The top-10 turbine OEMs in China’s wind market has been in the path of market expansion in the past decade. Continuously, the wind turbine market has been consolidating, with the top players taking more.
2019 witnessed a further consolidation in terms of added wind capacity, BNEF’s 2019 Chinese turbine OEM ranking clearly indicates. [The ranking is about turbine makers’ incremental installed capacity in China last year.]
Consolidation Among the Top Wind OEMs
In a way, it is nothing surprising. The market development in China only parallels the global market trend where the big fish eat the smaller and the leaders take more stakes.
But on the other hand, China is in the middle of a wind development rush. Developers rush to secure equipment supplies, both onshore and offshore so that they have a chance to grid-connect their wind projects before the door to national-subsidy closed. (Read More on China’s renewable subsidy policy set-up that leads to this project dash )
It is widely expected that smaller players would benefit from the project dash, as project companies are desperate to strike deals with anyone who is able to promise of a soon delivery.
But BNEF’s 2019 data suggests otherwise. Or at least, the installed capacity date did not reflect the share increase of smaller figures. Similarly, the three remaining foreign wind turbine makers in China failed to expand their territory, either. (Check out my report in Recharge on the matter. ) Although all three announce record-making orders last year.
We have five observations of the competition among China’s top wind turbine makers:
Observation-1: Further Consolidation, Top-10 Taking More
The market shares of top-3, top-5, top-7, and top-10 players all increased in 2019 compared to 2018, a solid indication of the market consolidation direction.
Meanwhile, smaller players are further marginalized, with the share of non-top-10 OEMs accounted for only 6.3% in 2019, down from two-digit previously.
Observation-2: Heated Competition Among 3rd-7th
the true battle is really among the 3rd-7th placed turbine makers, who registered the most aggressive market share increase and year-on-year installed capacity growth.
- Windey is Up Fast: Among all, Zhejiang Windey has made a stunning jump to the fourth place, up two and four slots compared to its ranking in 2018 and 2017. It installed 2GW last year, of the highest growth of 129%. The rising of Windey is related to the onshore wind project dash this year, where the Zhejiang firm focused entirely on. Worth to note that it did not take part in the offshore wind turbine battle.
- Dongfang Electric(7th), CSIC Haizhuang (6th), and MYSE (3rd) are the three who also registered significant installation growth, of 103%, 83% and 80%, respectively.
Observation-3: The Iron Top-3 is Solid
Since 2016, Goldwind, Envision, and Ming Yang Smart Energy (MYSE) have been sitting solidly on the top-3. 2019 is no exception.
The ongoing wind project rush in China does not seem to challenge their positions. And after the installation dash when the market demand would slump, companies with safer financial structure would survive the “dip”—and right now the three appear to be on a solid debt/equity structure.
Observation-4: Hot Pursuit of the Leader Position
However, the leader faces some rising challenges. Frontrunner Goldwind’s market share slipped in 2019 to 27.7%, which is lower to both its 2018 and 2017 portions, according to BNEF’s data. Among all top-10, Goldwind is the one who saw the steepest decrease in market share (-4.2%). The firm installed over 8GW in 2019, with a 19.6% YoY increase but a much smaller increase compared to the rest of top-7.
Observation-5: State-owned and M&A is NO Guarantee
United Power is Not Doing That Good: the OEM owned by China Datang and China Energy Investment Corp (CEIC)—world’s largest power and wind utility—has dropped from 4th all the way to 8th in a shocking fashion. In its heydays (2012-2015), United Power ranked 2nd and was once regarded as one of the decisive players in the wind market. The merger between China Datang and China Shenhua (giving birth to CEIC) has yet to show benefit on United Power’s game. [Read more about CEIC and other Chinese Power Utilities]
A side note of United Power is that the firm is slow in the offshore market, despite one of the early comers. But it has been fallen out of the heated competition among OEMs for developing the 10 MW super-sized offshore turbine. [Read more about Chinese OEMs’ “Amazing Race” to Develop 10MW Offshore Wind Turbines]
A similar case is XEMC, the state-owned manufacturer with some 80 years history and once the 5th placer in China, now falling to 9th and on the brink of leaving the top-10.
Where Will the Market Go?
Right now, the top-10 ranking looks somewhat static. But history told us the rise and fall of companies often happen quickly.
In the past decade, the wind market witnessed the burst of Sinovel’s ambition and the gradual slidings of many others–United Power and XEMC Wind (Xiantan Electric Machinery Corp Wind) are the most recent cases.
Last week, XEMC announced to seek buyers for its wholly-owned wind turbine subsidiary in the local (Hunan province) asset exchange market. Rumour of the firm seeking to strip off the wind asset has been circling for a year. The firm initially expected to strike a deal with a local government-owned railroad company, but that did not seem to result in a deal.
The sale may open the door for some of smaller players to acquire larger market share. Moreover, XEMC is still backed with its Dutch turbine R&D facility (formerly Darwind) and is still fighting to get a chance in offshore. Acquiring XEMC may not be a bad idea. Although, as we understand, the Hunan government may prefer to keep the asset within the province.
While the fate of XMEC remains unclear, the coming two years may be a window opportunity for smaller players to survive and profit. But soon a demand dip will no doubt arrive.
We expect that in the coming demand dip, smaller OEMs will further lose ground to the leading players, as the demand slump change the financing perspective for the smaller firms.
But that is not to say the big players will be exempt from the challenge. If Sinovel’s fall taught us anything, that is a solid debt-to-equity structure of the manufacturers are the key to survive the winter.