As can be gleaned from the articles below, the evidence also reflects that large European wind companies have already begun to shutter their higher cost western European manufacturing facilities in favor of building /relocating new factories to Eastern Europe and China. In addition, European companies are entering into joint ventures and licensing arrangment with Chinese wind turbine and blade companies to manufacture in China their products at a fraction of the cost within Europe and even North America. Even U.S. wind companies license their designs and technologies (outsource production) to lower priced Chinese wind turbine, blade and other component manufacturers.
Although some European companies have announced plans to build windmill production facilities within the United States, many of these are likely to be only 'showcase' technology centers which satisfy no more than a fraction of the companies' total worldwide production needs.
[See: How Can Obama Deliver Millions of U.S. 'GREEN COLLAR' Renewable Energy (Wind) Manufacturing Jobs If They Are Mostly Owned/Outsourced By/To Europe?, ITSSD Journal on Energy Security, at: http://itssdenergysecurity.blogspot.com/2008/09/how-can-obama-deliver-millions-of-us.html ].
And, the economic viability of these factories is highly dependent on the receipt of state level tax abatements, credits and other economic incentives underwritten by local communities, not to mention, susceptible to market volatilities in the oil and natural gas markets, as well as, currency fluctuations. What would it take to unravel the U.S. investment commitments made by such European companies? At what oil/ natural gas price would windmill technology investments no longer make economic sense?
[See, e.g., Oil Price Slide Seen Battering Alternative Energy Stocks, CNNMoney.com (Sept. 10, 2008), at: http://money.cnn.com/news/newsfeeds/articles/djf500/200809102128DOWJONESDJONLINE000929_FORTUNE5.htm ].
Lastly, due to the growth in global demand for windpower, a severe shortage of wind turbines and blades has resulted. And, Chinese and Indian wind turbine and blade factories with excess capacity seem most capable of picking up the slack. In fact, industry analysts predict that China will become the world's largest producer of wind turbines as early as 2009. And at least two of the largest Chinese windmill companies plan to begin exporting wind turbines globally by 2009 AND 2010.
If wind turbine and other windmill component parts will largely be manufactured in China and/or India in the future, how can windmill manufacturing jobs be considered 'green collar jobs'?
[See: Obama Boasts Plans for Millions of New GREEN COLLAR Jobs That Cannot be Outsourced; Can He Deliver? Hillary Says NO!!, ITSSD Journal on Energy Security, at: http://itssdenergysecurity.blogspot.com/2008/09/obama-boasts-plans-for-millions-of-new.html ].
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http://www.redherring.com/Home/24741
http://www.redherring.com/Home/24741
China to Subsidize Wind Turbinesby Justin Moresco
Red Herring – The Business of Technology
26 August 2008
The Chinese government said Friday it will subsidize wind power equipment makers as the country continues its drive to generate 15 percent of its energy needs from renewable sources by 2020.
“This is quite significant,” said Caitlin Pollock, Asia wind energy analyst for Emerging Energy Research, based in Cambridge, Massachusetts. “It will spur further growth.”
The policy marks the first Chinese subsidy exclusively targeting wind power and highlights the Asian country’s increasing interest in wind as a major source of energy. The government has set an official target of 30 gigawatts of installed wind capacity by 2020.
Last year China had a total of 5.9 gigawatts of installed capacity, according to Emerging Energy Research. The research group expects the country will nearly double that figure this year to 11.1 gigawatts.
But the subsidy also continues China’s overarching policy of growing domestic manufacturing in parallel with overall renewable energy production. China wants to be greener, and it wants the transition to be led by local companies.
That’s why only Chinese majority-owned turbine manufactures that source blades and other components from majority locally owned suppliers will qualify for the subsidy. And the subsidized amount--$88 per kilowatt for the first 50 units generating 1.5 megawatts or more--can only be used for research and development purposes.
Although there are more than 40 wind turbine vendors in China today, most have opted to license technology from foreign companies. The [subsidy] policy is intended to reverse that trend, Pollock said.
And in the long run, the subsidy should help make Chinese wind companies more competitive with their foreign rivals, such as GE Energy of the U.S. and Danish Vestas Wind Systems.
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http://news.scotsman.com/latestnews/Turbine-plant-closure-hits-Salmond39s.4397508.jp
Turbine Plant Closure Hits Salmond's Green Dreams
By Jenny Haworth
The Scotsman
Published Date: 16 August 2008
THE First Minister's plans for the nation to become the green capital of Europe were dealt a blow yesterday after a major wind turbine manufacturer announced plans to close its Scottish factory.
Vestas, which has its headquarters in Denmark, said it would be starting talks with its 91 employees about the future of its site in Campbeltown, Argyll, because it does not make enough money.
THE First Minister's plans for the nation to become the green capital of Europe were dealt a blow yesterday after a major wind turbine manufacturer announced plans to close its Scottish factory.
Vestas, which has its headquarters in Denmark, said it would be starting talks with its 91 employees about the future of its site in Campbeltown, Argyll, because it does not make enough money. However, insiders say the factory has been dogged by problems from the start, particularly the lengthy planning process in Scotland that has led to a lack of stability in the turbine market.
Vestas made the announcement on the same day it revealed its orders for wind turbines, and its share price, had increased.
