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China's strong wind power policy favors the cable market
In recent years, China's new energy sector has seen remarkable progress. From solar and wind power to nuclear and hydropower, these energy sources have been developed rapidly over a short period. Additionally, the future of secondary energy sources such as thermal, hydro, nuclear, solar, and even gasoline looks promising. For instance, offshore wind power is expected to play a key role in driving the cable industry forward.
The growth of wind power is directly influencing the demand for new energy cables. According to data from 2012, China's cumulative wind power capacity reached 75.32 million kilowatts, making it the world leader. That year, 12.96 million kW of new wind power was added, with 15.37 million kW connected to the grid. The total grid-connected capacity reached 62.37 million kW. Wind power generation in China that year amounted to around 20 billion yuan, but the loss of 20 billion kWh of electricity meant an economic loss exceeding 10 billion yuan.
Since the start of the 12th Five-Year Plan, the national energy authorities have promoted both centralized and decentralized wind power development. This has led to local projects being planned based on regional conditions, offering opportunities for small and medium-sized wind power companies.
As the new energy industry grows, so do its sub-sectors, creating new market opportunities. New energy cables are among the first to benefit, with a bright future ahead. The rapid expansion of new energy has provided Chinese enterprises with a platform to showcase their technological capabilities.
However, the high technical requirements of new energy cables pose challenges for domestic companies focused on the low-end market. To stay competitive, they must invest more in R&D to develop products tailored to specific needs.
In 2013, if subsidies continue, offshore wind power could outperform 2012. Moreover, wind turbine bidding prices have been rising, with average bids for 1.5 MW double-fed units approaching 3,800 yuan per kW—up from 3,700 yuan at the start of the year. This trend signals a shift away from low-price competition, which is beneficial for the overall wind power industry.
Despite this, offshore wind power still faces several challenges. Its on-grid tariff is significantly higher than onshore wind power. For example, the Donghai Bridge project has a post-tax price of 0.978 yuan/kWh—nearly twice that of onshore wind. Power curtailment and debt issues also remain serious problems, affecting cash flow for manufacturers.
Yet, there are positive signs. The National Energy Administration set a target of 18 million kW of new wind power capacity this year, and several offshore projects are underway. With improving turbine prices, the industry is gradually recovering.
Offshore wind power development is progressing across various provinces, including Shanghai, Jiangsu, and Guangdong. A total of 43GW of offshore wind potential has been identified, with 38 projects currently in preparation. Inner Mongolia leads in installed capacity, followed by Hebei, Gansu, and Liaoning.
According to the “12th Five-Year Plan for Renewable Energy,†China aims to build 5GW of offshore wind power by 2015, forming an industry chain. After 2015, large-scale development will begin, and by 2020, offshore wind capacity is expected to reach 30GW.
Distributed wind power will also grow, though onshore wind power remains the main driver. Improved grid infrastructure, such as UHV transmission lines and smart grids, will boost wind power capacity and cross-regional transmission, increasing grid connection rates.
Despite these developments, challenges remain. Offshore wind power may not see quick improvements, and the manufacturing industry is entering a phase of lower profit margins. Intensified competition and market maturity will test companies further.
With government policies and subsidies supporting the industry, consolidation and integration are likely. The future of China’s wind power sector remains promising, with growing competitiveness against traditional energy sources.
For the cable industry, the outlook for offshore wind power is encouraging. New energy cables can help reduce market chaos, promoting a healthier industry through innovation and quality improvement.
As offshore power generation expands, new energy cables are becoming a major focus for cable companies. However, many lack sufficient R&D investment due to thin profit margins. Larger firms are now investing more in high-tech, high-value products, aiming to lead the high-end market.
Cable manufacturers must remain market-aware and avoid blind investments or overexpansion. Otherwise, profitability may suffer, and the industry’s long-term health could be jeopardized.
The cable industry is capital-intensive and highly sensitive to raw material prices like copper and aluminum. Cost pressures, funding shortages, and overcapacity are significant barriers for smaller companies.
To thrive in the new energy cable market, companies must differentiate themselves. Mergers, acquisitions, and financial integration are essential to support R&D and produce competitive products. Only then can they compete with global brands.