China

China

Special Report - Opportunity and Risk in China - Domestic suppliers - Three leading lights way out in front

Chinese made turbines now make up more than half the total installed wind capacity in China, with 94% of them supplied by just three companies. Goldwind leads with 57% of the Chinese share, followed by Sinovel with 28% and Dongfang with 9%. A huge new government order is set to keep the three out in front, at least for the time being. Map: China at a glance. The map shows wind capacity by province (new and total capacity). Table one: Top suppliers in China. The table lists wind turbine installations in 2007. It lists the new capacity in 2007 and the total capacity and separates domestic and joint venture and foreign projects. Graph: The rise of domestic manufacturers. The graph is a percentage breakdown of manufacturer of new capacity from 2004 to 2007 whether it is is domestic, joint venture or foreign. Table two: The top ten leading developers. Ranking by equity weighted development activity. Table three: China's major domestic manufacturers by company, ownership, turbine portfolio, technology.

China's three main domestic wind turbine manufacturers - Goldwind, Sinovel and Dongfang Steam Turbine Works - are having a prosperous 2008 on top of a good 2007. Last year, the three companies installed more than 52% of the 55% share of the wind turbine market secured by Chinese companies. This year they have won a 3.75 GW government order, which even though split among them has not only boosted current order books, but also bodes well for the near term.

The order, placed by the government of Gansu and approved by the National Development and Reform Commission (NDRC), is for most of the first 3.8 GW stage of a huge 10 GW Wind Power Base development in the province, scheduled for completion by 2011. The NDRC has further earmarked Inner Mongolia as another possible location for a wind base and the coastal intersection of Jiangsu and Shanghai in east central China for a third.

The 3.8 GW ordered so far for Gansu will be split across 20 wind farms around Jiuquan, the far-flung Gobi desert city famous as the nation's space satellite launch centre. The various project developers, which includes State Grid Xin Yuan Company and China Huadian New Energy Development, have a 25-year franchise to build, own, and operate the wind farms. Construction on the projects has begun, with completion due by the end of 2010.

Sinovel and Dongfang both trounced their key rival Goldwind, the main Chinese turbine supplier for over a decade, in gaining bigger shares of the first Gansu turbine order. Sinovel bagged 1789.5 MW, valued at around CNY 11.47 billion ($1.68 billion), Dongfang is supplying 1149 MW, valued at CNY 7.32 billion ($1.07 billion and Goldwind is to deliver 811.5 MW for a value of nearly CNY 5.2 billion ($760 million). All three are supplying 1.5 MW machines. The remaining 50 MW of the 3.8 GW order went to CSIC (Chongqing) Haizhuang Windpower Equipment, a subsidiary of China Shipbuilding Industry Corporation, which will supply 25, 2 MW turbines. All turbines are due for delivery between 2009 and 2010.

Today, around ten Chinese manufacturers are capable of supplying megawatt class turbines, largely thanks to licence agreements or design partnerships with international companies (table page 16). Goldwind, Sinovel, and Dongfang have led the way. For these three, who also won a combined 950 MW order from a central government concession tender this year (Windpower Monthly, July 2008), Gansu is a thick layer of icing on what has become a substantial cake. Shi Pengfei of the Chinese Wind Energy Association expects them to capture around 60% of China's wind market during 2008-2010. Their biggest customers are the big five state owned utilities.

Sinovel

For Sinovel, the Gansu and concession orders bring it closer to achieving its ambition to overtake Goldwind as the Chinese wind industry's top dog. Last year, the company crept into tenth place, two slots below Goldwind, in the global ranking of wind turbine suppliers in BTM Consult's World Market Update. Two years ago it did not even rank in China's domestic top ten. Sinovel was also awarded more capacity than Goldwind in the 950 MW tender, securing two projects, one in Inner Mongolia and one in Hebei, totalling 450 MW. Goldwind got 300 MW in Inner Mongolia.

Sinovel, based in Beijing, was established in 2004 as a subsidiary of the massive Dalian Heavy Industry. At that time it secured a licence agreement to produce a 1.5 MW unit based on technology from small German wind turbine maker Fuhrlander. As a result, Sinovel became the first Chinese firm to offer a megawatt size machine.

Now it is China's largest supplier of 1.5 MW turbines, meeting about 60% of the demand for them last year. It has a strong supply chain in place, it says, with about 90% of components made in China. Its factory in Dalian for the 1.5 MW unit has an annual capacity of 1500 MW. Three further factories are in the works, planned for Jiangsu and Inner Mongolia. These will help it achieve its target to produce 2250 MW of its workhorse turbine next year and 3000 MW in 2010. It also hopes to begin exports next year.

Sinovel also intends to add larger turbines to its production line, with its sights set on a 3 MW unit and a 5 MW machine, both designed in partnership with AMSC Windtec. Sinovel will own the intellectual property rights. Earlier this year, Germanischer Lloyd (GL) in Germany was contracted to certify the 3 MW turbine, with Sinovel hoping to bring it to market this year, with mass production starting next year.

Sinovel's rise to the top has hit the headlines several times in recent years, largely due to its huge orders for electrical components from AMSC. The most recent was announced in June, just after it won the Gansu contracts, and worth $450 million. "Sinovel is the epitome of business success in China and is one of the fastest growing wind turbine manufacturers in the world," said AMSC's Greg Yurek at the time.

