Power shift: Navigating the rise of Chinese wind turbine OEMs

Chinese wind turbine OEMs have grown massively over the last 5 years. The top 5 OEMs have installed 59 GW of wind power in 2023, 4x the 2018 volume. In contrast, the Western top 5 grew by 1.6x only to around 38 GW. The staggering growth of Chinese players in absolute and relative figures sounds familiar in the renewables sector. 80-95% of the global PV module supply (depending on the manufacturing segment) comes from China and this is not expected to change despite political support for domestic production in the US and India.

From a European and US perspective the obvious concern is that the Western wind OEMs will be wiped out in the same way Western PV module manufacturers had experienced. Whilst there are similarities, we expect a different trajectory. Wind turbines are high-maintenance products that come as projects. PV modules, in contrast, are no-maintenance mass products.

China is extremely strong in manufacturing, but wind turbines come with additional challenges.

For many years, Chinese companies were the “workbench of the world”, mass-producing for Western companies. Their prices were, and are, highly attractive and made possible by low labor costs, low electricity prices, low raw material prices, and government support. Over time, Chinese companies have climbed up the value chain and further honed their skills in manufacturing competence which goes far beyond cheap labor and low electricity prices today. The huge domestic market and control over the whole upstream supply chain contributed to Chinese dominance. The end product, in this case, the PV module, is shipped in 40-foot containers to export markets. However, selling a wind turbine requires significantly more interaction with the customer. The specific turbine type needs to be permitted for the specific project. Transport routes need to be clarified and permits need to be obtained. The turbine foundation must match the soil condition and interfaces to the tower supplier and local construction companies need to be managed. Wind turbines are big mechanical machines that do fail. The recent quality problems of Siemens Gamesa are the most prominent, but certainly not the only example of extremely expensive quality issues in wind. Developers, investors, and banks want to be assured of product quality and strong technical support over the project’s lifetime.

Chinese OEMs have been facing challenges entering international markets over the last few years. In 2015, Envision tried to enter the European market but only installed a meager 42 turbines. Donfang is the same story with one wind farm in Sweden. Goldwind is active in Australia for many years. The projects they install are however own developments and not projects of 3rd party customers. But things have changed: 16 Chinese OEMs are heavily competing in their home market to stay in the game, continuously strengthening their muscles in innovation, product development, and manufacturing excellence. As a result, the strongest penetrate the international markets and give the Western OEMs a hard time. Whilst Western OEMs keep prices high, cut back on markets, and pause on new product launches to return to profitability, the Chinese OEMs are doing the exact opposite.

Today, Chinese OEMs are leading the tech race and turbines are 20-40% cheaper compared to those of their Western peers.

Chinese appetite to grow internationally is massive and a new dynamic is unfolding in international markets outside Europe and the US.

Envision is leading the pack with several 500 MW projects, a 5 GW pipeline in India, and the massive 1.67 GW NEOM project. Goldwind, also with big projects in the MENA region and Uzbekistan is due to open a factory in Brazil this year. Many of the large-scale projects are developed by Middle Eastern players like ACWA, Masdar, or AMEA. But also Western players like Engie, EDF, and CIP are building onshore wind farms with turbines from China.

Australia, Canada, and Eastern Europe (Windey is the preferred supplier for an 800 MW project in Serbia) are markets where Chinese players have won big projects and where they are likely to win even more going forward. Sany is very active in e.g. Germany but will have a hard time winning significant market shares in the EU.

Western OEMs do bag large deals in non-EU/non-US markets like Vestas (closed a 1.3 GW project in for Brazil in 2023) and GE Vernova (closed a 1.4 GW deal for Australia in 2024). But the air for them gets thinner in these markets, which is especially tough as the APAC and MEA markets are expected to outperform the EU and US in terms of growth.

So what’s next?

It´s a fact, that Chinese wind OEMs go international and do that very impressively outside Europe and the US. That narrows the international playground for Western OEMs which cannot compete for price reasons, and it happens at light speed. A power shift is underway and will impact all players in the wind sector:

The basis for navigating the changing environment where Chinese OEMs will play an increasingly strong role outside China is understanding in depth of the Chinese OEMs.

We answered these and other questions in a comprehensive study on the top 5 Chinese Wind Turbine OEMs.

Contact us for the study