China's wind turbine OEMs advance global dominance shows report

The latest report released by Wood Mackenzie shows global wind turbine order intake reached new highs in H1 2024, with activity in China driving demand and Western OEMs struggling to compete.

A new record of 91.2GW of activity was achieved in H1 mainly due to order intake in Q2, which exceeded 66GW due largely to demand in China’s northern region.

The report highlights that in addition to 70GW of orders for its domestic market, China also captured 5GW of orders abroad, reflecting a growing trend of acceptance of Chinese turbines overseas.

“Chinese OEMs continue to break records for order intake on activity both domestically and abroad,” said Luke Lewandowski, vice president, global renewables research at Wood Mackenzie in a webinar highlighting key report trends.

“Conversely, western OEMs are struggling to keep pace, challenged by China’s competitive advantages in pricing and availability. Soft demand in Western markets as well as policy uncertainty, inflation, and other cost pressures have also driven down activity in the US and Europe. China remains the undisputed leader in the industry.”

China is dominating with over 80% of order share in the first half of this year. This leaves Western OEMs with less than 15% market share in H1, according to the report.

While only 20GW of turbines were ordered outside of China, Chinese OEMs ordered 36GW of turbines in the 5.0 - 6.9MW class in H1 2024. Chinese OEMs also more than doubled the order book for 16MW+ class turbines for offshore in H1, with intake of 16MW+ turbines rising 57% YoY.

Said Lewandowski: "The Chinese market has now flipped the switch, they are now leading deployment of these larger machines both based on rotor diameter and on capacity rating..."

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Reasons for China's growth

According to Yuan Ren, management consultant, China wind power at Wood Mackenzie, China's growth can largely be attributed to a robust five-year growth plan, which has seen provincial governments and developers prioritise project development.

Also, China is able to compete in terms of price due to the consistent deployment of next-generation turbines and the competition between Chinese turbine OEMs.

The Chinese market is so competitive, said Ren, that the price has dropped to the point of impacting OEM profits. OEMs have had to take several measures to secure their financial performance, such as ensuring reasonable bidding prices and securing project development opportunities with high margins.

To mitigate these profit losses, Chinese OEMs are now focused on expanding into foreign markets, where high profits can be obtained.

Moving beyond local dominance

Chinese turbines are growing in popularity with Western developers for several reasons.

The report highlights that Chinese wind turbine OEMs have worked to improve their track record overseas.

And as developers in the West face increasing cost pressure, Chinese turbines become even more attractive as they can leverage local economies of scale and production capacity.

"Based on our analysis, despite increased cost compared to domestic turbines, exported Chinese turbines maintain a 25% to 32% price competitiveness in overseas markets compared to their Western peers," added Ren.

Endri Lico, principal analyst, wind supply chain and technology - internal projections and industry reactions - reiterated that many Western OEMs have declared low or negative profit margins due to supply chain pressures, geopolitical tensions, raw material costs and reliability concerns, "therefore they prioritise profitability over volumes opening the door to growth of Chinese players."

Said Lico: "Chinese OEMs are ready to capitalise on the struggles faced by Western OEMs and are forecast to maintain more than 60% of the global wind turbine market share, thanks to domestic scale in China and growth of exports."

Listen in to the EU Energy Projects podcast, where host Areti Ntaradimou discusses Mario Draghi’s report on European competitiveness and its implications for the energy sector with Kristian Ruby, secretary general of Eurelectric, and Patrick Clerens, secretary general of The European Association for Storage of Energy (EASE).

However, the report highlights that China still has hurdles to overcome in its quest for dominance.

Chinese wind turbine OEMs need to overcome the local content policies in overseas countries. Chinese OEMs need to expand manufacturing abroad in a way that boosts public opinion, contributes to local economic development, and reduces logistical complexity.

Also, Chinese OEMs have failed to comply with Western standards and bankability requirements in the past. There is still a way to go to meet these standards and ensure transparency, but the path to get there is visible, claims the report.