The decision comes just weeks after Alex Salmond gave the go-ahead for Europe's largest wind farm to be built in Scotland, as he expressed a desire for this country to become the green capital of Europe.
An industry insider said from the start the lengthy planning system brought difficulties for the factory."In 2002 there was an awful lot of confidence that the wind industry would be able to grow in Scotland quite significantly and quite quickly," he said. "That gave confidence for a lot of positive investment decisions at the time from people like Vestas. They were hoping the industry would have a regular throughput of planning decisions that would lead to orders."
However, he said the reality of the Scottish planning system – which has taken up to four years to make decisions about whether to give the go-ahead to wind farms – put an end to the initial optimism.
It is believed the factory has also struggled because it is not set up to build the larger turbines that are expected to be in high demand with the growth in offshore plants. It is thought Vestas was also at a disadvantage due to its remote location in Campbeltown that makes transportation of the turbine towers difficult.
Hugh Scullion, regional political officer for the union Unite Scotland, said he could not believe Vestas had made this decision at a time when the renewables industry was thriving.
He called for government intervention to make sure the manufacturing industry that builds turbines becomes established close to the wind farms, to make sure jobs are brought to the area.
Scotland's enterprise minister, Jim Mather, said he was seeking an urgent meeting with senior management at Vestas.
He added: "As a government, we are ready to do whatever we can to try and find a sustainable future for the yard."
In a statement Vestas said: "Evaluations have shown that the products for which the factory was designed and streamlined do not generate satisfactory earnings."
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http://energy.pressandjournal.co.uk/Article.aspx/708256?UserKey=
Balance of manufacturing power is swinging in favour of Far East - China’s turbine firms prepare to storm global wind markets
Energy Press and Journal
Published: 07/07/2008
EXPLOSIVE growth in the demand for wind power has created a global waiting list for wind turbines, according to ClimateChangeCorp. It says Chinese turbine companies may be part of the solution as they ramp up production and get ready to export. And according to the Global Wind Energy Council (www.worldenergy.org), China will become the top wind turbine manufacturer by 2009.
To encourage domestic production, Bejing increased tariffs on imported wind turbines in May, 2008, while slashing import taxes on components.
The latter incentive, to help Chinese firms compete internationally for scarce parts, will put pressure on the industry in the rest of the world.
Even before the latest tariff increase, China was demanding that foreign companies manufacturing turbines on Chinese soil have at least 70% domestically produced components.
Goldwind, China’s largest wind turbine maker, raised $245million through an initial public offer (IPO) early this year to fund a huge expansion. LM Glassfiber of Denmark, which has a co-operation agreement with Goldwind, opened its second turbine blade factory in China in October last year.
ClimateChangeCorp says other major Chinese turbine makers – Sinovel, Windey, Dongfang, MingYang and HEC – are also expanding capacities and shopping for joint ventures and licensing agreements with global players.
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http://peakenergy.blogspot.com/2008/07/localising-chinese-wind-turbine.html
Localising Chinese Wind Turbine Manufacturing
Peak Energy
July 2008
Renewable Energy World has an interesting article on the slow and steady process of creation [of] an indigenous Chinese wind power industry – China's Wind Power Industry: Localizing Equipment Manufacturing
When 2007 ended, China's installed base of wind power totaled just over 6 gigawatts (GW), earning the country fifth place among the world's largest wind energy producers (after Germany, the U.S., Spain and India), up from sixth place in 2006. Wind power industry statistics show that by the end of 2008, China's total installed base of wind power production will have reached 10 GW; some experts are estimating that by 2010, the total installed capacity for wind power generation in China will reach 20 GW and that by 2020 China's installed base of wind power will total 100 GW (current global wind installation is 94 GW).
In 2007 an estimated 24 billion Yuan [approximately US $3.28 billion] was invested in China's wind energy sector. Not surprisingly, this level of investment has spawned an industry — local manufacturers are responding by producing the equipment and components that the wind energy industry requires to sustain this growth.
It is conservatively estimated that between 2006 and 2015, 100 billion Yuan [US $14.5 billion] will be spent on equipment and component purchases to further develop China's wind power industry. According to the Ministry of Commerce, by the end of 2006 there were more than 100 Chinese companies manufacturing equipment and components for the wind industry. ...
To help spur the development of an indigenous wind power equipment and components industry, Beijing has mandated that all new wind power projects have at least a 70% Chinese component. Wind power equipment manufacturers also now enjoy a 50% discount on value added taxes (VAT) payable in China.
On April 23, 2008 the Ministry of Finance announced two changes to import tariff regulations with respect to the wind power industry, further spurring development of Chinese wind power equipment manufacturing. The first change, effective January 1, 2008, implemented a tariff and VAT rebate program for imports of parts and raw materials used in the manufacture of wind turbines. This change was significant because a large percentage of parts and raw materials used in the manufacture of wind turbines still must be sourced from outside of China.
The second tariff change, effective May 1, 2008, eliminated the tariff-free importation of wind turbines less than 2.5 MW. This tariff change is a strong indicator that the Chinese wind turbine industry is maturing rapidly; as recently as late 2007 Chinese wind power equipment was incapable of producing megawatt-class wind turbines.
Megawatt-class turbines are increasingly produced domestically and the elimination of tariff-free imports of wind turbines less than 2.5 MW in size will give added impetus to the domestic production of increasingly large wind turbines.
