Not many companies can claim a pipeline of 2000 MW of contracted wind projects in construction after just a year in the game, but one that can is China's Zhejiang Hewind. As a wind turbine supplier turned wind project developer, it is a subsidiary of Huayi Electric Company Limited, a large industrial enterprise listed on the Shanghai Stock Exchange in 2000. Huayi's core focus is production of high and low voltage switchgear equipment, which last year accounted for 92% of its total revenue. Through Hewind, Huayi entered the wind power industry in 2002 by cooperating with China's leading turbine supplier, Goldwind, in the manufacture of a 750 kW machine.
Today, Hewind produces its own 750 kW and 780 kW turbines and is developing a 1.5 MW model together with German wind turbine engineering consultancy Aerodyn. Last year it decided to go beyond wind turbine supply and entered the wind farm development side of the business as well. It has taken just 12 months for Hewind to position itself to be a major player on its home turf. Activities across the wind power market now account for about 50% of Huayi Electric's business.
"One of the reasons that Hewind decided to develop wind farms is to test our new products," says Hewind boss Wu Yundong, who was one of the founding members of Windey, which not long ago was China's second largest wind turbine supplier. Hewind is aiming to develop 3000-5000 MW of wind capacity in the next five years with a view to selling projects on at the construction stage, but on the condition that Hewind turbines are deployed in each case and that it retains a 10% ownership stake in each project.
"For a wind farm project, the expense on the preliminary work is high. We will not charge purchasers of our wind farm projects the preliminary cost. But they will be required to buy our turbines," says Wu. "Our clients will find the pricing competitive in purchasing our wind farms, compared with developing on their own. We should have no worry of selling them."
Current projects on the go include the 10.5 MW Tiantai Mountain wind farm in Zhejiang, in which Hewind holds a 43% stake, where it is erecting 14, 750 kW turbines at a project cost of CNY 100 million ($14.1 million), 70% of which has come from bank loans. Another project is the 30 MW Dongtou wind farm, also in Zhejiang using 780 kW turbines. Others in the pipeline include 200 MW in North China's Inner Mongolia Autonomous Region.
Out of retirement
As Hewind's new captain and a long established leading light of China's domestic wind industry, Wu is the man largely credited for the company's meteoric rise to relative prominence on China's wind scene. With Windey having been a majority state-owned enterprise, Wu was forced to retire from the company at the age of 60, as required under China's personnel laws governing the public sector. Having spent the better part of his life pursuing his wind dream and still feeling energetic enough to continue, he jumped at the offer to take the helm of Hewind early in 2007 -- an offer Huayi Electric says it did not hesitate to make due to Wu's experience and vision for the industry.
Serving concurrently as vice chairman of the China Wind Energy Association, Wu is an outspoken proponent of wind energy and believes development in China will grow much faster than anyone dare predict. While it is accepted that the country's goal for 30,000 MW by 2020 will be met early, Wu believes forecasts for 50,000 MW by 2015, made by the Chinese Renewable Energy Industries Association (CREIA), among others, may be surpassed. For him, the prospect of China having 100,000 MW of wind plant installed by 2020 is very real. "The wind potentials have been underestimated and the market is very big," he stresses.
With that in mind, Wu has been fast off the mark in transforming Hewind to take full advantage of the market. As the holder of an engineering Masters degree in Aeronautic Electrical Machinery, Wu knows about technology. Shortly after he assumed his new post, he set about upgrading Hewind's turbines, resulting in the 780 kW model which now sells well on the domestic market, and implementing plans for a 1.5 MW machine to add to its range. Each turbine is sold with a free maintenance services for two to five years. As one analyst notes: "This is a remarkably long time service. It reflects the company's confidence in the quality of its products."
Eventually, Wu expects Hewind to become a one-stop shop for wind farm development. As well as developer and turbine supplier, he is planning for Hewind to produce its own range of wind turbine components including blades, the glassfibre housing, gearboxes and generators. Manufacturing, he insists, will remain the company's core focus.
Wu has no intention of limiting Hewind's capability to China. His ambition for the company to become a key international player is already taking shape. Last year, Hewind became the first Chinese wind turbine manufacturer to export machines, with three of its 780 kW units delivered to Chile, South America. The deal was with Chilean company Ecoingenieros. "The business scale is not big. But it is a milestone and more machines are waiting to be exported," says Guo Xiaoyu, a representative of the Chile side in Beijing.
Hewind's current manufacturing capability is at 300-400 machines a year. While larger machines of 1.5 MW or more are increasing in popularity in China, Wu insists 750 kW or 780 kW turbines remain the best product for many wind farms in the country's southern areas, where the terrain is predominantly hilly and road access tricky. These smaller units also generate profit, unlike their larger counterparts, he says.
Even so, Wu concedes that 1.5 MW machines are now suitable for China's northern regions where transport conditions have greatly improved in recent years. Wu says he is prepared for Hewind to spend two or three years testing the 1.5 MW prototype it is developing with Aerodyn before putting it on the market.
With China's government aiming for 1000 MW of offshore wind capacity by 2020, Hewind also plans to embark on development of a 3 MW turbine. Again, Aerodyn is likely to be its design partner. Hewind hopes to reach an agreement later this year so a prototype can be produced in 2009. The machine will undergo testing at an onshore plant for at least two years before being installed at sea, adds Wu, who believes China should not rush unnecessarily to develop offshore wind farms. The technology, he says, is not yet mature, projects are not cost-efficient, and China has abundant wind resources on land to be exploited.
Bankrolling its product expansion plans, meanwhile, is unlikely to present an obstacle. "For Hewind, funding is not a big problem," Wu says. Huayi Electric has vowed to recycle at least 5% of its annual revenues back into product development every year. Moreover, the company is widely expected to launch a public offering of 20 million additional shares later this year in a bid to raise more cash for development of its 1.5 MW machine and construction of production facilities for 300 of the units a year. The offer is expected to be well oversubscribed: Huayi Electric is seen as prime stock by many investors.