China’s wind turbines get ever cheaper as price war hits profits

CHINA’S wind turbines will get even cheaper next year, supporting exports as products from western competitors become more expensive, according to one of the country’s leading manufacturers.

Export prices will drop by 15 per cent to 20 per cent per kilowatt of capacity in 2023, according to Zhejiang Windey, one of China’s top four turbine makers, as newer units become more efficient and other technological advances are made.

“We expect the price advantage of Chinese turbine makers to continue to expand in the next two years,” Yu Yong, general manager of the company’s overseas business division, told the BloombergNEF Shanghai Summit on Wednesday (Nov 30).

Prices in China have dropped sharply amid fierce competition in the highly fragmented market, which is already starting to hurt profits. Prices hit a record low in the first half, marking a 42 per cent decline over two years, according to BNEF. In the rest of the world, they’ve risen 18 per cent over that period because of higher commodity and shipping costs.

China is selling more turbines overseas, especially in South-east Asia, although a few contracts have been won for offshore projects in Europe and Japan. Chinese companies exported 1.6 gigawatts of turbines last year, up 60 per cent from 2020, according to BNEF, although that’s just a sliver of domestic installations, which are at 21 gigawatts so far this year.

Falling prices have raised concerns within the industry that quality could suffer. The price war “is not sustainable in the long term,” said Li Sisheng, a general manager at PowerChina International Group, the overseas division of China’s largest power plant builder.

“We should put safety, quality and technology first,” Li told the summit. “Otherwise, if we keep fighting the price war, it will only lead to a mess for the market, and then life will be difficult for everybody.” BLOOMBERG