The economics of the wind power equipment industry are quite favorable. At present the cost of construction of wind power in China is approximately 8000-9000 Yuan/Kw [US $1170-1315 /kw] and 60% to 70% of those costs are equipment purchases. ...
According to Steve Sawyer, secretary general of the Global Wind Energy Council, by 2009 China will become the world's largest producer of wind turbines. At present China has at least 40 wind-power turbine manufacturers: 17 are state-owned or state-controlled companies, 12 are private Chinese companies, 7 are joint-venture companies and 4 are wholly foreign-owned companies.
Though China has yet to export wind turbines, China's
two largest wind turbine manufacturers — Xinjiang Jinfeng (Goldwind, whose December 2007 initial public offering (IPO) was the first pure-play wind power equipment Chinese stock offering in the U.S.) and Sinovel — have plans to export in 2009 and 2010.Many of the largest wind turbine and other equipment manufacturers have licensed technology from western companies, including from
AMSC Windtec, REpower, Aerodyn, Vensys and Garrad Hassan. Most of the largest Chinese wind turbine manufacturers have begun to produce 1.5-MW wind turbines and gradually these Chinese wind turbine manufacturers, having purchased designs for 2-, 3- and 5-MW wind turbines, are developing prototypes of larger wind turbines. [SO MUCH FOR U.S. WIND TURBINE & COMPONENT MANUFACTURERS HAVING A FIGHTING CHANCE TO COMPETE IN THIS BURGEONING MARKET].
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http://www.renewableenergyworld.com/rea/news/story?id=53076
China's Wind Power Industry: Localizing Equipment Manufacturing
By Lou Schwartz and Ryan Hodum
Bejing, China [RenewableEnergyWorld.com]
July 18, 2008
When 2007 ended, China's installed base of wind power totaled just over 6 gigawatts (GW), earning the country fifth place among the world's largest wind energy producers (after Germany, the U.S., Spain and India), up from sixth place in 2006.
Wind power industry statistics show that by the end of 2008, China's total installed base of wind power production will have reached 10 GW; some experts are estimating that by 2010, the total installed capacity for wind power generation in China will reach 20 GW and that by 2020 China's installed base of wind power will total 100 GW (current global wind installation is 94 GW).
In 2007 an estimated 24 billion Yuan [approximately US $3.28 billion] was invested in China's wind energy sector. Not surprisingly, this level of investment has spawned an industry — local manufacturers are responding by producing the equipment and components that the wind energy industry requires to sustain this growth.
It is conservatively estimated that between 2006 and 2015, 100 billion Yuan [US $14.5 billion] will be spent on equipment and component purchases to further develop China's wind power industry. According to the Ministry of Commerce, by the end of 2006 there were more than 100 Chinese companies manufacturing equipment and components for the wind industry.
Foreign wind power equipment manufacturers, including the most significant international wind turbine manufacturers,
http://www.renewableenergyworld.com/rea/news/story?id=53076
China's Wind Power Industry: Localizing Equipment Manufacturing
By Lou Schwartz and Ryan Hodum
Bejing, China [RenewableEnergyWorld.com]
July 18, 2008
When 2007 ended, China's installed base of wind power totaled just over 6 gigawatts (GW), earning the country fifth place among the world's largest wind energy producers (after Germany, the U.S., Spain and India), up from sixth place in 2006.
Wind power industry statistics show that by the end of 2008, China's total installed base of wind power production will have reached 10 GW; some experts are estimating that by 2010, the total installed capacity for wind power generation in China will reach 20 GW and that by 2020 China's installed base of wind power will total 100 GW (current global wind installation is 94 GW).
In 2007 an estimated 24 billion Yuan [approximately US $3.28 billion] was invested in China's wind energy sector. Not surprisingly, this level of investment has spawned an industry — local manufacturers are responding by producing the equipment and components that the wind energy industry requires to sustain this growth.
It is conservatively estimated that between 2006 and 2015, 100 billion Yuan [US $14.5 billion] will be spent on equipment and component purchases to further develop China's wind power industry. According to the Ministry of Commerce, by the end of 2006 there were more than 100 Chinese companies manufacturing equipment and components for the wind industry.
Foreign wind power equipment manufacturers, including the most significant international wind turbine manufacturers,
Vestas, Suzlon, Gamesa, Nordex Corp., Honiton Energy Ltd. and GE Energy, have aggressively engaged this market. Though foreign wind turbine manufacturers' share of the market has declined from nearly 75% a few years ago to 55% now, the foreign presence in China's wind industry remains significant.
Foreign wind power equipment manufacturers have made strategic investments in China, allowing them to remain dominant even as indigenous Chinese wind equipment capabilities grow. At EU €60 million, Gamesa's factory in Tianjin, which manufactures wind turbines, is the Spanish company's second largest foreign investment (after the United States).
Also located in Tianjin is Vestas' Wind Turbine Equipment (China) Co. Ltd., which manufactures blades and does wind turbine assembly.
Nordex has located two of its three manufacturing centers in China and has established the company's Asia headquarters in Beijing. In the next three years, Nordex expects to invest an additional 500 million Yuan [approx. US $71 million ] to grow its business in China four-fold. GE Energy's Shenyang wind turbine plant produces 1.5-MW-class wind turbines.
