Large wind turbine manufacturing
Large wind turbine manufacturing
Business Model Description
Large-scale wind turbine generator systems can reduce the per kWh cost of electricity generation. The profit model of leading wind turbine manufacturers will shift to selling wind turbines and wind farms rather than only wind turbines. (7) (8)
Expected Impact
The development of large-scale wind turbines can reduce cost of electricity generation and greenhouse gases emissions, and create more jobs.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Guangdong
- China: Zhejiang
- China: Guizhou
- China: Shandong
- China: Jiangsu
Sector Classification
Renewable Resources and Alternative Energy
Development need
China's current energy structure dominated by fossil energy. Fossil energy resources are limited and can release large amounts of carbon dioxide when burnt, accelerating global climate change and extreme weather events. Thus, renewable energy is crucial to China's green transformation.
Policy priority
The proportion of non-fossil energy in total energy consumption should be increased to about 20%. State Council's action plan for carbon peaking stated that wind and solar power generation, biomass power generation and heating should be developed. By 2030, the total installed generation capacity of wind and solar power will reach above 1200 gigawatts. (1)
Gender inequalities and marginalization issues
Renewable energy employs about 32% women, compared to 22% in the energy sector. (2)
Investment opportunities introduction
The IOAs in the renewable energy sector center around the utilization of solar energy, wind energy, and biomass energy.
Key bottlenecks introduction
The energy endowment and demand don't match. Hydropower generation is centralized in southwest China, while wind and solar energy are centralized in northern China, which is far away from the centers of consumption in the eastern and coastal areas. The instability of renewable energy poses a challenge to the consumption and stable operation of the grid.
Alternative Energy
Development need
Wind power is the second most crucial renewable energy for China and plays crucial role in achieving China's carbon targets. However, its further development faces several challenges including: land-use limitation, wind curtailment. (3)
Policy priority
With increasing installed wind capacity, China's current policy focus has shift from giving subsidies to driving grid parity, promoting offshore wind power projects, as well as improving utilization rate and consumption. (4)
Gender inequalities and marginalization issues
Wind resources are unevenly distributed across China. Higher average wind speeds can be observed in the northeast, northwest, and southwest plateaus and coastal islands. (5)
Investment opportunities introduction
The IOAs in the wind power sector center around wind turbine manufacturing, and the operation of wind farms.
Key bottlenecks introduction
The intermittent nature of wind energy making it hard to be fully utilized. Most of China's rich wind resources are located in the north and west while the power demand is in economic centers in eastern and southern China, requiring long-distance transmission. (6)
Wind Technology and Project Developers
Pipeline Opportunity
Large wind turbine manufacturing
Large-scale wind turbine generator systems can reduce the per kWh cost of electricity generation. The profit model of leading wind turbine manufacturers will shift to selling wind turbines and wind farms rather than only wind turbines. (7) (8)
Business Case
Market Size and Environment
On-grid wind power capacity in China would reach 280 million kW in 2020. (16)
Indicative Return
20% - 25%
According to the average returns of the three projects owned by Xinjiang Goldwind Science & Technology Co., Ltd., Zhejiang Windey Co., Ltd, and MingYang Smart Energy Group, Ltd., the internal rate of return of similar projects is between 20% and 25%.
According to Xinjiang Goldwind Science & Technology Co., Ltd.'s 2021 Semi-Annual Report, its gross profit margin for wind turbines is around 20.34%. According to Zhejiang Windey Co., Ltd's 2021 Semi-Annual Report, its gross profit margin for wind turbines is around 20%.
MingYang Smart Energy Group, Ltd.'s gross margin for wind turbines is around 21.16%. The company's main business is wind turbine manufacturing, construction and intelligent operation of clean energy power stations, and operation and maintenance of smart wind farms.
Investment Timeframe
Medium Term (5–10 years)
According to Ming Yang Smart Energy's Prospectus, the dynamic after-tax payback period for the 5.5-12MW large-scale wind turbine production project in Yangjiang Hi-tech Zone is 5.09 years.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
By 2030, non-fossil energy should account for around 25% of primary energy consumption, and the total installed capacity of wind and solar power generation should be more than 1.2 billion kWh. (7).
