Study On The Low-end Overcapacity Of China’s Wind Power Industry

Nowadays, the environmental pollution and the energy crisis all over the world havebeen more and more serious, in this circumstance, China has planned its new strategy ofenergy, with wind energy included for its clean nature. Since the first wind turbine wasinstalled, China’s wind power industry has developed very slowly at first but had a rapidspeed recently, and now China has the world’s largest wind power installed capacity.However, the rapid development has also brought back concerns about overcapacity, andit will have some adverse effects of the development. So far many theses have studied theovercapacity with the quantitative method, this thesis has researched this problem withthe combination of qualitative and quantitative methods, for example its little capacityutilization rate, increased inventory, decreased profitability, etc, and in brief, there is theovercapacity in low-tech turbines of wind power industry.The analysis of its causes can be found not only in market factors, and non-marketfactors such as the government policy have greater responsibility for the capacity, thereasons are as follows: market concentration is high but with increased governmentincentives especially the large range of local government support, concentration oflow-end products becomes lower; low barriers to entry and high exit barriers lead to theoccur of overcapacity’s easily happening; the little differentiation between products leadsto the sharper competition; local government’s huge support to the industry with thepurpose to improve its GDP has caused the inequality competition.According to the above analysis, the problem can be solved from the followingaspects: regulation of the investment, technical support, in-depth development of theindustry chain can be included from the supply side, and for the demand, there are thedevelopment of offshore wind power, expansion of overseas markets, grid technology ofwind power and the implementation of wind power without grid technology. Thegovernment plays a leading role in the management, but the market power should also beconsidered seriously.