Localization of Equipment Manufacturing
To help spur the development of an indigenous wind power equipment and components industry, Beijing has mandated that all new wind power projects have at least a 70% Chinese component. Wind power equipment manufacturers also now enjoy a 50% discount on value added taxes (VAT) payable in China.
On April 23, 2008 the Ministry of Finance announced two changes to import tariff regulations with respect to the wind power industry, further spurring development of Chinese wind power equipment manufacturing. The first change, effective January 1, 2008, implemented a tariff and VAT rebate program for imports of parts and raw materials used in the manufacture of wind turbines. This change was significant because a large percentage of parts and raw materials used in the manufacture of wind turbines still must be sourced from outside of China.
The second tariff change, effective May 1, 2008, eliminated the tariff-free importation of wind turbines less than 2.5 MW. This tariff change is a strong indicator that the Chinese wind turbine industry is maturing rapidly; as recently as late 2007 Chinese wind power equipment was incapable of producing megawatt-class wind turbines.
Megawatt-class turbines are increasingly produced domestically and the elimination of tariff-free imports of wind turbines less than 2.5 MW in size will give added impetus to the domestic production of increasingly large wind turbines.
The economics of the wind power equipment industry are quite favorable. At present the cost of construction of wind power in China is approximately 8000-9000 Yuan/Kw [US $1170-1315 /kw] and 60% to 70% of those costs are equipment purchases. Because many of the most important Chinese wind power equipment and components companies have grown out of large industrial companies (including several public companies), there appears to be sufficient financial strength for these companies to grow.
Funds to finance new wind power equipment and component manufacturing in China have come primarily in the form of commercial bank loans, retained earnings and equity investments.
Turbines
According to Steve Sawyer, secretary general of the Global Wind Energy Council, by 2009 China will become the world's largest producer of wind turbines. At present China has at least 40 wind-power turbine manufacturers: 17 are state-owned or state-controlled companies, 12 are private Chinese companies, 7 are joint-venture companies and 4 are wholly foreign-owned companies.
Though China has yet to export wind turbines, China's two largest wind turbine manufacturers — Xinjiang Jinfeng (Goldwind, whose December 2007 initial public offering (IPO) was the first pure-play wind power equipment Chinese stock offering in the U.S.) and Sinovel — have plans to export in 2009 and 2010.
Many of the largest wind turbine and other equipment manufacturers have licensed technology from western companies, including from AMSC Windtec [AUSTRIA], REpower [GERMANY], Aerodyn [GERMANY], Vensys [GERMANY] and Garrad Hassan [UNITED KINGDOM]. Most of the largest Chinese wind turbine manufacturers have begun to produce 1.5-MW wind turbines and gradually these Chinese wind turbine manufacturers, having purchased designs for 2-, 3- and 5-MW wind turbines, are developing prototypes of larger wind turbines.
Bearings
The Chinese wind power industry continues to depend on imports for its supply of bearings. However, this dependence may be short lived. On December 11, 2007, the Timken Company entered into a joint venture agreement with the Xiangtan Electric Manufacturing Co., Ltd. to manufacture ultra-large bore bearings for the main rotor shafts of megawatt-class wind turbines. The bearings will be manufactured in China with some of the bearing materials and components coming from the U.S. The new US $38 million plant, which will be located in Hunan Province, will begin construction in 2008. [Canton, Ohio-based] Timken will have an 80% interest in the new venture.
Blades
The largest wind turbine blades to be manufactured in China to date (measuring 40.25 meters long) are now being manufactured by the China Materials Science and Technology Wind Power Blades Joint Stock Co. Ltd., in Beijing. The "Sinoma 40.2" blades that the company produces are manufactured in conjunction with a German wind blade designer. Presently, China Materials has a demonstration production line capable of producing 10 sets of molds/year and 200 sets (600 blades) of Sinoma 40.2 blades/year. The company has agreements with wind turbine manufacturers and already has supplied 30 sets of blades, 5 of which are being installed in wind farms in China's Northeast. China Materials is currently developing 2.5-MW blades and anticipates eventually having five different sized blades by 2010.
The Shanghai Prime Machinery Company, whose shares are listed in Hong Kong, is another significant Chinese wind turbine blade manufacturer. Aerodyn has licensed its blade manufacturing technology to Canada's Hanwei Energy Services Corp. for the latter to produce 37.5-meter and 40.3-meter blades for 1.5-MW turbines.
Gearboxes
Comprising roughly 15% of total wind turbine cost, gearbox manufacturing is critical to China's localization of components and equipment. The gearbox converts between slowly rotating, high torque power from the wind turbine rotor and high speed, low torque power used for the generator.
China's largest manufacturer of gearboxes is China High Speed Transmission, which in 2007 captured nearly 80% of domestic market share. Last year, the company raised US $272 million through a Morgan Stanley-led IPO in Hong Kong and currently supplies gearboxes to both Goldwind and GE Energy.
The CEO of Germany's Nordex Corporation has noted China High Speed Transmission is one of only two companies in China able to produce gearboxes for the 1.5-MW turbine that Nordex produces. Although China High Speed Transmission only has a three percent global market share, it has major export plans for the near future. Tempering these ambitions will be increasing raw material costs, including steel prices that have nearly doubled from US $535 a ton in 2007 to over US $1,000 a ton in 2008.
