Chinese wind-turbine manufacturers suffered dramatic profit falls in the first half of this year as stricter controls on development slowed the industry's growth in its home market.
Sinovel, China's biggest turbine maker, saw its turnover to June fall by nearly a third to CNY 5.325 billion ($835 million), with operating profits plunging by 61% to CNY 535 million.
Results were only slightly less negative for Goldwind, China's second-largest manufacturer, which saw its turnover fall by 17.61% to CNY 5.194 billion and operating profits fall by 45.6% to CNY 526 million.
Other leading listed wind-turbine makers, including Mingyang, XEMC, Dongfang Electric have shown similar declines in the first six months of this year.
Industry officials say Chinese wind-turbine makers are suffering because of more expensive raw materials and falling turbine prices due to greater market competition. Demand for turbines from wind-farm developers was falling too. Sinovel's orders to June were 4% lower than for the same period last year.
The pace of wind-farm construction has slowed down following China's decision to impose stricter controls on their construction, including withdrawing project-approval rights from local governments and raising thresholds for grid-access technologies and testing requirements.
Market analysts believe the first-half profit falls will act as a brake on what has been to date astonishing growth in China's wind power industry, paving the way for a "healthier development" of the sector in the future. Since 2006, China has realised three-digit annual growth in installed capacity for four consecutive years. At the end of 2010, China replaced the US as the world's top country in cumulative installed capacity, and now boasts 45.7GW.
In this process, the number of China's wind turbine manufacturers bloated to nearly 100, which sparked ferocious price battles for a slice of the market. In 2011, wind turbine prices continued to drop, from CNY 6.5 million per megawatt in 2008 to the current price of less than CNY 3.5 million.
Qin Haiyan, secretary general of the China Wind Energy Association, said market competition over prices and quality will facilitate full industrialisation of the wind-power sector.
Qin said developers are making higher and higher demands on the credibility of wind turbines. Only businesses with large funds, strong technologies and business capacities will survive.