CRI听力: Turbulence ahead for China's Wind Sector

Although the wind energy industry in china is relatively young, it is already second only to the United States in terms of capacity for generating electricity. But a recent report from Citi Bank warns of tough times ahead. It says the next two years could see up to three quarters of Chinese wind turbine manufacturers go out of business. But some say this may not necessarily be a bad thing. CRI's Dominic Swire has the story.

Wind energy is booming. Figures from the World Wind Energy Association show that wind-generated electricity across the world has grown by 10 times since 2001. China is leading the way, more than doubling its capacity in 2009 for the fourth year in a row.
 
However, a recent report from Citi Bank suggests that there could be a wind of change on the way. The reason is because Chinese wind turbine manufacturers are producing turbines at a faster rate than they can be used. Citi Bank's Pierre Lau is the author of the report. He explains why this is happening.

"The location of wind farms are usually in remote areas. Power grids have to extend their network to those remote areas for the connection."

Another reason, he says, is that many local authorities are keen to build wind farms to boost their local economy without necessarily thinking about how or when the electricity can be distributed. The result is overcapacity. Last year, Chinese wind turbine manufacturers could have produced enough turbines to generate 25GW of electricity, but only 16GW was installed. Citi Bank's Pierre Lau explains the problem:

"If your family only needs to drink 16 litres of milk per day, but your cattle can produce 25 litres, that's more than you need. Would you say 'let's drink 25 litres'? Do you really need it?"

The Citi Bank report says this over capacity could result in a fall in prices, which is likely to put many of the smaller wind turbine manufacturers out of business. It predicts a drop in the number of manufacturers from 80 to 20 over the next two years.
 
However, not all see this as bad news. Alvin Lin is an energy expert at the China branch of the US-based environmental group, the Natural Resources Defense Council.

"I think, just as in the solar industry, for example, a lot of companies bought up factories to get into the solar industry but they weren't necessarily making the best products. I think that's probably the case with the wind industry, so you may want to see fewer wind companies that have higher levels of quality, which will improve the efficiency of their turbines."

The World Wind Energy Association says that Chinese companies are now recognized as some of the best wind turbine manufacturers in the world. But up till now they have mainly focused on supplying the domestic market. If industry consolidation is able to result in better quality products, Chinese manufacturers will be hoping this can help them break into foreign markets.

For CRI, I'm Dominic Swire.