Retail investors seeking to participate in China's wind-power boom can invest in the ETF "FAN" that was recently explained by Peter Lynch on REW.com. In addition to the well-known foreign companies that have a significant piece of the Chinese wind power industry, FAN includes a handful of publicly-traded Chinese companies whose revenues are derived (at least partially) from sales into the wind industry.
The Chinese components of FAN include Goldwind (turbines), Harbin Wind Power Equipment Co., Ltd., Shanghai Prime Machinery Co. (blades), China High Speed Transmission Equipment Group Co., Ltd. (wind transmission equipment and gearboxes), China Wind Systems, Inc. (forged rolled rings) and China WindPower Group Limited.
Foreign wind power equipment manufacturers have made strategic investments in China, allowing them to remain dominant even as indigenous Chinese wind equipment capabilities grow. At EU €60 million, Gamesa's factory in Tianjin, which manufactures wind turbines, is the Spanish company's second largest foreign investment (after the United States).
Also located in Tianjin is Vestas' Wind Turbine Equipment (China) Co. Ltd., which manufactures blades and does wind turbine assembly.
Nordex has located two of its three manufacturing centers in China and has established the company's Asia headquarters in Beijing. In the next three years, Nordex expects to invest an additional 500 million Yuan [approx. US $71 million ] to grow its business in China four-fold. GE Energy's Shenyang wind turbine plant produces 1.5-MW-class wind turbines.
Localization of Equipment Manufacturing
To help spur the development of an indigenous wind power equipment and components industry, Beijing has mandated that all new wind power projects have at least a 70% Chinese component. Wind power equipment manufacturers also now enjoy a 50% discount on value added taxes (VAT) payable in China.
On April 23, 2008 the Ministry of Finance announced two changes to import tariff regulations with respect to the wind power industry, further spurring development of Chinese wind power equipment manufacturing. The first change, effective January 1, 2008, implemented a tariff and VAT rebate program for imports of parts and raw materials used in the manufacture of wind turbines. This change was significant because a large percentage of parts and raw materials used in the manufacture of wind turbines still must be sourced from outside of China.
The second tariff change, effective May 1, 2008, eliminated the tariff-free importation of wind turbines less than 2.5 MW. This tariff change is a strong indicator that the Chinese wind turbine industry is maturing rapidly; as recently as late 2007 Chinese wind power equipment was incapable of producing megawatt-class wind turbines.
Megawatt-class turbines are increasingly produced domestically and the elimination of tariff-free imports of wind turbines less than 2.5 MW in size will give added impetus to the domestic production of increasingly large wind turbines.
The economics of the wind power equipment industry are quite favorable. At present the cost of construction of wind power in China is approximately 8000-9000 Yuan/Kw [US $1170-1315 /kw] and 60% to 70% of those costs are equipment purchases. Because many of the most important Chinese wind power equipment and components companies have grown out of large industrial companies (including several public companies), there appears to be sufficient financial strength for these companies to grow.
Funds to finance new wind power equipment and component manufacturing in China have come primarily in the form of commercial bank loans, retained earnings and equity investments.
Turbines
According to Steve Sawyer, secretary general of the Global Wind Energy Council, by 2009 China will become the world's largest producer of wind turbines. At present China has at least 40 wind-power turbine manufacturers: 17 are state-owned or state-controlled companies, 12 are private Chinese companies, 7 are joint-venture companies and 4 are wholly foreign-owned companies.
Though China has yet to export wind turbines, China's two largest wind turbine manufacturers — Xinjiang Jinfeng (Goldwind, whose December 2007 initial public offering (IPO) was the first pure-play wind power equipment Chinese stock offering in the U.S.) and Sinovel — have plans to export in 2009 and 2010.
Many of the largest wind turbine and other equipment manufacturers have licensed technology from western companies, including from AMSC Windtec [AUSTRIA], REpower [GERMANY], Aerodyn [GERMANY], Vensys [GERMANY] and Garrad Hassan [UNITED KINGDOM]. Most of the largest Chinese wind turbine manufacturers have begun to produce 1.5-MW wind turbines and gradually these Chinese wind turbine manufacturers, having purchased designs for 2-, 3- and 5-MW wind turbines, are developing prototypes of larger wind turbines.
Bearings
The Chinese wind power industry continues to depend on imports for its supply of bearings. However, this dependence may be short lived. On December 11, 2007, the Timken Company entered into a joint venture agreement with the Xiangtan Electric Manufacturing Co., Ltd. to manufacture ultra-large bore bearings for the main rotor shafts of megawatt-class wind turbines. The bearings will be manufactured in China with some of the bearing materials and components coming from the U.S. The new US $38 million plant, which will be located in Hunan Province, will begin construction in 2008. [Canton, Ohio-based] Timken will have an 80% interest in the new venture.
Blades
The largest wind turbine blades to be manufactured in China to date (measuring 40.25 meters long) are now being manufactured by the China Materials Science and Technology Wind Power Blades Joint Stock Co. Ltd., in Beijing. The "Sinoma 40.2" blades that the company produces are manufactured in conjunction with a German wind blade designer. Presently, China Materials has a demonstration production line capable of producing 10 sets of molds/year and 200 sets (600 blades) of Sinoma 40.2 blades/year. The company has agreements with wind turbine manufacturers and already has supplied 30 sets of blades, 5 of which are being installed in wind farms in China's Northeast. China Materials is currently developing 2.5-MW blades and anticipates eventually having five different sized blades by 2010.
