China was the world's largest wind energy market in 2012 in terms of annual installed capacity, according to new data released by Bloomberg New Energy Finance (BNEF). This is the fourth consecutive year that China has held the top position, after surpassing the U.S. in 2009.
China's wind energy industry installed 15.9 GW of onshore wind energy last year, representing 35% of the world's new onshore wind power capacity. In comparison, the U.S. – which installed a record-breaking 13.2 GW in 2012 – added 14% fewer turbines than China, BNEF says.
Moreover, wind energy has become China's third-largest energy source, behind coal and hydropower. China now has 61 GW of cumulative grid-connected wind energy capacity – 5.3% of the country's total nameplate capacity – and wind energy generates 2% of the country's total electricity.
Wind energy's new place in China's power sector comes despite an 18% decline in annual installations from 2011's record of 19.3 GW, BNEF says, noting that many projects were delayed due to grid-connection issues, leaving many companies in the supply chain suffering from late payments and subsidies.
China's total new power-generation additions from all sources last year exceeded 80 GW, more than the entire power-generation capacity of Australia or Mexico. The other main sources of new capacity were as follows: thermal (50.7 GW), hydro (15.5 GW), solar (1.2 GW) and nuclear (700 MW).
In 2012, new financial investment in wind energy in China also fell 12% to $27.2 billion, although the falling cost of wind energy means that the same dollar amount of investment committed during 2012 will finance 10% more megawatts than it would have if it had been committed during 2011, BNEF explains.
New financial investment is a powerful indicator of construction activity, since it leads the completion of onshore wind farms by up to two years. However, 15 GW – a full 20% of China's wind capacity – remains unconnected to the grid, BNEF notes.
Meanwhile, according to figures from the State Electricity Regulatory Commission, capacity factors fell slightly in China in 2012 to 21.6% – one of the lowest rates in the world. This compares to an average capacity factor of about 30% in the U.S., BNEF points out, noting that 1 MW of wind power installed in China produces 70% of the amount of energy the same megawatt of wind would produce if installed in the U.S.
However, the low capacity factor is offset by the fact that Chinese turbine prices are approximately 40% lower than the international turbine prices listed in BNEF's Wind Turbine Price Index.
China's leading wind turbine suppliers last year were all domestic: Goldwind (2.8 GW, 19% market share); Guodian United Power (1.9 GW, 13% market share); and Sinovel (1.5 GW, 10% market share). This ranking is unchanged from 2011, when Goldwind and Guodian United Power displaced Sinovel from its top spot.
The top three developers of wind projects were also large domestic companies: Longyuan Power Group (1.7 GW), Huaneng Renewable (810 MW) and Datang Renewable (800 MW).
Inner Mongolia was the top location for Chinese wind project development in 2012, with 1.7 GW of new capacity added, followed by Shandong (1.4 GW) and Hebei (1.1 GW) provinces.
"2012 was a good year for the Chinese wind industry, considering how tough the environment was," says Demi Zhu, China wind analyst at BNEF. "The industry faced many problems, including a reluctance by the grid operator to buy all the intermittent electricity produced by wind farms, plus stricter permitting requirements, unpaid subsidies and vigorous government efforts to cool down the industry's rate of expansion.
"This year, however, project approvals have sped up, and we forecast a modest recovery in both financing activity and construction in 2013," Zhu adds. "The fact that China wind overtook nuclear as a generation source, even in its most challenging year of recent times, is a testament to the massive scale and momentum of the industry in this country."
BNEF forecasts that China will add 16.6 GW of wind energy installations this year and 17 GW to 18 GW in both 2014 and 2015. At these rates, the industry would achieve the government's end-of-2015 target of 100 GW of grid-connected capacity more than a year early.