Gender & Marginalisation
Renewable energy employs about 32% women, compared to 22% in the energy sector. Yet women employers only account for 21% of the wind energy industry (based on survey responses). (20)
Expected Development Outcome
Scaling the wind turbine systems can lower the per kWh cost of electricity generation. The number of installation sites and wind turbines can be reduced, and the costs of turbine sets, cables, installation, and operation will also be reduced.
Gender & Marginalisation
Large-scale deployment of renewable energy can create more jobs. Women's performance in the wind industry can be enhanced by addressing gender inequality, including network building, mentoring, training, experience sharing, gender policies, internship opportunities, and discussion sessions. (20)
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
The share of non-fossil energy in China's primary energy consumption reached 15.9% in 2020. (12)
The "14th Five-year Plan" stated that the share of non-fossil fuel in China's total energy consumption should be increased to around 20%. (19)
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Indirectly impacted stakeholders
People
Outcome Risks
The turbine blades are made of polymer-based composite materials. The curing features of epoxy resin and glass fiber make them hard to be recycled; recycling is also costly and harmful. (10)
Impact Risks
The issue of idle capacity in wind and solar power is prone to repeated occurrences, and significant potential risks exist. (11)
Impact Classification
What
The cost per kWh of wind power electricity generation is reduced while the efficiency is increased. Greenhouse gases and carbon emissions is reduced and more jobs are created. (17)
Risk
Fossil fuel phase-out can marginalize people in the fossil energy industry and areas. (17)
Impact Thesis
The development of large-scale wind turbines can reduce cost of electricity generation and greenhouse gases emissions, and create more jobs.
Enabling Environment
Policy Environment
The country should promote energy reform, build a clean, low-carbon, safe and efficient energy system, and vigorously promote wind power generation. (21)
In 2021, wind power and photovoltaic power generation: around 11% of the total electricity consumption; by 2030, non-fossil energy: around 25% of primary energy consumption; the total installed capacity of wind and solar power generation: over 1.2 billion kWh. (19)
Targets are specified in the "2020 Guidance on Energy-related Work” to further improve energy systems' efficiency and clean energy utilization such as wind and photovoltaic power. (22)
Financial Environment
On February 24th, 2021, NDRC, MOF, PBoC, CBIRC, and NEA jointly put forward several measures for supporting the development of renewable energy industries, such as wind power, photovoltaic power, and biomass power. (15)
Based on "Notice on Value-Added Tax Policies for Wind Power Generation" by the Ministry of Finance and the State Administration of Taxation, comprehensive utilization entitling enterprises are subject to the value-added tax policy of immediately refunding upon payment. (24)
The additional fiscal appropriation was estimated to be 5 billion yuan in 2020, which can support new wind power, photovoltaic power, and biomass power projects. Financial institutions are encouraged to support enterprises in the list of subsidized power generation projects. (25)
Regulatory Environment
Wind power project management and construction requirements: wind farm projects must be approved before the start of the construction; no electricity price subsidy would be provided in the condition of unapproved start. (23)
The key components used in wind power equipment should go through type certification following the "Wind turbines—Conformity testing and certification" (GB/Z25458-2010), and the certification process should be carried out by authorized institutions.
NEA issued the "Rules on Wind Power Standard Establishment" and the "Wind Power Standard System Framework” which includes wind turbine design requirements, tests for wind turbine's power characteristics, certification rules and procedures, etc. (18)
Marketplace Participants
Private Sector
Enterprises manufacturing the complete turbines in China include Xinjiang Goldwind Science & Technology Co., Ltd., MingYang Smart Energy Group, Ltd., and Shanghai Electric Group Company, Ltd.
Government
Zhejiang: Total installed wind power capacity reaches 6.3 million kW, including 5 million kW of offshore wind power. Jiangsu: Accelerate “PV +" comprehensive utilization. Fujian: Develop offshore wind power and industrial upgrading of offshore wind power.
