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UPDATED: March 5, 2012 NO. 10 MARCH 8, 2012
Still Tilting at Windmills
China's wind power industry faces resistance in the United States and overcapacity at home
By Liu Xinlian

But it will have little to no effect on China's domestic industry due to low export figures, said Shi Pengfei, Vice President of the Chinese Wind Energy Association. China's exports of all wind power products to the United States were estimated at $100 million in 2011. Wind towers are only part of the total.

Titan Wind Energy (Suzhou) Co. Ltd., one of the top wind power producers in China, was listed in the petition. Zou Tao, Secretary of the Board of Titan, told 21st Century Business Herald that the product covered by the investigation is steel towers that support the engine and rotor blades for use in wind turbines with electrical power generation capacities in excess of 100 kw. Titan's exports to the United States were for turbines with less than 100-kw capacity.

Zou also said that Titan, as a private company, has never received government subsidies.

But the investigation into Chinese wind towers is just the beginning of the trade disputes between the United States and China over wind power.

Li Shengmao, an analyst with the Shenzhen-based industry research company CIConsulting, said that China has not expanded its wind power market into the United States on a large scale, so the competition with U.S. companies is not tough enough to spark a bigger trade dispute.

As Chinese companies take rapid steps to expand overseas in the coming years, it is very possible that U.S. companies will start anti-dumping and anti-subsidies probes into the whole wind-power industry.

He warned that U.S. investigations may soon be expanded to other wind power products from China. Blades, also belonging to the low-technology and labor-intensive sector, will most likely become the new target.

The companies that were not listed in the petition this time should be prepared, Li said.

A vulnerable industry

The U.S. investigation came at a time when the Chinese wind power industry began seeking overseas expansion as a result of overcapacity at home.

Boosted by the country's green energy ambitions, China's wind power industry witnessed rapid growth in recent years.

"There is an overabundance of investment in emerging energy sectors, such as the wind power sector. This is the result of an influx of capital into China's equipment manufacturing industry, which is operating under the idea that China has strictly controlled fixed investments in sectors that consume more energy and resources," said the National Development and Reform Commission.

China has more than 80 wind power equipment manufacturers. In 2010, its wind power capacity increased 62 percent year on year to reach 41.8 million kw, ranking first in the world.

Despite the impressive growth, the industry is still facing difficulties, such as the technology level, which is not in tune with the market size, and the lack of independent research and development, said Lin Boqiang, Director of the China Center for Energy Economics Research in Xiamen University.

"After years of development, the domestic equipment manufacturers are now able to produce some of the main components and parts. But the technology of key parts of high-power wind power generators has been controlled by foreign big enterprises," Lin said.

Grid connection remains an obstacle constraining the development of wind power in China. Grid expansion cannot keep up with the rapid development of wind power capacity. Wind-generated electricity has high requirements for grid stability, grid backup and long-distance transmission, said Lin.

The Chinese Government should pay more attention to wind energy research and development and end-use because the insufficient end-use caused the surplus, said Lin. He also suggested the government provide a more flexible pricing system for wind power.

Pricing is another major constraint for the development of the wind power sector. Compared with conventional energy, the cost of wind power generation is much higher.

"Solving the pricing problem lies in short-term subsidy commitments and longer-term changes in the energy pricing system to reflect the cost of resources and the environment. These steps will make clean energy more competitive," said Lin.

Email us at: liuxinlian@bjreview.com

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