Even though wind speeds in the first half of 2014 were generally lower than in the same period last year, China's new installed capacity easily made up for the shortfall. In the first six months of the year wind power facilities fed 76.7TWh of electricity into the grid, an 8.8% increase on the equivalent period the year before.
According to the China Wind Energy Association (CWEA), the country installed 16.1GW of wind turbines in 2013, driving cumulative installations to more than 90GW, well over a quarter of the world's total. But figures released by the National Energy Administration (NEA) revealed that "only" around 77GW of that had been connected to the grid by the end of the year.
China's target for 2014 is to exceed last year's new build, ensure that at least 90GW of wind capacity is connected to the grid, and further reduce curtailment. All the indications are that it will succeed in these aims.
Investment in the wind power sector has been accelerating this year. By the end of the first quarter, tendering for turbines reached 7GW in combined capacity, up 83% on a year before. Confidence has been boosted by the ambitious plans some of China's leading wind developers announced early this year.
The China Guodian Corporation, parent company of Longyuan Power, set itself a 2014 target of 50% more than the 1.75GW it installed last year. If it achieves that, it will own more than 20GW of wind capacity by the end of the year. Huaneng New Energy, which installed 1.33GW in 2013, announced a similar plan to boost installation by 50% this year. Not to be outdone, Datang New Energy declared its ambition to surpass last year's 821MW of new installed capacity by 60%. The government's new-build target for 2014 is 18GW, but industry watchers believe that 20GW is attainable.
According to NEA statistics, the curtailment rate is falling rapidly, from 17% in 2012 to an average of 11% through 2013, standing at 8.5% for the first half of 2014.
And curtailment is to be reduced further, thanks to developments of the grid infrastructure, especially high-voltage transmission lines.
Early this year, the state power grid confirmed that 12 lines for transmitting electricity from the west to the east had obtained state approval. These include four alternating current extra-high voltage (EHV) lines, five direct current (DC) EHV lines and three 500kV transmission lines. According to feasibility studies, each DC line requires an investment of CNY 25-33 billion ($4-5.3 billion) and each AC line amounts to CNY 36 billion.
The strategy of distributing wind installations to regions where electricity is in greater demand may also help reduce curtailment. This is reflected in the fourth instalment of NEA provisional approval of wind projects, announced in February, which granted 60% of the 27.6GW projects to more developed low-wind areas in central, eastern and southern China.
Measures are being taken on a trial basis to allow wind to power heating facilities in winter and fine-tune the administration of rationed grid feed-in on different power sources. Successful trials show these measures help solve the curtailment problem, too.
Offshore wind is considered another solution to avoid curtailment, because China's coastal areas are usually more developed and have high load demand. Grid conditions are often better as well.
In a written notice dated 5 June, the NEA put forward its first programme for an offshore wind-power grid feed-in tariff (FIT). The document put FIT rates, which will be for offshore wind at CNY 0.85/kWh ($0.136/kWh) and for intertidal installations at CNY 0.75/kWh. Qualifying projects will receive these rates for 20 years.
The long-awaited policy received a mixed response. While recognising its positive impact on offshore wind development, many industry players complained that the rates were too low. The present scheme is valid for about two and a half years. Then it will be revised by taking into consideration technological advancements and changes in development cost, as well as the results of concession tendering, NEA says.
China started building its first offshore wind project in 2008, the 100MW Donghai Bridge demonstration wind farm with 34 Sinovel turbines in Shanghai, which was completed two years later. But progress since then has been slow. By the end of 2013 China had just 428MW installed offshore, leaving it lagging behind countries such as Denmark, Belgium and Germany, and well adrift of the offshore market leader, the UK.
China's official target for offshore wind is an installed capacity of 5GW by the end of 2015. Few industry observers believe this will be achieved.
The government is reportedly considering introducing compulsory quotas for renewables on the country's energy players, which would be good news for wind. The policy is expected to be announced later this year.
The Chinese wind industry has struggled with turbine overcapacity in recent years, and although the problem is far from over, the situation is improving. The number of turbine manufacturers in the country has dropped from more than 80 in 2009 to around 30 now, while the average price of a turbine has climbed from its lowest point of CNY 3,600/kW in June 2011 to the current price of around CNY 4,100/kW. "Turbine manufacturers as a whole have bidden farewell to loss-making," said Qin Haiyan, CWEA secretary general, at an investment forum in June.
With the market picking up, manufacturers are making more efforts to develop machines with better quality, enhanced performance and adapted to varied wind and environment conditions such as low speed, typhoon, high altitude and offshore.
Enjoying domestic market shares of 23.3% in new and 20.79% in cumulative installations in 2013, Goldwind is indisputably China's top turbine manufacturer. Its domestic success has made it the world's number-two turbine supplier, with an 11% share of the global market in 2013, second only to Vestas' 13%, according to Navigant Research's BTM World Market Update. Last year, two other Chinese firms also made it into the world top-ten - United Power (eighth) and Ming Yang (ninth).
Former giant Sinovel retained second position in cumulative installations in China, but dropped to seventh place with 5.6% share of domestic market in new installations — compared with 23.2% in 2012 - overtaken by United Power, Ming Yang, Envision, XEMC and Sewind. Sinovel is struggling to turn deficit running into profit making. If it registers another period of negative growth at the end of the year, the company will probably be delisted on the stock market.
According to CWEA, at least 17 Chinese turbine manufacturers were active in overseas markets in 2012-13, from selling equipment, investing in wind farms or setting up offices. Their business activities engaged all continents except Antarctica, with the US and Europe the main destinations.
Goldwind contracted supply deals in seven countries — the US, Thailand, Chile, Australia, Romania, Panama and Cuba. Sinovel exported turbines to Brazil, Turkey, Italy and Spain. Ming Yang's overseas business extended to the US, India, Bulgaria, Romania and Cyprus.
The standard warranty on a wind turbine in China ranges from two to five years, which means that an increasing number of machines are now coming out of their warranty period. The operation-and-maintenance (O&M) market could be worth CNY 100 billion by the year 2020, analysts say. However, the O&M service is a new game that Chinese companies must learn to play. A couple of far-sighted companies, such as Goldwind and Longyuan, as well as some third-party firms, are doing pioneering work in this sector. But the market is yet to determine what sort of companies can deliver reliable and cost-efficient O&M service in China.