Extending the global reach

While China's leading turbine and generation companies now rank at the top of global league tables, practically all sales and capacity have been to the home market.

Far away...Goldwind  turbine is installed in USA
Far away...Goldwind turbine is installed in USA

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This year, however, has definitely seen an upsurge in activity on the international stage, as turbine firms beef up their foreign operations with funds raised by their recent launches on the stock exchange.

Renewable-energy subsidiaries of leading wind-power generation firms Longyuan, Datang and Huaneng have also floated shares for the first time, raising and financing the international profile and ambitions of China’s largest developers.

The US market, as the next largest after China, appears to be top of the list of those in which Chinese firms are seeking to become active, and the American Wind Energy Association’s annual exhibition held in June this year was again notably well represented by Chinese hopefuls, including Sinovel, Goldwind, Mingyang, Sany, Envision and a host of component suppliers.

Firm agreements

In terms of concrete turbine-supply deals from turbine manufacturers, Goldwind has committed to balance-sheet financing for a 100MW project in Illinois, which it bought from global renewables developer Mainstream, while Zhuzhou CSR has already sent products to the US early in the year. Haizhuang also delivered two wind turbines in August for a wind project co-developed with a local developer in Iowa. And Baoding Huide, the first to install turbines in the US, in 2008, closed a deal to deliver 100MW, while 9MW of Guodian United turbines were being shipped from China to the US in June.

The key in the US is to demonstrate an ability to provide cost-effective performance in the form of operating experience. The magic hurdle, according to some in the industry, is 100 operating turbine years in the US, beyond which models become bankable to the financial sector. Goldwind looks likely to be the first to reach it while most Chinese equipment is supported by generous vendor finance.

As for the Chinese power-generation companies, Longyuan announced it had acquired a meaningful stake in a 100MW project in Ontario, Canada, and Datang is discussing the purchase of US developer Everpower, which has over 1.5GW of wind-power projects under development.

Potential for Chinese ownership of wind assets or general infrastructure is seemingly good, even though competition is fierce. The currency risk in particularly is unlikely to be an issue. China’s foreign currency reserves have continued to grow, expanding a further 30% year-on-year to June, reaching over $3.2 trillion. Of this amount, much remains parked in US-dollar treasuries, with China remaining the largest single holder with a $1-trillion position.

Beyond North America

Global activities have by no means been confined to North America, with Africa, Australia, Latin America, Eastern Europe and Asia all having seen growing activity over the past year. Dongfang New Energy announced its first export deal at the end of 2010 to supply 250MW to India and this year Sewind signed a similar agreement. Over the course of this year, Goldwind has signed deals to export 50MW to Ethiopia, 100MW to Australia, and to help introduce wind power in Ecuador with 15MW. Sinovel has inked large deals to deliver up to 300MW to a Greek utility and up to 1GW to an independent developer in Ireland. XEMC closed a deal this summer to deliver 50MW to the Maldives and will also export 14MW to Ireland.

Developers are also combing the globe to invest in projects. Longyuan’s expectation of installing up to 200MW in South Africa before the end of last year has come to nothing so far, but no one has completely given up hope as potential for wind power in South Africa remains real. After looking but not bidding for the UK offshore tenders in 2009, Datang is now making progress in Australia where it has partnered with a local developer for projects over 1GW in the foreseeable future. One of the more notable deals is that between Chinese state transmission firm, the State Grid, and a state in Brazil, in which Xuji, a little-known turbine manufacturer owned by State Grid, could supply 2GW of equipment to projects there in the next four years.

The Chinese companies’ emerging international approaches, business models and strategies continue to evolve. The international expectation is that Chinese turbines come with vendor finance and Chinese banks and export credit agencies are increasingly interested in financing wind deals abroad. But while it is available, the finance can be slow in coming.

It has not all been smooth sailing thus far, but, looking ahead, there are clearly more deals to come.

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