Despite it all, the capacity of Sinovel wind turbines in the ground was no more than 750 MW at the end of 2007, less than 1% of the global total. The AMSC order was for electrical components for more than 10 GW of wind power capacity, according to Yurek. The contract calls for shipments to begin in January 2009 and increase in volume year-on-year through the contract's completion in December 2011. For the US firm, which also has a deal to supply components for Sinovel's 3 MW unit, the Chinese firm's success has been the backbone of its own in the wind market.

Goldwind

Active in China's wind market for a decade, with around 1500 MW installed by end 2007, Goldwind will not give up its long standing crown as China's leading turbine supplier easily. While its market share in China has diminished in recent years, falling to 25.1% last year from 33.37%, its annual revenues have increased 100% for seven consecutive years, starting in 2000. Its sales in 2007 totalled CNY 3.1 billion ($454 million), with the profit on that amounting to CNY 630 million ($92 million). The company, which has been a big winner in other government sponsored concession projects, including racking up over 1 GW of concession contracts this year in addition to Gansu, says it expects to maintain a minimum 25% share of its home market this year.

The company's first machine was a 600 kW turbine produced under a licence agreement with German firm Jacobs Energie, now part of Repower Systems. It also produces a 750 kW unit, again under a Repower licence. Its flagship 1.5 MW unit is a direct drive turbine, with the rotor turning the generator without the intermediary of a gearbox, designed in co-operation with Germany's Vensys, a company Goldwind now controls. The two are also working on bigger turbine designs.

Goldwind's EUR41.24 million acquisition of 70% of Vensys, a wind turbine design company, completed early this year, is one of a number of key initiatives over the past 12 months with the purpose of upping its game and branching out onto the world stage. It closed 2007 with a listing on the Shenzhen Stock Exchange, the first Chinese renewable energy company to do so. The initial public offering sparked a surge of interest, exceeding analyst expectations and breaking stock market records (Windpower Monthly, February 2008). Goldwind raised CNY 1.75 billion ($256 million) as a result, money it said will be used to diversify into wind project development, expand manufacturing operations and further invest in research and marketing. Vensys was its first big expenditure.

Goldwind currently has three production bases, one in its home region of Urumqi, and the others in Beijing and Baotou. In coming years, production of the 750 kW unit is to be scaled down. The combined production capacity for its megawatt scale turbines is of 900-1000 units a year, it says. This year the company expects to produce 500 of its 1.5 MW turbine and 1500 of the 750 kW machines. Next year it plans to turn out 2000 of the bigger machines and 1000 of the smaller, while in 2010 it is aiming for 2500, 1.5 MW units and 500, 750 kW units.

To boost its production capability, Goldwind is building four further manufacturing facilities, including one in south-west Germany at Neuenkirchen, near Saarbrucken. Here Vensys will assemble about 30 turbines for the European market in 2009, ramping up to at least 50 units in 2010. They will be a mix of the 1.5 MW unit and a 2.5 MW machine. A prototype of the 2.5 MW model, designed primarily for offshore use, will be installed near Saarbrucken at the start of 2009. The expansion overseas has driven Goldwind's market value to over $6 billion, notes China's Clean Revolution, a report published by The Climate Group earlier this year.

With an eye to the offshore market in China, Goldwind is also working with Vensys on a 2 MW unit. The company installed China's first offshore turbine, a modified version of its 1.5 MW model, for the China National Offshore Oil Corporation (CNOOC) at Liaodong, Bohai Sea, late last year (Windpower Monthly, January 2008). A few months after the turbine was commissioned, CNOOC confirmed it is proceeding with plans to build a 1000 MW wind farm offshore near Shandong province. The CNY 21 billion ($3 billion) project will be developed over the next ten years and Goldwind is widely expected to be the supplier.

Dongfang

Compared to its bigger rivals, China's third largest domestic turbine supplier, Dongfang, lags some way behind. It had just 237 MW installed by end 2007, but orders secured this year alone, including Gansu, mean it will have at least 2000 MW on line within the foreseeable future. The company, based in Deyang in Sichuan province in the south-west, is a subsidiary of Dongfang Electric Corporation, a listed company which is one of the world's largest power generating equipment manufacturers. It produces 1.5 MW turbines under a licence agreement signed with Repower in 2004, but is now working with German turbine design company Aerodyn to develop a 2.5 MW machine for which it will own the intellectual property rights.

Some 276 MW of its order pipeline comes from two contracts the company secured shortly after Sichuan province was hit by an earthquake (Windpower Monthly, July 2008). While the disaster in May affected Dongfang's main operations severely, the turbine division was relatively unscathed and back in operation within a week. It expects to meet its target to produce up to 800 machines this year, said the company's Zhang Zhiying at the time.

It expects to close the gap on Goldwind and Sinovel, predicting its market share will increase from less than 7% of new capacity installed in 2007 to 15% in 2008. Its performance in the first six months of this year seems to support that assertion - and makes Goldwind's 100% year-on-year revenue increases look small. Dongfang's wind turbine sales revenue for the period totals CNY 1.39 billion ($204 million), up 206% over the same period last year, says the company. As well as a factory in Deyang, it has production bases in Tianjin and Jiuquan. Next year it expects to increase its wind turbine output by 75%, with 1400, 1.5 MW units coming out of its factories.

Article by Gail Rajgor Senior Editor

Lin Jianyang China Features for Windpower Monthly.

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