Front Generator Wind Turbine

Last year, President Obama slapped tariffs on China solar panel makers deemed to be undercutting their American rivals with cheaper goods.  As a result of Washington’s barrier to entry and budget cuts for solar energy in Europe, the world’s biggest Made in China solar companies lost billions.

Trina Solar (TSL) went from nearly $700 million in market cap last year to $400 million currently.  The company’s shares have fallen by more than 40 percent.  By comparison, Tempe, Arizona based First Solar (FSLR) shares fell by 23 percent over the last 12 months.

With Chinese solar companies now limping through the U.S. market, Washington has set its sights on wind power. Obama denied permits for a privately held China firm to build a wind farm in green-as-can-be Oregon. The majority of Chinese investments in the United States have either been approved or have not required any approval at all.  State oil giant CNOOC (CEO) is in the U.S. oil business. But when it comes to clean energy, something the U.S. proclaims it wants to be a leader in, China is not welcome.

One reason may be strategic.  China is focused on becoming a world leader in alternative energy technology.  It’s high cost, high value for an economy known as the world’s assembly line.  High cost, high tech products is where the U.S. wants to be. It’s not that Washington doesn’t want green energy from China. It just wants U.S. firms to do it, and not Chinese rivals, who have been able to do it cheaper thanks to labor laws and other regulations in their favor.

China has more wind power capacity than another nation on earth.  It currently has around 68 gigawatts of wind power while the No. 2 U.S. has about 46 gigawatts.  But Chinese companies looking for new markets, and extra cash to expand, are going to have to rely on their home market.

On December 18, the U.S. Department of Commerce imposed stiff tariffs on Chinese-made wind towers. The department said Chinese exporters were selling utility-scale wind towers in the at margins 45 to 70 percent cheaper than their U.S. counterparts. In response, the department set deposit rates for cash, used as surety for goods, ranging from 34.33 to 60.02 percent on the towers and additional countervailing duties of 21.86 to 34.81 percent to offset Chinese government subsidies.

Speaking with China Daily in Beijing recently,  Zheng Kangsheg, secretary of the board of directors for the publicly traded $3.5 billion wind powerhouse, Titan Wind Energy (SHE: 002531) said, “With rates of duty like this, it’s impossible for the products of Chinese wind tower manufacturers to enter the U.S. (Our) market share will definitely decline sharply,” he added.

Titan’s shares are up over 7 percent this year and 34.87 percent in the last 12 months. This is a company on the march.

A 2012 investigation into anti-dumping and countervailing duties found that Titan Wind Energy gained sales revenue of $58.4 million from its U.S. exports of utility-scale wind towers in 2011, accounting for 38.64 percent of its operating revenue that year. The company will now attempt to expand its market share in Europe, the Asia-Pacific region and Africa to offset the predicted losses in the U.S., the company said.

The department’s decision has added to the tough times being experienced by Chinese wind power equipment manufacturers as a result of overcapacity. Washington’s anti-China wind stance has made matters worse for a sector that seems to have done what China does best: overbuild, and overbuild quick.

China Ming Yang Wind Power Group (MY), one of the world’s top 10 wind turbine manufacturers by sales, reported a gross profit of 137.2 million yuan in the third quarter of 2012, a fall of 55.1 percent from 305.6 million yuan for the corresponding period in 2011, blaming weak demand for wind turbine generators in China. Shares are down 42.9 percent over the last year.

Sinovel Wind Group Co (SHA: 601558), another leading Chinese manufacturer in large-scale onshore, offshore and inter-tidal wind turbines, reported a net loss of 280.3 million yuan during the same period. Shares of the company’s stock are down 18.7 percent.

Beijing has since raised the technical bar for wind farms to connect to their energy grid, and now industry experts predict that a larger number of companies will be forced out of the sector altogether in the next three years, trade barriers or not.  China is still seen as one of the major global markets for wind energy, both as an end-user and as a producer. It’s just that, if it wants to spread the cheer of cleaner air, it will just have to do it at home. That is, if the Commerce Department continues to have their say.