De-localization of Wind Power Facilities

Previously, there was a policy in China stipulating that 70% of the wind power facilities used in this country should be made in China. Now the policy has been canceled.

The policy started to work five years ago. On January 13, Shi Lishan, Deputy Director of New Energy Department, State Energy Bureau, confirmed that China had already canceled this stipulation for the requirements of the USA and Europe as well as the consideration of the development of its own wind power industry.

It was known that no publication of the cancellation was available before middle January, but written documents have already been issued to the relevant departments of local governments and were officially implemented at the same time.

Mao Pengling, chief engineer of Shanghai Fiberglass Research Institution, said that the cancellation would bring about the strongest impact upon the Chinese domestic wind power facility manufacturers for they would have no subsidies from the government. For the parts manufacturers, the impact is less strong. Actually, there have been leading enterprises in China to drive the whole industry’s development.

Positive for Technological Advancement

In 2005, the National Development and Reform Commission (NDRC) issued the Notice on NDRC’s Requirements of Construction and Management of Wind Power Industry, stipulating that 70% of the wind power facilities should be made in China and the wind power plants which failed to meet the requirements were not allowed for construction.

Encouraged by the policies, the installed wind power capacity in China started to increase by 100% from 2006. Then the government issued a series of policies concerning subsidies, giving more support to the domestic wind power facility manufactures.

In 2009 the newly installed wind power capacity in China was 8 million kWh and in 2010 the installed capacity is estimated at 20 million kWh. China has had the fourth largest installed wind power capacity in the world and will be the No. 1 in only a few years.

According to the data from the National Energy Bureau, 76% of the newly installed wind power facilities in China wee made in China and 62% of the market share belonged to the domestic enterprises. Sinovel Wind Group Co., Ltd, Goldwind Science and Technology Co., Ltd and Dongfang Electric Corporation took more than half of the market.

According to Shi Lishan, some foreign enterprises thought that the policy impaired their competition power in China; on the other hand, the aim of issuing this policy was to protect the starting wind power enterprises in China. After years’ development, the domestic wind power enterprises were strong enough to deal with the competition. Therefore, the cancellation of the policy was positive for the development of domestic wind power enterprises.

“In my opinion, the suggestions from the foreign companies certainly played a role in the policy cancellation. Because the demand for the wind power in Europe and America is small, the European and American enterprises keep attaching more importance to the Asian market. Most of them have manufacturing bases in China and are well equipped with everything from raw materials to assembly line. However, due to the restrictions, their large investments can not yield profits. That’s why they had complaints about the policies,” said Mao Pengling.

Restructurings May Happen

However, the cancellation of the protection policy has raised the worries among the Chinese domestic wind power facility manufacturers. According to the report of the National Energy Bureau issued last December, more than 70 domestic companies have already got into wind power industry or plan to be involved. Compared with the foreign companies, most of the domestic enterprises are on the losing side for small production capacity and weak competitive power.

The cancellation of the policy will not bring great impact upon the big wind power facility manufacturers because have thermal power business in addition to wind power. However, those small companies which are only engaged in the wind power industry may face great trouble.

Mao Pengling said that the cancellation would promote the restructurings in the domestic wind power market.

The world’s largest wind turbine manufacturer Vestas from Denmark assigned its spokesman in China Liu Yanjun to tell the media that the cancellation of the protection policy is very important for the foreign wind power facility manufacturers to see great development in China.