Scaling up: Asia Pacific’s wind energy supply chain in the race to 1.5 degrees celsius

The wind energy supply chain in APAC is a study in contrasts. China and India dominate the market, boasting robust domestic manufacturing ecosystems capable of producing turbines, blades, and associated components at scale.

China alone accounts for over 60% of global wind turbine production, leveraging economies of scale, advanced technology, and a supportive policy framework.

According to Xuyang Dong, a China energy policy analyst at Climate Energy Finance, “With a domestic supply glut and world-leading technology, China will increasingly seek to export turbines.”

Meanwhile, India’s wind sector has made significant strides, with domestic firms like Suzlon and international players such as Vestas contributing to the country’s renewable energy targets. However, outside of these two giants, the supply chain in the rest of the APAC region is underdeveloped.

Markets like Indonesia, Vietnam, and the Philippines have immense wind energy potential but lack the domestic manufacturing capacity and infrastructure to capitalize on it. Instead, these countries rely heavily on imported components, leading to higher project costs and longer timelines. The absence of localized supply chains also poses logistical challenges, further hindering the expansion of wind energy in these markets.

Wind energy plays a vital role in APAC’s sustainability ambitions. The region is home to some of the world’s largest carbon emitters, and the transition to renewable energy is crucial to meeting global climate targets. By replacing fossil fuels with wind power, APAC countries can significantly reduce greenhouse gas emissions, improve air quality, and decrease reliance on imported fuels.

In China, wind energy contributed approximately 8% of the country’s electricity generation in 2022, a figure set to rise as more capacity comes online. India’s wind sector is integral to its ambitious goal to achieve 500 GW of renewable energy capacity by 2030.

Meanwhile, emerging markets like Vietnam have seen exponential growth in wind installations, driven by favorable policies such as feed-in tariffs and power purchase agreements. Beyond environmental benefits, wind energy also drives socio-economic development. The sector creates jobs across the value chain, from manufacturing and installation to operation and maintenance. Localized supply chains can further amplify these benefits, fostering economic growth and resilience in communities.

Despite its promise, the wind energy sector in APAC faces several challenges. Policy and regulatory uncertainty in many APAC countries deter investment and slow project development. For instance, sudden changes to Vietnam’s feed-in tariff policy in 2021 caused delays and financial losses for developers. Infrastructure bottlenecks, such as limited port capacity, inadequate grid infrastructure, and insufficient transmission networks, pose additional barriers to scaling wind energy in the region.

Offshore projects, in particular, require substantial investment in specialized ports and vessels, which are lacking in most APAC countries. High capital costs also remain a major issue. The reliance on imported components and the absence of economies of scale result in higher project costs for many APAC markets, while financing remains a challenge, especially for smaller developers in emerging markets.

Additionally, the concentration of manufacturing capacity in China and India creates vulnerabilities, particularly during geopolitical tension or supply chain disruptions, as evidenced during the COVID-19 pandemic.

The next few years will be critical for the wind energy sector in APAC. By 2025, the region’s onshore wind capacity is expected to exceed 800 GW, with offshore installations projected to cross 50 GW. To achieve these milestones, APAC countries must focus on enhancing regional collaboration and building resilient supply chains through joint ventures, technology transfer agreements, and regional trade partnerships. Such initiatives can facilitate the development of localized manufacturing hubs and reduce reliance on imports.

Policy reforms will also play a crucial role. Stable and transparent regulatory frameworks are essential to attract investment and accelerate project timelines. Incentives such as tax breaks and subsidies can further lower the cost of wind energy projects. Technological innovation is another key driver. Advances in turbine technology, such as larger rotors and floating offshore turbines, can unlock new wind resources and reduce costs. Investing in research and development will be crucial for maintaining the sector’s momentum.

Additionally, capacity building through training programs and workforce development initiatives can address skill gaps in the wind energy sector, creating a pipeline of qualified professionals to support the industry’s growth.

Wind power offers several advantages over non-renewable energy sources. It is emissions-free, sustainable, and increasingly cost-competitive. The levelized cost of electricity (LCOE) for wind energy has fallen significantly in recent years, making it competitive with coal and natural gas in many APAC markets. However, wind energy also has limitations. Its intermittent nature requires complementary technologies, such as energy storage systems or hybrid renewable solutions, to ensure grid stability. Wind projects’ upfront capital costs remain higher than fossil fuel plants, although falling costs and technological advancements are narrowing this gap.

The feasibility of scaling wind energy in Asia depends on several factors. Many APAC countries have abundant wind resources, particularly for offshore projects. For example, Japan and South Korea have significant offshore wind potential, while countries like Mongolia boast high onshore wind speeds.

Rapid urbanization and industrial growth in APAC drive energy demand, creating a strong market for wind energy. Governments’ commitments to renewable energy targets further enhance the sector’s prospects. While financing remains challenging, innovative models such as green bonds and public-private partnerships are emerging as viable solutions.

International institutions like the Asian Development Bank are also crucial in funding renewable energy projects. At the same time, the concentration of manufacturing capacity in China and India underscores the need for a diversified supply chain. Countries must navigate geopolitical tensions and trade dynamics to ensure the resilience of their wind energy sectors.

The race to 1.5 degrees Celsius demands urgent and transformative action, and wind energy is poised to play a leading role in APAC’s renewable energy transition. While challenges persist, the region’s immense wind resources, growing energy demand, and supportive policy environment create a compelling case for investment and innovation in wind energy. APAC can scale its wind energy capacity and contribute meaningfully to global climate goals by addressing supply chain bottlenecks, fostering regional collaboration, and embracing technological advancements. The road ahead may be fraught with challenges, but the potential rewards—a sustainable, low-carbon future—make it worth undertaking.