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Harm to reputation cannot be undone

If you thought the wind industry lacks exciting story lines, think again. The latest allegations against Sinovel - in its long-standing row with American Superconductor (AMSC) - read like a cross between a spy novel and a tabloid newspaper.

In addition to AMSC's claims, we have an Austrian court finding a Serbian man employed by its subsidiary Windtec guilty of passing on grid code-related software to Sinovel. According to reports, cash, sexual favours and a job with China's number-one wind turbine manufacturer were among the inducements on offer.

But while the Sinovel-AMSC saga makes a strong candidate for best wind industry story of the year, it has had unfortunate ramifications for both companies. AMSC has been forced to slash its 2011 results and cut staff, while Sinovel's reputation continues to suffer amid accusations of intellectual property theft.

Whether Sinovel is guilty or not, the online wind-power community seems to have made up its mind: whatever the merits of AMSC's case, the company does not stand a chance when it goes to court in Beijing. It is an understandable point of view. One only has to look at Enercon's travails in India with EIL to know that in intellectual property cases it can be difficult to get a good result away from home.

Ultimately, even if Sinovel wins the battle, it could still lose the war. Over the past year, it has made substantial efforts to expand beyond its home market, signing deals in Greece, Ireland and Brazil. It is doubtful the current accusations will help its cause overseas, least of all in the US, where Sinovel has only one turbine installed.

For other Chinese companies trying to do business abroad, the row could prove awkward amid fears they could be tarred with the same brush. Goldwind has gone to some lengths to ensure it is on script and buying from US suppliers with its North American operation, while Mingyang was sufficiently concerned to issue a stock-exchange statement highlighting its respect for intellectual property.

International expansion is incredibly important for China's turbine manufacturers, with market conditions in their home market set to harden as a result of stricter controls on development. This was echoed in the first half of the year when many Chinese turbine manufacturers suffered poor results. Sinovel saw its turnover over the period fall by nearly a third while Goldwind fared only slightly better with a fall of 17.6% (see page 22).

On a global level, the environment is better but optimism remains fragile. Windpower Monthly's Windicator (page 87) finds stock prices for turbine manufacturers have continued to fall despite many outside China posting strong results. Both Vestas and Gamesa were good examples of this, announcing strong second-quarter figures but suffering significant share-price falls as a result of the global economic situation and austerity measures affecting wind tariffs.

It is against this backdrop that the wind sector has to drive the industry with new products and designs. Whether an innovation has been gained through company acquisition or research and development, in an industry that is becoming increasingly competitive, intellectual property can only become more important. It is easy to understand the motivations for wanting to find a shortcut on this, but the fact is this can only harm the development of the products that will make wind a more attractive alternative.

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