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14 September 2022

China’s Mingyang to power global growth of offshore wind – IEEFA

An overseas expansion by China’s largest private wind turbine manufacturer could drive turbine sizes higher and wind farm development prices lower, finds US energy think tank IEEFA.

By Oliver Gordon

The much-anticipated overseas expansion of Chinese offshore wind giant Mingyang could provide an important boost for the global supply of offshore wind power, according to a new report from US think tank the Institute for Energy Economics and Financial Analysis (IEEFA).

China boasts the world’s largest offshore wind industry. Between 2010 and 2020, China accounted for 32% of the total global expansion of offshore wind generation capacity, while in the past two years, one out of every five turbines came from Mingyang, China’s largest private wind turbine manufacturer.

Wind turbines in the South China Sea off Hong Kong. (Photo by chrissmith731 via Getty Images)

“Mingyang’s overseas expansion could drive turbine sizes higher, wind farm development prices lower and benefit the supply of offshore wind power in many markets around the world,” says IEEFA’s energy finance analyst Norman Waite.

Chinese offshore wind now has a levelised cost of electricity (LCOE) – the price at which the generated electricity should be sold for the system to break even at the end of its lifetime – that is near coal: offshore wind (including transmission) is at $78 per megawatt hour (MWh) and coal at $76/MWh. Offshore wind projects are typically more expensive than onshore projects because of construction and maintenance challenges. The answer to this has been to build larger turbines that reduce their total number, as LCOE declines for larger units.

“Mingyang has consistently led the way toward larger offshore units in China and appears like it will continue to do so,” says Waite. “It was the first to introduce 6.5MW, 8MW and 11MW offshore wind turbines to the local market.”

Striving for ever-larger turbines, Mingyang has become one of the first manufacturers to adopt a type of permanent magnet synchronous generator known as a medium speed hybrid gearbox (MSPMSG). The company has already become the world’s largest supplier of hybrid MSPMSG turbines and supplied around 90% of hybrid drives in China in 2021.

Bucking the trend among its Chinese competitors, Mingyang has moved much of its production in-house; keeping external suppliers for redundancy but doing much of its own production of blades, drive gearboxes and other systems to protect its intellectual property.

While German manufacturing company Aerodyn teamed up with many other suppliers in the mid-2000s, Mingyang took the first-mover advantage to go beyond licensing Aerodyn designs to start joint development of new models.

Around 50–55% of Mingyang’s revenue is still sourced from onshore turbine models, IEEFA estimates, but that will fall as the company increasingly focuses research and development on offshore technologies.

The East Asian offshore wind markets of Japan, Korea, Vietnam and Taiwan are all mired in a degree of uncertainty regarding Mingyang’s expansion, according to Waite. However, the company has recently raised equity in London that can be used to fund a turbine assembly and blade manufacturing facility in the UK. "The UK is a mature and transparent market with more capacity growth potential by 2030 than all four of those East Asian markets put together," says Waite. "Mingyang’s UK investment opportunity could be a game-changer for the company and the industry.”

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