In 2012, China's wind power industry faced a severe downturn, marked by widespread losses, a dramatic rise in wind curtailment rates, and a weakening macroeconomic environment. The sector was also struggling with a lack of policy support and corporate engagement. How long would this "winter" last for China’s wind power industry?
According to a source from Longyuan Power Group, the industry might take 2–3 years to recover. This prediction has been echoed by many industry experts, signaling a prolonged period of challenges.
One of the major issues was electricity curtailment. In 2011, wind turbines across China were idled for an average of 19 hours per day, resulting in over 100 billion kWh of wasted energy and losses exceeding 5 billion yuan. By 2012, the situation had worsened. In Inner Mongolia, wind curtailment rates reached as high as 50%, while the "Wind-Fire Trading" pilot project in Hulunbuir hit an alarming 80% rate. Qin Haiyan, Secretary-General of the China Wind Energy Association, noted that these figures were not isolated incidents but rather the new normal.
The impact on developers was significant. Datang Renewable Energy reported a loss of 856 million yuan in the first three quarters, down from a profit of 386 million yuan the previous year. Huaneng New Energy saw its half-year net profit drop by more than 50%. These financial struggles rippled through the supply chain, affecting equipment manufacturers. Huarui Wind Power suffered a loss of 280 million yuan in the third quarter, while Goldwind, despite reporting a smaller loss, had to restructure several subsidiaries. Vestas, the global leader, recorded losses of 345 million euros in the first nine months of 2012.
Liu Qi, Deputy General Manager of Shanghai Electric Wind Power Equipment Co., Ltd., stated that none of the top ten turbine manufacturers were immune to the crisis.
Internally and externally, the industry faced multiple challenges. Regions like Xinjiang, Gansu, and Inner Mongolia struggled with overcapacity and insufficient local demand. For example, Inner Mongolia generated 297 billion kWh of electricity last year, yet its maximum load was only 21 million kW. Transmission infrastructure was also inadequate—Gansu had only one major line, Xinjiang had limited capacity, and Inner Mongolia had not approved any new transmission lines for seven years.
In addition, there was a conflict between wind and thermal power. Under China’s planned power system, thermal plants were given priority, forcing wind farms to reduce output, especially during winter heating seasons. Technical limitations, such as the lack of low-voltage ride-through capabilities in some wind turbines, also contributed to curtailments.
Another key factor was the decline in carbon credit revenues. CDM projects had previously brought nearly 10 billion yuan to the sector, but falling international carbon prices—from 30 euros per ton to less than 1 euro—drastically reduced these earnings. Developers who lacked expertise in managing carbon credits were particularly vulnerable, with some facing legal issues after contract breaches.
Economic downturns worldwide further exacerbated the situation. Chen Hao of Sinoma Technology noted that the "great pond" of capital was drying up, leading to tighter financing conditions for wind power projects. As a result, developers scaled back construction and delayed payments, which in turn affected suppliers and manufacturers.
In response, companies resorted to desperate measures. Huaneng New Energy issued 2 billion yuan in debt, Longyuan Power raised 358 million USD, and Datang New Energy issued short-term bonds. Meanwhile, Goldwind sold off subsidiary shares, Sany Electric laid off over 50% of its staff, and Vestas closed factories globally.
Despite government efforts to promote wind power through policies like offshore and high-altitude projects, progress remained slow due to high costs and implementation challenges. Industry insiders predict that fourth-quarter earnings for listed companies will continue to be weak.
Qin Haiyan emphasized that without systemic reforms and policy adjustments, wind power integration into the grid would remain difficult. While the State Grid pledged support for renewables, its plans for ultra-high voltage transmission have faced criticism from experts over safety, cost, and technological concerns.
China’s wind power industry is at a crossroads, with recovery still uncertain.
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