What’s new: China’s major wind turbine manufacturers have seen their profitability squeezed as escalating industry competition depresses equipment prices.
Goldwind Science & Technology Co. Ltd. (002202.SZ), the largest wind turbine maker in the world, reported a 44% decline in 2023 net profit to 1.3 billion yuan, while sales revenue expanding 9% to 50.5 billion yuan, according to the company’s earnings report. Goldwind remains a top play in the industry with 20% market share at home and 13.9% globally.
Rival Shanghai Electric Wind Power Group Co. Ltd. (688660.SH) reported a wider loss of 1.27 billion yuan in 2023, with revenue dropping 16% to 10 billion yuan. Ming Yang Smart Energy Group Ltd. (601615.SH) has forecasted a 70% drop in 2023 net profit.
The weakening performance underscores the intensifying competition in the wind power industry that puts pressure on manufacturers' profit margins. According to the companies’ reports, Goldwinds’ gross profit margin was 6.41% in 2023, down 11.3 percentage points from 2021, while Shanghai Electric Wind Power’s margin fell to 5.74%.
The context: China added a record 75.9 gigawatts of wind power generation capacity in 2023, up 102% from the previous year, according to National Energy Administration.
Despite the expansion, wind turbine prices have trended down due to growing competition. According to data from the China Renewable Energy Society in 2023, the average winning bid price for China's onshore wind turbines plunged 15% year-on-year to about 1,500 yuan per kilowatt, while the average winning bid price for offshore wind turbines dropped 10.8% over the past three months.
While 98% of Chinese wind power manufacturers’ newly installed capacities are in the domestic market, accelerating overseas expansion is a new source of growth momentum, according to a report by Bloomberg New Energy Finance.
In 2023, Chinese wind power companies added 1.7 gigawatts of installed capacity outside their home market, with business coverage nearly tripling from 2018 to more than 20 countries and regions, according to the report.
Contact reporter Han Wei (weihan@caixin.com)