Target Locations
China: Guangdong
China: Zhejiang
China: Guizhou
China: Shandong
China: Jiangsu
References
- (1) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030
- (2) IRENA, 2019, Renewable energy: a gender perspective. https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective
- (3) Forward Intelligence, Market Foresight and Investment Strategy Report of China's Wind Power Industry, https://bg.qianzhan.com/report/detail/f7fa9c50850a4f16.html?v=footer2
- (4) Guiding Opinions of the State Council on Accelerating the Establishment of a Sound Economic System with Green, Low-carbon and Circular Development (No. 4 [2021] of the State Council), http://www.gov.cn/zhengce/content/2021-02/22/content_5588274.htm
- (5) XNY365, http://www.xny365.com/zhuanjia/article-53293.html
- (6) Zhu Linzhi, Chen Ning, Han Hualing. Keys Problems and Solutions of Wind Power Accommodation [J]. Automation of Electric Power Systems, 2011, 035(022):29-34.
- (7) China Wind Power, 2021 Wind Power Review and Outlook, https://news.bjx.com.cn/html/20211029/1184630.shtml
- (8) China Energy News, https://wap.cnki.net/touch/web/Newspaper/Article/SHCA201906240090.html
- (9) in-en.com, https://wind.in-en.com/html/wind-2413240.shtml
- (10) BJX.com.cn, https://news.bjx.com.cn/html/20200407/1061268.shtml
- (11) Liu Shiyu, Chen Junjie, Analysis and suggestions on new energy consumption situations in the 14th Five-Year Plan, https://guangfu.bjx.com.cn/news/20210918/1177646.shtml
- (12) National Energy Agency, http://www.nea.gov.cn/2021-03/30/c_139846095.htm
- (13) in-en.com, https://www.in-en.com/finance/html/energy-2244999.shtml
- (14) IRENA, Future of Wind: Deployment, investment, technology, grid integration and social-economic aspects, https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Oct/IRENA_Future_of_wind_2019_summ_CH.pdf?la=en&hash=9EA292792EC04AF45CB7C05A6161F343CD242FEF
- (15) National Development and Reform Commission, "Notice of Encouraging the Intensified Financial Support to Promote the Sound and Orderly Development of Wind Power and Photovoltaic Power Industries", https://www.ndrc.gov.cn/xwdt/tzgg/202103/t20210312_1269411.html?code=&state=123
- (16) National New Energy Consumption Monitoring and Early Warning Center, https://mp.weixin.qq.com/s/foZ9JOTq-rJ1WpZIgcpBWQ
- (17) GWEC, Wind Power as an Important Engine for Achieving Global Economic Recovery, https://gwec.net/green-recovery-policy-recommendations/
- (18) National Energy Administration, 2013, Notice of Issuing the Rules on Wind Power Standard Establishment, the Technical Committee Charter for Wind Power Standardization in the Energy Industry, and the Wind Power Standard System Framework, http://www.nea.gov.cn/2013-10/12/c_132792051.htm
- (19) National Energy Administration, 2021, Notice on Matters Concerning the Development and Construction Plan for Wind Power and Photovoltaic Power Generation in 2021, http://zfxxgk.nea.gov.cn/2021-05/11/c_139958210.htm
- (20) BJX.com.cn, https://news.bjx.com.cn/html/20200227/1048174.shtml
- (21) Xinhua News Agency, The Outline for the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the Year 2035, http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm
- (22) National Energy Administration, 2020, Guiding Opinions on Energy-related Work in 2021, http://www.nea.gov.cn/2020-06/22/c_139158412.htm
- (23) National Energy Administration, 2011, Notice on Issuing the Interim Measures for the Administration of the Development and Construction of Wind Power, http://zfxxgk.nea.gov.cn/auto87/201302/t20130226_1583.htm
- (24) China, 2015, Notice on Value-Added Tax Policies for Wind Power Generation, http://szs.mof.gov.cn/zhengcefabu/201506/t20150616_1256851.htm
- (25) Ministry of Finance, 2020, Several Opinions on Promoting the Healthy Development of the Power Generation of Non-water Renewable Energy, http://www.scio.gov.cn/xwfbh/xwbfbh/wqfbh/44687/45175/xgzc45181/Document/1701228/1701228.htm