As China wind market falls away US tower tariffs another blow

Facing strong headwinds in its home market China's wind power manufacturing sector market seems unlikely to find much relief in the United States. Following on from its decision earlier this month to impose steep import tariffs on Chinese-made solar cells, the US Commerce Department (DOC) yesterday announced that it is imposing tariffs as high as 26 percent on utility-scale wind towers made in China.

The DOC says that after an investigation, it found Chinese producers and exporters of towers used to support actual wind turbines with more than a 100-kW power rating were receiving state subsidies between 13.74 and 26 percent. In response, DOC applied tariffs of 13.74 percent on CS Wind and 26 percent on Titan Group companies. All other Chinese tower producers and exporters received preliminary tariffs of 19.87 percent.

The ruling does not cover the nacelle, turbine and rotor blade complex that sit on top the wind towers. Unlike their solar power counterparts, Chinese wind turbine manufacturers have very little penetration in the US market but wind tower suppliers have been doing rather well, suggesting some hope for the sector as a whole

Ill wind at home

Back home the Chinese wind manufacturing sector is going through a tougher time than the solar sector, which can at least count on a booming domestic market to at least partially make up for the slowdown in Europe’s solar markets and the new tariff barriers raised in the US.

China’s National Energy Administration recently stated that it will approve about 40 percent less wind power capacity in 2012 than what it did last year. 2011 was no banner year for the Chinese wind sector which installed 17.6-GW of new capacity, 6.9 percent less than 2010 according to the China Wind Energy Association (CWEA).

The problem facing the industry is one of governance or, more precisely, previous poor governance that regulators are now trying to address. Chinese government policies issued in recent months are aimed at getting wind project developers and their allies among the ranks of provincial government officials to focus on making sure wind-generated electricity flow safely into power grids rather than building ever more generating capacity.

"China's wind power sector used to focus on its development speed, but now more attention is directed to the quality of its development," said Dong Luying, an associate professor at the Energy Research Institute at the National Development and Reform Commission, during a speech in Shanghai earlier this month. "Last year's slowdown marked the beginning of this adjustment period."

The under-regulated expansion of the Chinese wind power sector created a serious misalignment between the capacity of new wind farms and ability of provincial and national grid infrastructure to handle their large and unpredictable fluctuations in wind-powered generation. As a result much wind-powered generating capacity remains unconnected to the grid, more than two years after the problem became very apparent during the peak of the wind boom in 2010.

The CWEA estimates that the installed but unused wind-powered generating capacity last year was enough to provide electricity to 3 million Chinese homes. It is little wonder then, that regulators are being cautious about adding to the total.

The grid issue is primarily one of safety. Last year, for example, a number of serious incidents cropped up in Gansu province, one of China’s major power bases. In once instance equipment failure at one Gansu wind farm caused a chain reaction that knocked out hundreds of wind turbines across the region and threatened to disrupt a transmission network that delivers electricity to about a third of the country.