China-based renewable manufacturers are offering prices up to 200% lower than Western players in major competing markets, according to a new report from Wood Mackenzie.
The consultancy said rapidly declining prices, alongside integrated supply chains and a “high standard of performance,” have enabled China-based renewables manufacturers to supply more than 65% of total global demand. It said there is evidence that prices for non-Chinese products are double that of comparable China-made equipment.
“Benefitting from a robust domestic supply chain, equipment produced by Chinese manufacturers overseas remains price-competitive despite an uplift due to inflation uncertainty and higher production costs,” said Xiaoyang Li, APAC director of power and renewables research at Wood Mackenzie.
The consultancy said that Chinese manufacturers are targeting overseas markets with local content requirements to become regional manufacturing hubs. Between 2019 and 2023, Chinese renewable product exports grew by 35%, which Wood Mackenzie attributed to “competitive prices and production capacity domination.”
Over the same time period, wind and solar project investment increased by 23%, while energy batteries surpassed solar modules to become China’s primary renewable energy commodity export.
According to the report, Chinese companies’ interest in overseas renewable project investment is increasing, but progress is slow due to high development risks and uncertain revenue flows. Wood Mackenzie said Chinese renewable energy companies tend to invest in markets with high power demand, stable business environments, and predictable revenue streams.
“Backed by strong equipment supply chains from Chinese manufacturers, Chinese solar and storage investors prefer greenfield investment when looking for overseas opportunities,” Li said.
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In November, Wood Mackenzie published a report saying that China’s massive increase in solar module production capacity and PV installations has allowed it to maintain relatively low, stable power prices compared to Europe and the United States.
China’s cumulative PV capacity surpassed 670 GW in April, thanks to approximately 60.5 GW of new solar installations since the start of the year.
This article has been updated on 29/05/24 due to a previous inaccuracy in the headline.
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200% less is a negative number… perhaps 50% less or maybe 66% less.