“The size and power output of China’s new offshore wind turbines are remarkable. We are talking about turbines almost 200 meters tall, with blades spanning the length of a football field. The amount of electricity they can generate is staggering.” enthused Cosimo Ries from Trivium China, who is a clear “fan” of offshore wind. And China’s turbines are getting bigger. The Dongfang Electric Corporation just rolled the world’s largest single-capacity offshore turbine (26MW) off the production line in Fujian Province this October.

S&P Global estimates by 2050, offshore wind could become one of China’s most affordable renewable energy sources. The installed capacity increased exponentially over the past two years with gigawatts of new projects coming online. A clear state-led strategy has been pivotal. The Chinese government prioritized offshore wind in its 14th Five-Year Plan. To achieve needed cost reduction and efficiency improvements, offshore wind developers received higher government feed-in tariffs. The additional earnings allow companies to invest more in R&D, sharply reducing wind turbine costs. Moreover, major state-owned enterprises like China Three Gorges Corporation have taken the lead in developing offshore wind projects. 

Although offshore wind energy holds significant potential for China, its growth depends on a delicate balance of government support and market forces. Early feed-in tariffs anchored the industry. However, as shallower coastal sites become occupied, concerns grow about the industry’s long-term ability to sustain coastal provinces’ power needs. To explore the drivers shaping the offshore wind industry, Cosimo Ries (CR) joined the China Environment Forum (CEF) for a closer look at its evolving landscape.

CEF: I read online you think wind power is more important than solar. Why? 

CR: Wind power is generally more reliable over time and across regions on the grid, while solar is overwhelmingly concentrated in specific hours of the day. China has added record quantities of solar capacity at rates no one thought was even remotely possible just a few years ago. The problem is whether the industry has done too much too quickly and is now destined for a major slowdown beyond 2025. Until there’s a major breakthrough in storage for solar, wind will remain the more stable energy source. 

The vast majority of wind capacity comes from onshore projects, not only in China but around the world. This is because offshore wind is still a younger industry, with higher costs and less technological maturity. The first commercial offshore wind project in China was built in 2010, whereas onshore wind has been around since the 90s. However, offshore holds great promise due to its high electricity generation potential. Wind farms located along China’s southeastern coast, such as Eastern Guangdong, can produce over 4,000 hours of electricity annually.

CEF: What’s driving China’s offshore wind development? 

CR: Initially, central government subsidies were crucial in encouraging the costly wind farms to be established. However, these subsidies ended in 2022, which many industry insiders felt was one or two years too soon. In response, some wealthier provinces, like Guangdong, extended subsidies out of their own pocket. Most provincial subsidies will soon be phased out and they no longer appear essential for most projects to reach commercial viability. With limited land for onshore renewables, China’s electricity-hungry coastal provinces offer offshore wind developers strong revenue potential. 

In the next decade, fixed-bottom offshore wind sites in shallower coastal waters run out. The biggest challenge will be whether the industry can cut costs and commercialize the far more expensive floating offshore wind supply chains quickly enough. Particularly difficult will be building out a big enough fleet of large-capacity vessels to install these huge floating turbines.

CEF: Why do the coastal provinces build offshore wind projects instead of importing renewable energy from inland China?

CR: Local offshore wind projects are big generators of GDP, employment, and tax revenues. Building these projects drives local economies through several complementary business activities, such as turbine transport, port upgrades, and supply chain development. This is a better deal than importing renewable power from Western China. The transmission process from the west to the east can result in energy losses due to the poorly coordinated energy planning at the national level. Additionally, there is an element of local protectionism, with provincial governments prioritizing their industries.

CEF: What influences Chinese developers to decide where to build offshore wind farms?

CR: Aside from provincial subsidies, site selection is largely industry-driven. Many companies choose to build close to their headquarters. For instance, CATL, the renowned battery maker, plans to establish its first offshore wind project in its home province Fujian. While it is not explicitly stated, I’d guess that this project serves to green its energy supply and comply with the EU Battery Regulation.

CEF: After the wind turbines are retired, can the components be recycled? 

CR: Infrastructure for recycling wind turbine components, such as fiberglass in the blades and rare earth minerals used in permanent magnets, is currently limited because relatively few turbines in China have been decommissioned. I expect this will become a priority in the future, as aging turbines are retired in large numbers. Recycling technologies for permanent magnets are already fairly mature and well-established. Thus, it should not be much of an issue in the future, particularly since the government recently established a state-owned enterprise dedicated to renewable component recycling. 

CEF: Can you elaborate on the phenomenon of Chinese renewable developers being forced to build their own storage and “subsidize” the coal industry? 

CR: The increasing costs of mandated storage are indeed creating a drag on the growth of the renewable industry. While wind and solar power have grown rapidly, their intermittent output has strained the grid, necessitating backup from coal-fired plants for stability. This is because energy storage is not yet economically feasible, with the power market still underdeveloped. In order to alleviate the problem, the government mandates renewables to invest in storage. This adds considerable costs to their developments. 

At first glance, the cross-subsidization between renewables and coal-fired power appears to divert funds from further renewable expansion. However, it’s somewhat the opposite: coal-focused state-owned enterprises (SOEs), under pressure to meet renewable targets, have long “subsidized” renewables by providing grid stability without full compensation and by reducing their own generation to make room for renewable sources. Now, with government caps on coal prices creating financial pressure on these SOEs, they are actively seeking higher-return assets. As regulatory frameworks and technology for renewables have become more mature, they now present a more attractive investment opportunity, enabling SOEs to offset the burden of their loss-making coal assets.