Propelled by a strong gust of subsidies, the Chinese wind power industry accounts for half of the global wind power market. Yet it remains to be seen if wind energy can refill the sails of the Chinese economy, which faces considerable headwinds.
Following recent stock market volatility and a slump in exports, Beijing devalued the renminbi to more than ¥6 per U.S. dollar in a bid to leverage the weaker currency to maintain the global competitiveness of Chinese goods.
Yet, it didn’t really work. Why?
From 2004 to 2014, China has been gradually transitioning from an export- to an investment-led economy. Recently, net exports have been deducting an average of 3% of GDP and investments have been accounting for an average of more than 52% of GDP. In addition, China recently:
- Experienced a slowdown in fixed asset investment in the first seven months of 2015
- Suffered diminishing foreign reserves for four straight quarters, increasing concerns about capital outflow
Meanwhile, Chinese companies maintain a mean gross margin of 10–15% and only a net margin of 2–5%. So, companies not only need to increase their efficiencies but also rethink their strategies.
Policy and emerging and pioneering technologies drive growth and efficiency improvements in the renewables industries – not currency devaluations. The reduction in asset investment and capital outflows will continue to highly affect capital expenditures (CAPEX) on wind power. Yet, the real problems with wind power remain the high operating expenses (OPEX) and an ongoing reliance on now-obsolete wind technologies that require heavy ongoing maintenance.
Yesterday’s design problems led to today’s ongoing problems
With the mid-2000s ‘gold rush’ to develop wind energy, Chinese independent power producers (IPPs) and wind turbine original equipment manufacturers (OEMs) imported and redesigned technology based on outmoded motors and generators. Therefore, many of the existing wind power generators are based on double-fed induction generators (DFIGs) or small- or medium-power induction machines that were easy to source, copy and replicate in China at that time.
Today’s wind power suffers from poorly designed generators – featuring overweight magnets and inefficient cooling systems – that don’t deliver the power output that they should.
This is an unsustainable situation. As long as the economy remains in a slump, the more likely the Chinese government is to reconsider subsidizing wind power, which still pales in comparison to the country’s use of dependable fossil fuels such as coal and oil.
A pioneering idea: optimize wind efficiency with PM machines
Currently, about 30% of Chinese wind power companies have adopted advanced technology, such as permanent magnet generators (PMGs). By encouraging this trend and adopting our permanent magnet (PM) machines, the country’s wind power industry can lower its cost of energy while generating more energy output.
When compared with induction machines, PM machines provide unmatched power density, energy efficiency, design flexibility and operational reliability. They offer an advanced drive train package that can help generate cheaper energy than any other source.
We offer the world’s largest range of PM machines and frequency converters, enabling us to bring solutions to market in a predictable time frame. Our flexible business model, including product delivery, strategic partnerships and license agreements, reduces lead times for customer projects and delivers solutions for growth.
The Switch can provide Chinese wind power more efficient infrastructure in the near term and well into the future.
Corporate Business Development Director, The Switch