The Shanghai Prime Machinery Company, whose shares are listed in Hong Kong, is another significant Chinese wind turbine blade manufacturer. Aerodyn has licensed its blade manufacturing technology to Canada's Hanwei Energy Services Corp. for the latter to produce 37.5-meter and 40.3-meter blades for 1.5-MW turbines.
Gearboxes
Comprising roughly 15% of total wind turbine cost, gearbox manufacturing is critical to China's localization of components and equipment. The gearbox converts between slowly rotating, high torque power from the wind turbine rotor and high speed, low torque power used for the generator.
China's largest manufacturer of gearboxes is China High Speed Transmission, which in 2007 captured nearly 80% of domestic market share. Last year, the company raised US $272 million through a Morgan Stanley-led IPO in Hong Kong and currently supplies gearboxes to both Goldwind and GE Energy.
The CEO of Germany's Nordex Corporation has noted China High Speed Transmission is one of only two companies in China able to produce gearboxes for the 1.5-MW turbine that Nordex produces. Although China High Speed Transmission only has a three percent global market share, it has major export plans for the near future. Tempering these ambitions will be increasing raw material costs, including steel prices that have nearly doubled from US $535 a ton in 2007 to over US $1,000 a ton in 2008.
Retail investors seeking to participate in China's wind-power boom can invest in the ETF "FAN" that was recently explained by Peter Lynch on REW.com. In addition to the well-known foreign companies that have a significant piece of the Chinese wind power industry, FAN includes a handful of publicly-traded Chinese companies whose revenues are derived (at least partially) from sales into the wind industry.
The Chinese components of FAN include Goldwind (turbines), Harbin Wind Power Equipment Co., Ltd., Shanghai Prime Machinery Co. (blades), China High Speed Transmission Equipment Group Co., Ltd. (wind transmission equipment and gearboxes), China Wind Systems, Inc. (forged rolled rings) and China WindPower Group Limited.
-----------------------
Lou Schwartz is president of China Strategies LLC, and publisher of the China Renewable Energy and Sustainable Development Report and the China Aluminum Industry Report. He has degrees in East Asian Studies from the University of Michigan and Harvard University where he studied Chinese language and literature, economics and law, among other disciplines. Lou also earned a J.D. from George Washington University Law School.
Ryan Hodum is an environmental and renewable energy professional who recently earned a Master of Arts in Global Environmental Policy from American University in Washington, D.C. with a focus on renewable energy utilization in China. He now works for David Gardiner & Associates LLC, a strategic consulting firm focused on climate and energy solutions. Ryan spearheaded the development of China Strategies' China Renewable Energy Interactive Map and the China Solar Map, which can be found on China Strategies' website.
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Lou Schwartz is president of China Strategies LLC, and publisher of the China Renewable Energy and Sustainable Development Report and the China Aluminum Industry Report. He has degrees in East Asian Studies from the University of Michigan and Harvard University where he studied Chinese language and literature, economics and law, among other disciplines. Lou also earned a J.D. from George Washington University Law School.
Ryan Hodum is an environmental and renewable energy professional who recently earned a Master of Arts in Global Environmental Policy from American University in Washington, D.C. with a focus on renewable energy utilization in China. He now works for David Gardiner & Associates LLC, a strategic consulting firm focused on climate and energy solutions. Ryan spearheaded the development of China Strategies' China Renewable Energy Interactive Map and the China Solar Map, which can be found on China Strategies' website.
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Headwind: Asian Wind-Power Upstarts Stumble
By Tom Wright
Environmental Capital/ Wall Street Journal
June 30, 2008
Wind power is supposed to be the clean-energy panacea, if only the world can get enough turbines. Waiting lists in the U.S. are now stretching into 2010. China and India are eager to fill the void in the world’s windmill market—as they did with everything from cheap footwear to IT. But as the trials and tribulations at India’s Suzlon Energy show, it isn’t that easy.
Earlier this year, Suzlon had to recall almost all the wind-turbine blades it sold in the U.S., after some cracks appeared in Suzlon machines. Now, as we reported in the WSJ, Suzlon’s problems are multiplying.
Suzlon was so eager to crack the U.S. market, it rushed out new prototypes without proper testing on the U.S. grid, which is different than India’s. The result? The big, 2.1 megawatt turbines haven’t performed up to snuff as stipulated in Suzlon’s contracts—and leaves the company on the hook for financial penalties.
Suzlon’s travails could hold lessons for other developing-world wind companies hoping to strike gold in the U.S., the fastest-growing wind-power market in the world. While China’s Sinovel and Gold Wind have enough on their plate for now with China’s own outsized clean-energy ambitions—the country just moved up another wind-power target—the ultimate goal is to become export kings, like global leaders Vestas, Gamesa, and General Electric.
But wind power is a technology game. Cheaper labor gave Suzlon and Chinese makers an early leg up, and helped Suzlon sieze 8% of the U.S. market. The trick now, when costs for everybody’s turbines is on the increase thanks to pricier components, is how to hang on to existing customers while doubling output to satisfy new ones.
Some are already worried: Edison Mission Energy in the U.S. cancelled a 150-turbine order from Suzlon until the blade issue is sorted. Chinese makers have barely started exporting.
