Neither the worldwide financial meltdown nor the recent drop in oil prices, viewed by some as bearish for wind, could dampen the exuberance of those attending the three-day Global Wind Power 2008 conference in Beijing at the end of October. With China on course to close the year with over 10 GW of cumulative installed capacity, up from just under 6 GW at end 2007, the optimism that characterised last year's Windpower Shanghai conference and exhibition (Windpower Monthly, December 2007) was once again ever present.
"Should the financial crisis cause an impact, it could only delay the booming of this industry," said Arthouros Zervos of the Global Wind Energy Council (GWEC), one of the main sponsors of the October 29-31 event. "This is the most exciting place in the world to be in wind energy right now," agreed Andrew Garrad of Garrad Hassan, a UK-based consulting firm that has worked with several Chinese manufacturers on turbine design.
It was a view echoed in every corner of Beijing's China International Exhibition Centre as it teemed with 1000 conference delegates from 35 countries and some 10,000 visitors scanning the exhibits of 207 companies from around the world. By every measure, the Beijing event had a much stronger showing than its 2007 Shanghai forerunner, which had attracted around 500 conference delegates, 8000 exhibition visitors and around half the number of exhibiting companies than paid to display their wares this year.
And this is no wonder: "From planned projects to operational capacity, China is on track to become the single largest market for wind power by 2011," said Keith Hays of Emerging Energy Research (EER). GWEC agrees and is now predicting that China will have more than 200 GW of wind plant installed by 2020. This is nearly double its previous forecast for 120 GW and assumes optimal political and economic conditions, Zervos said. GWEC and Greenpeace launched a joint report, Global Wind Energy Outlook 2008, at the event (page 56).
Optimism is high for a continuation of the good times, "supported by strong political will, improving incentives and vast natural and industrial resources," said Caitlin Pollock of EER. Speaker after speaker agreed, proclaiming the fundamental drivers for China's booming wind industry were stronger than ever, with Wu Gang of China's leading domestic supplier, Goldwind, adding that the local work ethic was also a factor. "We do not really have weekends or holidays," he said, noting with obvious perplexity how workers from other countries balk at working at weekends. "They talk about human rights."
The top Chinese wind power industry executives, including Gang, Sinovel's Han Junliang and China Composites Group's Zhang Dingjing, all predicted annual installation in China will rise from around 4-5 GW for 2008 to 7-10 GW in the next few years. Pollock agreed, suggesting China will hit the 10 GW a year mark by 2011. She anticipates $78 billion in turbines sales revenues in 2008-2015. "Order books will intensify throughout the period," she said.
Bursting at the seams
Even greater demand could be met, added Sebastian Meyer of consulting firm Azure International. He pointed out that China's domestic manufacturing base is bursting at the seams. "Overall we're looking at 19 GW of production capacity theoretically available in China by 2010, if we believe all of the production plans by all of the turbine manufacturers in the industry today," he said. The backlogs that have ailed the industry are also easing. "That's not to say that you can receive any turbine you want in under 12 months," Meyer said. "But at least half of the product types that are out there have backlogs that are less than 12 months."
Against this background, industry consolidation is widely expected. Sinovel's Han was just one of several speakers who said the global credit crunch, a dominating topic in discussions, could actually help speed up the healthy consolidation of the Chinese industry, boosting competitiveness. Meanwhile it could mean China's leading developers, such as China Huaneng and Datang International, secure loans from banks more easily than in recent times as the Chinese government loosens monetary policy and increases liquidity among commercial banks to address the credit crisis, he said.
Others echoed his views. "Energy is a lasting issue, and governments around the world are not expected to change their energy policies in a significant way due to the financial crisis," said Li Junfeng of the Chinese Renewable Energy Industries Association, another key sponsor of the event. "We have not seen any sign that the Chinese government will cut subsidy on renewable energy," he added, while China Composites' Zhang said: "I've communicated with the CEOs of the largest power corporations. They have all indicated that they will not slow investment in renewable energy."
Soren Lutken of energy and environment firm Casper Van der Tak Consulting was more cautious. "Financing after the financial crisis has really hit us. It has become more difficult," he said. "That doesn't mean it is impossible. And some would even say it is healthy that we get back to basics in project financing, that we get the most risky projects out of the market."
Meanwhile, other key issues discussed at the conference included the need for better wind resource assessments, the quality of turbines being made in China, and the need for grid enhancements across the country to keep pace with development. Several speakers warned that in China's rush to build wind plant, not enough was being done to ensure quality across the board. Paulo Soares of India's Suzlon issued the bluntest criticism when discussing the 3.8 GW of projects awarded in Gansu province in June (Windpower Monthly, China Supplement, November 2008). "There was no mention of wind resource measurement data available in the government," he said. "How can you define the tariff?"
Shi Pengfei of the Chinese Wind Energy Association agreed and recounted the case of a 100 MW project developed by a state-owned enterprise that used wind assessment data from outside its site. "Everyone is in a hurry," he said. The same is true of many manufacturers, Shi said. "Even when manufacturers want to improve their quality, orders come in and they must ship out products in a hurry," he said. "Manufacturers tell me they want to improve but do not have time."
There have been some improvements though, insisted Willem Kortekaas of Dutch mechanical engineering firm Mecal. "If you talk about Chinese turbine manufacturers and manufacturers of components such as gearboxes, their standards used to be quite a bit lower," he said. "But they are coming up very quickly. You are seeing them reach levels that will be acceptable internationally in a year, two years." He cited as examples China's top three gearbox suppliers: Chongqing Gearbox, which is affiliated to China Shipbuilding Industry Corporation, China High Speed Transmission, and Hangzhou Advance Gearbox Group. "They are beginning to be very confident," he added.
In terms of building more grid connection and transmission capacity, Azure's Meyer noted that the amount of wind capacity installed but yet to be connected to the grid network has increased. By the end of 2007 some 2 GW of installed plant was laying idle waiting for connection. "From what we can tell now, installed but not yet connected turbines increased to 2.2 GW in the first half [of 2008]. This is concerning because typically in the third and fourth quarter we see installation activity peak in China, " he said. "It suggests that this inventory of installed but not yet connected turbines will grow to the end of this year." This will hit cash flows significantly for project operators, he said.
On the exhibition floor the leading global and domestic companies vied for the attention of visitors. "We truly believe that China will become the epicentre of wind power in the world, and we are here to support this," said Lars Andersen of Danish turbine manufacturer Vestas. The firm stamped its authority as the world's leading turbine supplier by locating its two-floor booth at the exhibition hall's main entrance. It would have been fitting if Vestas' neighbour had been China's Goldwind, the country's leading turbine supplier, but that position was assumed by Sinovel, also with a two-storey booth. The company has soared to tenth place among the world's turbine suppliers and second place in China in just four years. In Beijing it was clearly sending a message that it does not plan to stop there. Goldwind, ranked eighth in the world supply league table, had to settle for a place farther back in the hall.