farms through last year. Tokyo has set a goal of having 10 GW worth of wind power in place by the end of the decade.

One factor that fueled China’s surge in wind farms was a change to the government’s feed-in-tariffs.

In 2019, China’s National Development and Reform Commission told operators that new offshore wind capacity approved through the previous year must be connected to the grid by the end of 2021 to qualify for the subsidized power pricing.

Furthermore, the tariffs would be reduced each year. Operators looking to lock in the highest possible selling price moved en masse to build offshore wind farms.

Beijing’s intervention into the wind industry also provided a boost.

“In China, provincial governments select the maritime area to be developed and the power provider, and the central government grants the authorization,” said Wang Jiayang, senior research fellow at the Tokyo-based Renewable Energy Institute.

Because renewable energy is seen as a foundation for economic growth, “provinces are competing in a development race to build supply chains involving local companies,” said Wang.

Backed by such domestic growth, Chinese wind turbine manufacturers have gained international clout. They captured first through fourth place in terms of offshore wind turbine capacity last year, according to data from BloombergNEF.

The leading non-Chinese maker was Denmark’s Vestas Wind Systems, ranked fifth. Spain-based Siemens Gamesa Renewable Energy, which boasted the global lead from 2017 through 2020, dropped to sixth place last year.

The new champion, Shanghai Electric Wind Power Group, was established in 2006 as an arm of Shanghai Electric Group. The company derives its strength from its wide range of products, with the generating capacities of its turbines ranging from about 1,250 kilowatts to over 8,000 kW.

Runner-up Mingyang, also founded in 2006, successfully operated a floating offshore wind turbine last year.

Even in Japan’s fledgling wind market, Chinese enterprises are starting to move in. Venti Japan plans to use Mingyang’s turbines for a wind farm off Toyama Prefecture. The project originally called for using Hitachi turbines, but the company has exited the business. Mingyang was chosen because the size of its turbines was better suited for the project than Western rivals.

European players took the lead in mass production and making larger turbines, which cut costs and expanded their market shares. Chinese rivals answered their vast domestic demand by investing heavily in mass production, building upon technology and performance along the way.

Now Chinese players are positioned to break out of the domestic market and challenge European competitors for global sales. China came to dominate the global solar panel industry through a similar evolution.

The global offshore wind market is anticipated to grow strongly this year as well. In China and the rest of Asia, 5.9 GW worth of new offshore farms are expected to be commissioned in 2022, according to the Global Wind Energy Council, while Europe will see 2.8 GW of new offshore wind farms installed.

Although China’s momentum is expected to weaken, the country will still remain the driver of international growth. European turbines are becoming costlier due to higher commodity prices, but because China can self-supply much of the raw material and fuel, Chinese makers can gain some cost advantage.

Japanese players have plans to work with Western wind turbine makers to develop floating units. One target market is Southeast Asia, a region lagging in renewable energy development.

Source: Nikkei Asia, June 15, 2022. https://asia.nikkei.com/Business/Energy/China-breezes-to-the-lead-of-offshore-wind-power-race