China’s phantom menace in wind power

The Western wind industry has been living for years with the threat of Chinese manufacturers flooding the market with their low-priced turbines. In recent times, this fear has intensified due to the moment of weakness of Western OEMs, which seems to open the door to the Asian giants. But is this threat real? What can we expect in the coming years? Is it true that the wind market may evolve as the solar market has already done towards Chinese dominance?


The Chinese are coming!

As we discussed in a previous article, the generalised price hikes by Western OEMs are opening a window of opportunity for Chinese manufacturers to gain access to customers and markets that were previously off-limits to them. This is explained very well in a recent Recharge article. In fact, looking at WoodMac’s graph on price evolution, it is impressive to see how Chinese OEMs continue to lower prices and the gap with Western OEMs is growing.


And news such as Vensys/Goldwind in Spain or Mingyang’s contract in the UK for an offshore project only increase the fear that the invasion is already underway.


But wait a minute, wasn’t their technology much worse?

As recently as 10 years ago, Chinese manufacturers were selling turbines with Western licences (or without licences with very suspicious resemblances). They were clearly inferior technology, with reliability problems and uncertified. But in just over a decade things have changed completely. As Sergio Fernández Munguía explained very well in his always recommendable Windletter, Chinese OEMs have taken the lead in the development of both onshore and offshore turbines.




As can be seen in the graphs above, companies such as Mingyang, Goldwind and CSSC are currently leading the race for the largest turbines, both onshore and offshore. In fact, industry experts such as Shashi Barla of Woodmac, warn that the pace of development by Chinese companies is not going to slow down; on the contrary, it is expected to accelerate even more.


And size is not everything: they have also worked hard to make the technology more reliable by working with Western certifiers and investing in key technologies such as permanent magnets, blades and control.


So if they are cheaper and better, Chinese turbines are supposed to be everywhere, right?


Not really. To date, Chinese turbine projects outside China are quite few despite the companies’ efforts and aggressive commercial policy. Goldwind has undoubtedly been the most successful of the OEMs.  Let’s look at some examples:


Through Chinese developers

This has been the most common way to enter new markets. Countries such as Vietnam, Australia or Ethiopia have Chinese manufacturers with many of the projects being developed by Chinese utilities. To this must be added the trend of Chinese utilities investing in Western utilities such as Three gorges in EDP.


Through financing

The clearest case is the Belt and Road projects. In Asian countries such as Pakistan and Africa, Chinese companies have arrived as part of the Chinese state’s infrastructure investment plan.


Buying up projects under development

Goldwind entered in Panama in the Penonomé wind farm and in Argentina by directly buying the wind farms under development.


Directly with Western clients

There have been well-known cases such as Enel’s Reinaco wind farm in Chile with Goldwind or Mainstream’s agreements also with Goldwind. But the truth is that these are isolated cases and the big Western developers do not usually work with Chinese turbines.


So what is going to happen in the next few years?

Let’s look at the wind “pie” by country in 2021 as a reference



– It can be seen that half of the market is China, where the local OEMs have 100% of the market, so they cannot grow beyond stealing market share from each other (probably by lowering the price even further).


– The US market will be very unlikely to be accessed for geopolitical and strategic reasons, even more so with the protectionist shift in the US with the Inflation Reduction Act.


– Something similar is happening in Europe where regulation tends to encourage local manufacturing and Chinese manufacturers do not seem very willing to lose their competitive advantage of manufacturing in China at low cost.


– Other future markets such as India, Korea and Japan are quite protectionist and are not exactly “China-friendly”.


In conclusion, there are still Latin American markets, Africa and the rest of Asia, which are precisely where they are already present, so the margin for growth is not very large either.


As for customers, it is clear that the big Western utilities are interested in having OEMs with low prices to put downward pressure on the market, but the reality is that the relationship with Chinese manufacturers is not easy due to cultural and trust issues. In addition, not all projects with Chinese turbines would be bankable (basically only Goldwind) so that is another barrier.


So where does this leave us? Is it a real threat or not?

We have been hearing for years that the wind sector would evolve like the solar panel sector with the invasion of low-cost Chinese manufacturers, but this has not been the case. The complexity of wind technology is a big barrier and currently, the geopolitical and commercial scenario is not likely to help Chinese entry.


Moreover, if we look at the situation of Chinese OEMs, it seems idyllic, reporting profits and with large volumes assured, but as we have seen, they base their business on continuous price cuts to compensate for tariff reductions, they are in a mad race to develop new products without maturing those already launched, they have little room for manoeuvre to increase business without resorting to price cuts and their bargaining power is limited… does this scenario sound familiar to anyone? Exactly, it is the same scenario that has led Western OEMs to their current situation.