China: taking the wind out of America's sails

Apr 14 - Datamonitor

After three years of growth, new wind power installations in the US fell steeply last year from 2009 levels, leading China to overtake it and become the world leader in installed wind power capacity. The American Wind Energy Association claims that the global recession and weak electricity prices weighed on the industry, but can increased efficiency help the sector recover?

In 2009 the US built over 10GW of wind power, up from 8.4GW in 2008 and 5.3GW in 2007. However, this growth plummeted in 2010 as the construction of new installed capacity fell by approximately 50% to 5.1GW. This subsequently put the US behind China in terms of total installed capacity.

China added 18.9GW of wind power in 2010, taking its installed capacity to almost 45GW, 5GW ahead of the US. In 2010, every second wind turbine that was added anywhere in the world was installed in China and its wind market doubled every year between 2005 and 2009 in terms of total installed capacity.

But the consequences of this growth reach beyond the race for installed capacity, as China's dominance has had a significant impact on the market shares of wind turbine manufacturers. As put by Li Junfeng, president of the China Renewable Energy Industries Association: "The growth of wind power in China has spurred a boom in domestic manufacturing, and four out of the top 10 global wind turbine manufacturers are now Chinese."

In the US, wind power manufacturing has suffered from a lull in demand. While wind power still contributed more than a quarter of the total new electricity supply in the country in 2010, weak electricity prices and the continuing effects of the recession have weighed heavily on the sector. Furthermore, natural gas- and coal-fired power generation continue to grow faster than wind thanks to greater levels of commercial viability.

Yet Denise Bode, CEO of the American Wind Energy Association (AWEA), told news sources that the downturn in the wind sector has in fact made it more efficient. "All the fat's out," she said, adding that in some parts of the US it is possible to sign power sales agreements at $0.05 per kilowatt hour, making it cheaper to add wind turbines than to build advanced natural gas- or coal-burning plants.

This newfound efficiency could help stimulate a recovery in the US wind market, which has an estimated 5.6GW under construction already in 2011. Nevertheless, this will have to grow considerably if over-capacity problems in a sector on which more than 75,000 jobs rely are to be addressed.