Despite subsidy cuts, renewable power helping nation meet dual carbon goals

Demand for wind power projects is expected to gradually pick up during the second half following the slow growth of China's wind power sector during the first six months, as policy gradually improves and other obstacles are resolved, said industry experts.

Overall performance of the wind power sector was relatively weak in the first half due to factors such as slow approval of offshore wind projects and sluggish bidding demand, said BOC International (China) Co Ltd.

However, it is expected that demand for both onshore and offshore wind installations will remain strong this year as a whole, considering last year's high bidding volumes and low installed capacity, it said.

The performance of several A-share-listed wind power industry leaders, including Xinjiang Goldwind Science & Technology Co Ltd and Mingyang Smart Energy Group, saw declines in net profit in the first half.

This is after newly installed offshore wind capacity plunged nearly 65 percent last year due to the government's decision to cease granting national-level subsidies for offshore wind power projects. The government offered various subsidies to wind farm developers between 2014 and 2021 for every kilowatt-hour of offshore wind power they delivered to the grid.

Phasing out subsidies has cut profit margins among wind power industry players. Under the subsidy change, offshore wind farms built from Jan 1 this year must sell the power they make to the grid at the same prices as coal plants.

Nevertheless, analysts still believe the sector will embrace massive development opportunities amid China's commitment to achieving a carbon peak before 2030 and carbon neutrality before 2060.

China's accumulated offshore wind capacity is projected to double by 2025, increasing from 30.5 gigawatts by the end of 2022 to more than 60 GW, said the National Energy Administration.

Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute, said the wind power sector in China is expected to grow rapidly in the coming years, with a trend for wind turbines to become bigger, with taller hub heights and larger rotor diameters.

"The declining performance during the first six months is unlikely to impact the industry's rapid growth," Luo said.

He added that there is a trend of making wind turbines larger and more powerful, typically by increasing their physical size and capacity to generate more electricity from wind. Larger turbines are often more efficient and cost-effective, leading to improved performance in the wind energy industry.

Yao Yuan, marketing manager of the new energy industry at Schneider Electric, agreed, saying that using wind turbines with larger capacities is an inevitable path for offshore wind farms because they can save installation and maintenance costs.