Gearbox supply in Asia and Europe expands -- Wind power now an industry worth making investments for

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GE Energy's announcement last month that the Nanjing High Speed & Accurate Gear Company (NGC) is to become a leading supplier of gearboxes for GE wind turbines is the most public indication yet of the steady build-up of the wind industry's gearbox manufacturing capacity. NGC and GE will co-develop gearboxes for GE's 1.5 MW turbines. Development of the new gearbox will be complete by next year for supply to GE turbines destined for installation in China and elsewhere, say sources at NGC. GE has committed 700 MW of wind turbines for China.

NGC, a manufacturer of high-speed and heavy duty gearboxes for a number of industries, is one of China's top companies. "With NGC's experience and expertise ... and with GE's advanced technology, the partnership will benefit not only the parties involved, but also the customers and the gear industry of China," says Hu Yueming, chairman and president of NGC. In the US, GE Transportation has already developed a wind turbine gearbox, which will go into 10% of GE turbines this year (Windpower Monthly, July 2006).

A Serious customer

Until the past year, the wafer thin profit margins associated with supplying components to the wind industry and the lack of long term visibility for orders had discouraged any serious attempt by suppliers of major forged parts to ramp up production capacity. The result has been a wind power market with demand outstripping supply of vital components, gearboxes in particular. With turbines prices hiked by up to 30%, the wind industry is these days regarded as a far more serious customer -- one worth making investments for.

Last year gearboxes were supplied for about 10,000 MW of newly installed wind plant. Just two gearbox companies, Hansen and Winergy, met more than 75% of demand, with Winergy, part of the Siemens empire, the larger of the two. Winergy supplies gearboxes to most of the wind industry, including GE, while Hansen has served Vestas and Gamesa. Both gearbox makers are busy expanding their production capacity.

Winergy, which last year sold gearboxes for about 4500 MW of new wind capacity, says it intends to grow as fast as the market. It has three works, with the main plant in Voerde, Germany, currently able to produce gearboxes for 3000 MW of wind turbines a year, its US plant in Illinois able to produce for 600 MW a year and its Indian production facility able to meet demand of about 1000 MW a year. Winergy is building new production capacity in China and parent Flender (part of Siemens) has opened a gearbox factory in China in which Winergy has a share. The company aims to build its Chinese production capacity to possibly 1000 MW a year, to serve GE, Suzlon and Vestas.

Belgium-based Hansen, which earlier this year was bought by Indian wind turbine manufacturer Suzlon, is this year expanding its facilities in Belgium to add 1000 MW to its 3600 MW production capacity, says Suzlon's Tulsi Tanti. Ironically, Suzlon buys its gearboxes from Winergy though intends to "integrate gearbox technology in the development of its wind turbines." Winergy says its contracts with wind turbine manufacturers typically run for three to five years. In March this year, just two weeks before making its purchase by Suzlon public, Hansen announced the signing of a factory lease agreement for a Chinese assembly and service centre in the Tianjin Economic-Technological Development Area near Shanghai.

Other players

Among the handful of smaller gearbox suppliers to the wind industry, German Eickhoff says it will nearly triple production in the next two years. Its sales this year will be for around 660 MW of wind capacity, up from 340 MW in 2005 and it is aiming at supplying 910 MW in 2007, says the company's Ralf Wittor. The company supplies wind turbine gearboxes to Repower, Nordex and GE.

Finland's Moventas, which previously sold gearboxes under the trade names Metso and Valmet, says it, too, is ramping up production, but declines to be specific about its volume of sales or its customers. "What we can say is that our customers are most of the major wind turbine producers worldwide," says the company's Ahti Ahonen. "We saw sizeable increases in demand in 2005 and this was reflected in our turnover. We expect this increase in demand to continue in 2006. We have responded by increasing production at our plants in Finland. There may be a need to increase that production further," he adds.

Ahonen declines to speculate on industry talk of a possible takeover bid for Moventas by Vestas. "We must consider our customers and our production needs. We may need to go where our customers are and have production outside Finland. We cannot rule out acquisitions at some stage, although we have no real firm plans in that direction at present," he says. Moventas is Finland's leading player in the area of mechanical power transmission.

GE's partnership with NGC is unlikely to be the first Asian threat to the wind industry's traditional gearbox suppliers in Europe. In India, large Elecon Engineering has supplied gearboxes to Turbowinds NV of Belgium, which has sold about 50 of its Indian-made 600 kW turbines in the country since 1995. Elecon is reportedly said to be developing gearboxes for Vestas. Meantime, Repower may also be considering gearboxes from Elecon, following the announcement of its wind turbine manufacturing joint venture with India's Essar Global Power. Essar is said to be looking to Elecon for gearboxes.

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