In this article from the 2024 Renewable Energy Market Review, discover how Chinese wind turbine generator OEMs have become a key player on the global renewable stage and how insurers plan to respond.
China has long been recognized as a global powerhouse for its manufacturing base but may be at a turning point where its wind turbine generator (WTG) original equipment manufacturers (OEMs) become increasingly pivotal players on the global renewable energy stage.
In 2022, Chinese OEM Goldwind emerged as a leader in global market share for the first time with the addition of 12.5 GW of new capacity. This transition consolidated positive perceptions of the OEM, variously driven by Goldwind's innovation, focus on quality, more robust warranties, enhanced performance metrics and a supportive regulatory environment coupled with government incentives.
In 2022, Chinese OEM Goldwind emerged as a leader in global market share for the first time.
Yet the integration of Chinese OEMs into the global market introduces complex challenges from an insurance standpoint.
The global market has been dominated by non-Chinese manufacturers for many years and insurers have been vocal on the challenges around understanding performance when compared to more traditional manufacturers' performance. However, we would argue it's important for the good of increasing competition in the sector that global insurers can achieve a clearer view of Chinese OEMs.
Here, we examine how insurance markets can get a better understanding of Chinese manufacturers' quality assurance and control, validated historical domestic performance, expanding supply chain connections and spares availability.
Realigning perceptions
In the early 2000s, Chinese government incentives for domestic deployment in China focused on installed capacity with less emphasis on quality or efficiency. This approach fostered a market driven by delivery speed, low cost and volume, inadvertently cultivating a perception of lower quality and higher risk of defects.
During the advent of new onshore and offshore wind projects during this period, Chinese OEMs were not seen as viable competitors or alternatives to their European and U.S. competitors in the global marketplace.
The Chinese government approach changed around 2010 wherein a tariff-based scheme was introduced for domestic deployment with the aim of focusing on accountability, performance efficiency and profitability, rather than on MW/GW of installed capacity only. A few major Chinese OEMs grasped the vision and opportunity to meet these goals.
Whilst many Chinese manufacturers, or projects with Chinese interests, have historically been insured in the international markets, there remains limited experience with Chinese WTG OEMs, but it is broadly acknowledged that earlier models from companies like Goldwind and Ming Yang experienced quality issues (although this was frequently in common with European manufacturers). However, Goldwind has notably enhanced its competitive international business model and technology performance, leading to a broader acceptance by international developers and operators and consequently within the global insurance markets.
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