The Evolution of the Wind Industry and the Rise of Chinese Firms: From Industrial Policies to Global Innovation Networks

Abstract

Powered by a growing environmental awareness and the perception of ending fossil-based energy sources, wind energy has evolved as a reliable, mature and increasingly price-competitive alternative to fossil and nuclear energy sources. Along with incremental technological progress, the wind industry, i.e. the development and manufacturing of wind turbines, has developed very dynamically both with respect to organization and location. Originating mainly in small and medium-sized enterprises in a core region of Northern Europe, the wind industry is now a global industry with an increasing significance of Chinese turbine manufacturers. Informed by evolutionary thinking and recent discussions on the concept of path dependence, we will trace this organizational change and geographical shift over time and space. We will show that the development of the wind industry is an example of on-path evolution in which the accumulation of small and incremental change has led to fundamentally new structures. The main drivers of this development have been politics and various types of public policies as well as, more recently, the globalization of knowledge production in global innovation networks—thus illustrating the need to better integrate the role of the state and of institutions at multiple levels into evolutionary thinking.

Acknowledgements

We wish to acknowledge the helpful funding of the Ministry for Science and Culture (MWK) in Lower Saxony, Germany, which provided financial support through its PRO*Niedersachsen programme.

Notes

Examples for acquisitions are the take-over of Danish Bonus by Siemens, and German Tacke first by Enron, then GE (Campos Silva & Klagge, 2011). The most prominent merger among established wind industry firms is the merger of NEG with Micon in 1997, later as well with Vestas in Denmark, where industrial policies supported consolidation to strengthen domestic companies in a more and more competitive sector (Lewis & Wiser, 2007).

Despite its impressive growth, wind energy only provided less than 1% of total electricity production in China in 2009 (IEA, 2012). Moreover, the enduring economic upward trend and the growing energy need in China is—and in the near future will be—mostly met by the use of more fossil fuels, especially coal (EIU, 2012).

Interview with Managing Director and Regional Sales Manager for ENERCON Spain, June 2010.

Interview with the Director of External Relations for the Spanish Wind Association, April 2011.

More conservatively, the IEA Wind (2011: 70f.) states the number of Chinese turbine manufacturers as 60 in 2010, since not all of the 80 companies have commercially available models. Moreover, out of the 60, only 25 have started (larger) batch production.

IPR protection has been a major issue in recent trials, e.g. between Sinovel and its partner AMSC (American Superconductor) (Xinhua, 2012; Davidson, 2012a).