China’s Wind Giant Sees Demand Boom Resuming After 2021 Pause

(Bloomberg) — For China’s biggest turbine makers, 2021 may turn out to be a year of pause from a torrid pace of wind projects, judging by the bullish outlooks outlined by the industry and analysts.

The sector experienced a sharp slowdown after delivering a record volume of new capacity last year to beat a deadline for government subsidies. Key Chinese incentives for onshore wind ended at the end of 2020, while offshore allowances lapse this year.

A weakening pace was clearly evident in the financial results of the country’s biggest turbine manufacturer, which late Tuesday reported an 11% drop in revenue for the third quarter. Xinjiang Goldwind Science & Technology Co. sold 6.4 gigawatts of turbines for the first nine months of 2021, compared with last year’s 8.3 gigawatts.

Yet the turbine business is expected to pick up as China and the rest of the world embrace renewable energy. Goldwind President Cao Zhigang said last week that wind installations will be on the rise in the years ahead, while the International Energy Agency projects that demand for wind and solar globally will quadruple by 2030. The United Nations’ COP26 climate change conference starting next week in Glasgow, Scotland, may also help accelerate growth.

Investors are embracing the optimistic outlook. Goldwind shares jumped as much as 10% Wednesday, bringing gains for a 12-month rally to 64%. Rival Ming Yang Smart Energy Group Ltd. gained as much as 8% and reached a record high.

While China is reeling in the subsidies that helped spur the installation boom, the government still aims to drive the industry’s growth as it ramps up efforts to reach climate goals.

Beijing said this week it will accelerate the construction of large-scale wind power and solar bases. The government set a target for nonfossil energy consumption to exceed 80% of the total mix by 2060. President Xi Jinping earlier this month announced a massive renewables project in the country’s vast deserts.

Chinese companies have been leading the way in wind turbines, accounting for about 60% of global production. Goldwind supplied 13.5% of all installations last year, ranking just behind GE Renewable Energy and ahead of Vestas Wind Systems A/S, according to research by Bloomberg NEF.

Goldwind will record revenue increases faster than consensus, with growth accelerating in 2022–23 under COP26 commitments, domestic policy measures and elevated fossil-fuel prices, according to a Bloomberg Intelligence analysis.

The company said it received 13.3 gigawatts of orders for the latest nine months, 1.9 gigawatts of which were from abroad, down slightly from 14 gigawatts the previous year.

Goldwind is aiming to export 2–3 gigawatts annually after 2021, up from about 1.5 gigawatts over the past few years. That would boost its share of the overseas wind market to 5% from 3%, Cao said in the interview last week.

Contact editor Bob Simison (hello@caixin.com)

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