Tech glitches have plagued every turbine maker at one time or another. The big difference? Vestas, Nordex, and other European manufacturers worked through their technology glitches decades ago, when wind power was still a fringe energy off the world’s radar screens. Suzlon and Chinese newcomers angling for a piece of the pie face a much steeper learning curve—with the stakes suddenly a lot higher.
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http://www.allroadsleadtochina.com/index.php/2008/07/24/tianjin-investment-newsletter-june-24-2008/
CHINA’S BIGGEST WIND SYSTEM MANUFACTURING CENTER EMERGES IN TEDA
Tianjin Investment Newsletter
June 24, 2008
Recently Vestas held an earth breaking ceremony for its controller plant in TEDA West, the third time for the Danish giant in this industrial wonderland of North China. Since September, 2005, Vestas Wind Systems (China) Co., Ltd. has successively built and launched its blade plant, nacelle plant and generator plant. The new controller facility will make it possible for TEDA West to supply complete wind systems. So far, Vestas and TEDA have jointly hammered out China’s biggest wind system manufacturing base.
Ulrik Christensen, the Danish general manager of the controller plant, said that the establishment of the new facility is part of a long-term investment to meet the massive growth within the wind turbine industry and plays an important role in Vestas’global production footprint. The 15,000-square-meter new facility will focus on the production of control panels to supply the big Vestas family. (Tr. by Zhang Shanshan)
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http://www.compositesworld.com/articles/wind-turbine-blades-big-and-getting-bigger.aspx
WIND TURBINE BLADES: BIG AND GETTING BIGGER
By Chris Red
Composites World
6/1/2008
"[O]ver the next 10 years there could be enough business to support the construction of perhaps 70 to 80 new wind turbine blade factories. These new plant estimates do not account for the inevitable closure of a few older blade manufacturing facilities and equivalent capacity to replace that production elsewhere.
Since 2000, at least five older European facilities (each specializing in sub-1.0-MW turbine blades) have been shuttered. Undoubtedly there will be others as blade manufacturing continues to globalize.
We anticipate that nearly three-quarters of this new capacity will need to be placed into service in the second half of the 2008 to 2017 time frame. The logistical difficulty involved in transporting these large blades from factory to wind farm will dictate that factories be local to demand. Therefore, about two-thirds of the new blade factories that will come online over the next 10 years are likely to be built in the developing markets across Asia — especially in India and China — and, to a lesser extent, in South and Latin America. Only about 32 percent of the new blade manufacturing capacity will be built in regions currently in the vanguard of wind energy development: 20 percent of the new capacity is expected to be located in Europe, and North America will see the remaining 12 percent of the capacity expansions."
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http://www.windaction.org/news/15372
Turbulence Ahead: India Windmill Empire Begins to Show Cracks
By Tom Wright
Wall Street Journal
April 18, 2008
In a filing with the U.S. Securities and Exchange Commission in February, Edison Mission Energy, a unit of Edison International, said the 144-foot-long windmill blades it recently bought from Suzlon have begun to split at three wind-power sites it operates in the Midwest. Suzlon has recalled 1,251 blades from its top-of-the-line turbines, which represent the majority of blades the company has sold to date in the U.S..
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http://www.windaction.org/news/15372
Turbulence Ahead: India Windmill Empire Begins to Show Cracks
By Tom Wright
Wall Street Journal
April 18, 2008
In a filing with the U.S. Securities and Exchange Commission in February, Edison Mission Energy, a unit of Edison International, said the 144-foot-long windmill blades it recently bought from Suzlon have begun to split at three wind-power sites it operates in the Midwest. Suzlon has recalled 1,251 blades from its top-of-the-line turbines, which represent the majority of blades the company has sold to date in the U.S..
Its troubles don't end there. A year ago, the company bought a controlling stake in a large German turbine manufacturer, REpower Systems AG, in one of India's biggest overseas acquisitions. ...Now, Suzlon can't get its hands on the blueprints. Hamstrung by a German corporate law, Suzlon must offer to buy out minority shareholders before it can demand REpower's designs. It's unlikely that the company could make a tender offer until 2009, say people with knowledge of the companies...Mr. Kher blamed the cracks on the Midwest's unexpectedly violent changes in wind direction. Though Mr. Tanti says that only 45 blades have cracked, Suzlon says it will add an extra lamination layer to almost all of the blades it has shipped to the U.S. To repair cracked blades and reinforce the rest, the company expects to spend $30 million.
After harnessing the breezes to build a $7 billion family fortune, Indian windmill magnate Tulsi Tanti is encountering heavy turbulence.
A bit more than a decade ago, Mr. Tanti sold his family's struggling yarn-making business and scraped together about a half-million dollars to start a new company.
Defying industry incumbents who dismissed him as a dreamer, he started building wind-powered turbines.
With lobbying, heavy borrowing and good timing, he turned Suzlon Energy Ltd. into the world's fifth-largest windmill maker. Suzlon does roughly $1.8 billion in sales a year and has captured 8% of the U.S. market. Mr. Tanti ranks among the world's richest green-power moguls.
Maintaining his perch will be a challenge. In a filing with the U.S. Securities and Exchange Commission in February, Edison Mission Energy, a unit of Edison International, said the 144-foot-long windmill blades it recently bought from Suzlon have begun to split at three wind-power sites it operates in the Midwest. Suzlon has recalled 1,251 blades from its top-of-the-line turbines, which represent the majority of blades the company has sold to date in the U.S..
