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Ming Yang admits reliance on Aerodyn

CHINA: Ming Yang has admitted its position could be adversely affected if it loses its licensing agreement with Aerodyn, the German designer of its SCD wind turbines.

Mingyang's SCD two-bladed turbine... designed by Aerodyn
Mingyang's SCD two-bladed turbine... designed by Aerodyn

In its 2011 annual report to the US Securities and Exchange Commission, lodged 1 May, Ming Yang revealed details of its US licensing agreement with Aerodyn for its 2.5/3MW and upcoming 6MW turbines. The company is listed in the New York Stock Exchange.

Ming Yang has previously played down the input of Areodyn into its designs, describing the relationship between the two companies as a collaboration.

Ming Yang said it could not guarantee shareholders that Aerodyn would not make a similar agreement, or sell new technology, to its competitors. It also said the German company had provision to terminate the licensing agreement.

Additionally, the agreement also prohibits Ming Yang from entering into joint ventures or contracting subsidiaries to manufacture either the rotor blades or the turbine.

Worryingly Ming Yang appear to have reservations about the ability of its turbines to stand up to offshore conditions. In the report it said: "Due to the fact that our SCD wind turbines are based on a new technology and that the long-term reliability of such technology has not been proven, it is uncertain whether our SCD wind turbines can be installed on offshore wind farms and will perform as designed.

"It has not been proven whether the special surface treatment and design of our SCD wind turbines are adequate for the erosive and salty environments that are typical of offshore wind farms. The installation and maintenance of such offshore wind turbines are expected to be more difficult, labor intensive and costly."

Earlier this year, Ming Yang launched an research and development centre in North Carolina to test the SCD turbines and lower the cost of energy.

Aerodyn will also receive an up-front annual royalty payment for the SCD 2.5/3MW turbine regardless of the market demand for the turbine.

In a section titled 'Risks related to our company', Ming Yang said it was reliant on a small number of customers for most of its  orders. In 2011 almost 80% of orders came from three companies China Huaneng, Datang Renewables and Huadian.

Like fellow Chinese turbine manufacturers, Ming Yang has had a difficult 2011. The company's profits for the year have fallen from CNY 709 million in 2010 to CNY 292 million, a 53% fall in profit.

As with Goldwind and Sinovel, which suffered higher profit fall, Ming Yang blamed this on falling turbine prices in the Chinese market.

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