With an oversupply of wind turbines, why are governments subsidizing new manufacturing plants?

In recent years, China has ramped up its efforts to become a world leader in manufacturing and installation of wind turbines.

But the other side of the story is that China has also idled 40 percent of its industrial wind turbine manufacturing capacity as a result of oversupply and plummeting prices.

In Europe, the world’s largest turbine manufacturer, Vestas, announced a bond issue of 600 million euros ($807 million). This is the first bond issue in the company’s history and it was due to slow growth.

Even with an oversupply of manufacturing capacity, and falling prices for wind turbines, taxpayer-funded investment in wind turbine manufacturing by foreign companies in North America has been moving ahead with great fanfare.

In Canada, Ontario signed a $7 billion dollar deal with South Korea’s Samsung to manufacture industrial wind turbines and develop wind energy projects in the province — creating 4,000 jobs.

John Laforet is president of Wind Concerns Ontario, a coalition of 42 grassroots organizations aiming to curtail development of wind farms in the central Canadian province of Ontario.  He is also running for municipal public office.

Governments around the world are actively seeking private development of renewable energy projects by offering generous feed-in tariffs that often see developers paid many times the market rate for the power they produce.

This has encouraged a surge of applications, but the volume of applications and other challenges associated with these projects present potential risks to prospective investors.

Projects require transmission capacity to carry their energy to market, but the agencies accepting applications for a given jurisdiction often aren’t responsible for managing transmission systems.

In the Czech Republic, a boom of renewable projects has caused considerable challenges to the transmission system and has caused the grid operator to block future wind projects, while threatening to disrupt grid connections for existing renewable energy projects.

In Canada, Ontario’s inventory of projects under development, approved or in the proposal stage, does not consider existing grid capacity.