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China's wind power industry is facing a challenging period, with several significant hurdles emerging in recent years. According to Zhu Yuyu, an analyst at Bloomberg New Energy Finance, new investments in the sector have seen a sharp decline since the fourth quarter of 2012, signaling that the growth of installed capacity may not rebound strongly from 2014 onward.
In 2012, wind power surpassed nuclear energy for the first time, becoming China’s third-largest energy source after coal and hydropower. However, despite its rapid expansion in earlier years, the industry has entered a phase of adjustment over the past two years. As it matures, long-standing issues are becoming more apparent, particularly in terms of funding pressures along the supply chain.
Financing challenges remain one of the most pressing concerns. While large state-owned enterprises often enjoy easier access to capital, smaller and private companies struggle significantly. For example, Datang Group New Energy, though slowing down in its investment pace, attributes this to regional power curtailment rather than financial constraints. Similarly, leading firms like Goldwind benefit from strong support from state-backed banks, even amid tighter monetary policies.
However, the majority of wind power companies—especially private ones—face severe financing difficulties. Han Kerui, who handles sales and financing in Asia, noted that many private firms seeking to acquire foreign technology face reluctance from state banks. "Since 2011, it's become very hard to support small private clients. We can only offer up to 20% in assistance," he said.
Financial institutions also play a role in these challenges. With the domestic market environment uncertain, banks are cautious about lending to riskier projects. Additionally, problems such as wind curtailment and safety risks have made some lenders hesitant to invest in wind power.
The International Finance Corporation (IFC), part of the World Bank group, has supported large-scale wind projects in China, but even these face delays and underperformance due to factors like insufficient subsidies and weather conditions. Meanwhile, insurance coverage for wind power remains limited. State Grid Property Insurance, which manages the largest power business in the country, lacks specific products tailored for wind energy. The low premium rates make it unattractive for many insurers, resulting in a mismatch between insurance offerings and industry needs.
Chen Xin of State Grid Property Insurance pointed out that domestic insurers lack a deep understanding of wind turbine technology and the associated risks. In 2011 alone, there were over 30 turbine failures, highlighting the need for better risk management. He emphasized that current premiums are far from sufficient to cover such losses.
Zhu Yuyu from Bloomberg New Energy Finance suggested that learning from international markets could help. In developed wind power sectors, financing focuses on the project itself rather than the company, emphasizing cash flow stability and risk-benefit alignment. He concluded that improving transparency and communication could lead to more efficient and timely financing for China’s wind power industry.