Wind energy development in China has doubled in China in 2008, according to the director of Ministry of Industry and Information Technology Equipment Industry Division, Zhang Xiang-mu, who recently authored an article on Renewable Energy China. Zhang called for a brake on wind energy development because of the lack of grid electricity transportation. Overcapacity in the wind energy industry is even worse than in the solar industry, Zhang said. He estimated that the number of companies involved in wind energy increased from 6 to 70 in 2008, and production capacity will reach an annual output of 35-40 million kilowatts.
Zhang said China's wind farm construction speed may be maintained at the annual installed capacity of 10-15 million kilowatts. As a result, some of the companies face tough competition and reshuffling in the industry is inevitable in the near term. A-Power Energy (NASDAQ:APWR), a US-listed company, tripled its stock price on the expectation that China will speed up wind farm development and expanded capacity to 2GW by 2010. However, with the brake call by the Ministry of Industry and Information Technology, the demand for turbines may slow down significantly in 2010. The last few quarters' earnings are rather disappointing, as no wind turbines, aside from two samples, have actually been sold.
Disclosure: Author is long GE.