(March 26): Ming Yang Smart Energy Group, one of China’s biggest wind turbine manufacturers, says industry efforts to boost prices are starting to bear fruit.

“Prices have recovered since February and we see the potential for a further price rise of five percentage points,” Ming Yang chairman Zhang Chuanwei said in an interview at the Boao Forum for Asia. The gross profit margin for the top five manufacturers should be 5% to 10% at the moment, and it could go even higher “if managed properly,” he said.

China’s wind power industry, like the country’s other clean energy sectors, has been hit by a price war following several years of rapid expansion. Twelve major manufacturers including Ming Yang, Goldwind Science and Technology Co and Envision Energy Co signed a self-discipline pact in October with punitive measures for what they described as “vicious” competition.

“The industry has gone through neijuan for almost two years, but the market share structure hasn’t really changed,” Zhang said, referring to a Chinese buzzword that literally translates as “involution” and denotes a state of pointless overwork due to cutthroat corporate rivalry. 

“Everyone has realised that this kind of competition is not healthy for this sector’s development and clients have also reached a consensus that the price war among equipment providers is not conducive to the quality of their own wind power projects,” he said.

Chinese wind turbine makers have been looking to increase the size of offshore equipment to give themselves a competitive edge. But Zhang thinks this race to make ever-larger turbines will slow down, since higher production costs do not necessarily translate to improved efficiency. 

“For example, 10-megawatt turbines can be installed in areas with good wind conditions,” he said. “For regions where wind speed is only 4.5-5.5 metres per second, however, turbines with capacity between five and seven megawatts would be enough.” 

Chinese manufacturers have also increased exports of wind power equipment in recent years, with most focused on Asia, Africa and South America. Ming Yang, meanwhile, has pursued projects in Germany and Italy. 

“The existing market in Europe is very large and beyond the local manufacturers’ capacity to handle,” Zhang said. “Clients and governments there have a strong need to reduce energy costs.” 

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