In 2012, China’s wind power industry faced a severe downturn, marked by widespread losses, an alarming rise in wind curtailment rates, and a struggling macroeconomic environment. Companies were also dealing with limited market access and poor policy support. The question on everyone’s mind was: how long would this “winter†last for the Chinese wind power sector?
According to a source from Longyuan Power Group, it could take 2–3 years for the industry to recover. This view is widely shared among industry veterans who believe that the challenges are deep-rooted and require time and structural changes to resolve.
One of the biggest issues has been electricity curtailment. In 2011, wind turbines across China operated for only 19 hours a day, leading to over 100 billion kWh of wasted energy and losses exceeding 5 billion yuan. By 2012, the situation had worsened, especially in Inner Mongolia, where wind curtailment reached as high as 50%, and in some areas like Hulunbeier, it even hit 80%. Qin Haiyan, Secretary General of the China Wind Energy Association, noted that these figures were not isolated incidents but rather the new normal.
The financial impact was immediate. Wind power developers saw their revenues shrink dramatically. Datang Renewable Energy reported a loss of 856 million yuan in the first three quarters, compared to a profit of 386 million yuan the previous year. Huaneng New Energy’s net profit fell by more than 50% in the first half of 2012. Equipment manufacturers also suffered, with companies like Huarui Wind Power losing 280 million yuan in the third quarter, and Goldwind reporting a loss of 3 billion yuan after restructuring. Even Vestas, one of the world's largest wind turbine manufacturers, lost 345 million euros in the first nine months of the year.
Liu Qi, deputy general manager of Shanghai Electric Wind Power Equipment Co., Ltd., stated that none of the top ten wind turbine manufacturers were immune to the crisis. The pressure was mounting from all sides—both internal and external.
The problem wasn’t just technical. In regions like Xinjiang, Gansu, and Inner Mongolia, the installed capacity of power generation far exceeded local demand. For example, Inner Mongolia generated 297 billion kWh of electricity last year, yet its maximum load was only 21 million kW. The lack of transmission infrastructure made things worse. In Gansu, there was only one major line under construction, while in Xinjiang, transmission lines were still in early stages. Inner Mongolia hadn’t approved any new transmission lines for seven years.
Compounding the issue was the conflict between wind power and thermal power. In the northern wind belts, wind power often had to give way to coal-fired plants due to planned power quotas. During heating seasons, the tension between wind and cogeneration units became even more intense.
Human factors also played a role. A major incident in 2011 at Jiuquan, Gansu, led to blame being placed on wind farms lacking low-voltage ride-through capabilities. Many wind farms were restricted from operating because they hadn’t passed tests from the State Grid Power Research Institute.
Zhang Fusheng, general manager of Inner Mongolia Electric Power Co., Ltd., noted that the grid could handle more than 20% of wind power without technical issues, but the real challenge lay in balancing interests among various stakeholders.
Another overlooked factor was the sharp decline in carbon credit revenue. CDM projects once brought nearly 10 billion yuan to China’s wind power sector, but with international carbon prices plummeting from nearly 30 euros per ton to less than 1 euro, the value dropped drastically. Guo Wei of CCDC described the situation as “selling pork for cabbage.â€
Additionally, the lack of control over carbon trading operations by developers accelerated the decline. When contracts were breached, companies like Huaneng New Energy struggled to protect their rights. As Wang Wei of Longyuan Power Carbon Assets said, carbon asset prices were expected to continue falling in the short term.
Internationally, the global economic slowdown also impacted the industry. Chen Hao of Sinoma Technology mentioned that the “Great Pond†was drying up, and the capital chain for wind power was breaking down.
As a result, developers were forced to scale back projects and delay payments, which directly affected equipment manufacturers and suppliers. Hou Youhua of Inner Mongolia Electric Power Corporation suggested that large-scale wind power development was not ideal at the time.
Companies responded with desperate measures—issuing debt, selling shares, laying off staff, and even halting projects. Goldwind sold subsidiaries, Sany Electric shut down its Zhangjiakou base, and Vestas closed factories worldwide.
Despite efforts from the National Energy Administration to promote new developments such as offshore and high-altitude wind power, progress remained slow. Pilot projects aimed at local consumption, like wind direct-fired power and wind heating, faced high costs and implementation challenges.
Industry insiders predict that fourth-quarter earnings for listed companies will be even worse. Qin Haiyan emphasized that without systemic and policy reforms, increasing wind power integration would remain difficult.
While the State Grid pledged support for renewable energy, its proposal for large-scale deployment of ultra-high voltage transmission has faced criticism from experts concerned about safety, cost, and technology.
China’s wind power industry is at a crossroads, struggling to break through despite ongoing efforts. The road to recovery remains uncertain and long.
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