Its troubles don't end there. A year ago, the company bought a controlling stake in a large German turbine manufacturer, REpower Systems AG, in one of India's biggest overseas acquisitions. REpower's technology could improve Suzlon's current product line. The German company has also developed some of the industry's biggest turbines, which could help turn Suzlon into a wind-power front-runner.
Now, Suzlon can't get its hands on the blueprints. Hamstrung by a German corporate law, Suzlon must offer to buy out minority shareholders before it can demand REpower's designs. It's unlikely that the company could make a tender offer until 2009, say people with knowledge of the companies.
Mr. Tanti, a 50-year-old with a narrow moustache and slicked-down hair, plays down the concerns. In an interview, he demonstrates a bold confidence in the technology that has propelled Suzlon this far, and bristles at questions about its challenges.
Four-Year Plan
"There are no companies growing the way we are growing. Within four years we will feed product technology to the whole world," says Mr. Tanti, the company's chairman and managing director. Suzlon remains on track to double its annual production capacity by 2010, he says. The cracked-blade problem, he says, doesn't stem from any fundamental design flaw. He declines to comment on ownership issues at REpower.
Suzlon's rapid rise reflects the advantages that developing-world companies have in some booming new sectors -- as well as the trouble they may have staying on top. Mr. Tanti kick-started his company in the late 1990s in part by lobbying a local government for a friendly tax regime. In 2005, he tapped an international appetite for investments in emerging markets and renewable energy to raise capital for an aggressive expansion. He used India's cheap labor costs to undercut the prices of established rivals abroad.
Now, to grow further, Suzlon must compete with the likes of Denmark's Vestas A/S, the world's largest windmill producer, and General Electric Co. Established wind-power companies are loath to license their latest technology to third-world manufacturers.
Instead, they've typically opted to set up joint ventures abroad that don't involve technology transfer.
Polyester Yarn
Mr. Tanti was born in Rajkot, an industrial town in the northwestern Indian state of Gujarat. After studying commerce and mechanical engineering in the 1970s, he went to work for his family's cold-storage business.
In the early 1980s, Mr. Tanti and his three brothers moved to Surat, a textile center in Gujarat, and set up a company to make polyester yarn for saris and dresses. The company's name, Suzlon, combined the Gujarati word for intelligence and the English word loan.
Suzlon struggled. One big problem, Mr. Tanti says, was electricity. India grants agricultural users in some states subsidized or free power, leaving industrial users to bear some of the world's highest electricity costs. Even so, supply is erratic.
So Mr. Tanti decided to power his factory with windmills. In 1994, he bought two small turbines from Vestas.
But wind power, too, was a headache. Big Western makers weren't installing and servicing the equipment they sold, making maintenance a chore. Mr. Tanti saw an opening: He could build windmills and operate wind farms for Indian factories, which were growing following the country's 1991 economic reforms. "Always the ideas come when you are under pressure," he says.
In 1995, he and his brothers raised $600,000 by selling some family property and set up Suzlon Energy Ltd. near Mumbai.
Mr. Tanti had to build from scratch a company that could compete in a highly technical industry. Wind turbines are complicated mechanisms with thousands of parts. Their immense blades must be engineered to catch wind efficiently but avoid breaking in high gusts.
Suzlon mined troubled European makers for talent and designs. It struck a deal with a small German producer, Südwind Energy GmbH, to sell its turbines in India. When Südwind went bust in the late 1990s, Suzlon hired its engineers and set up a turbine research and development center in Germany. Around the same time, Suzlon bought AE-Rotor Techniek BV, a bankrupt Dutch company, to design its blades.
'Tremendous Lobbying'
Mr. Tanti pressed government officials in Mumbai, the capital of Maharashtra state, to support the fledgling wind-power industry. In 1999, Maharashtra instituted a generous tax break that let companies deduct windmill costs against their sales-tax bill.
"There was tremendous lobbying from the industry," said G.M. Pillai, former head of the Maharashtra Energy Development Agency, the state body that sets policy for renewable energy. "Suzlon was a mover."
Mr. Tanti sold his turbines to big Indian companies, including motorcycle maker Bajaj Auto Ltd. Its chairman, Rahul Bajaj, says he was impressed by Mr. Tanti's business model. But had it not been for the tax break, he says, "I am not sure whether we would have gone ahead."
Suzlon's sales multiplied, reaching $131 million in the company's fiscal year ending 2002, up from $32 million in 2000. But the tax break caused an outcry in the local media, because it effectively reduced the flow of money into public coffers. The state repealed it in 2002, Mr. Pillai says.
Mr. Tanti looked for opportunity abroad. In the U.S., where tax credits boosted wind-power demand, producers were behind on turbine orders. In 2003, Suzlon sealed its first U.S. deal, selling two dozen 1-megawatt turbines -- each capable of powering about 650 U.S. households -- to a Minnesota developer.
Foreign investors were drawn to Suzlon, which offered exposure to both India's booming stock market and the promising renewable-energy sector. In 2004, Citigroup's Citibank took a 9% stake in the company for $22 million.
Citibank's $1 Billion
When global stocks sagged later that year, Citibank worried that Suzlon was taking on risky levels of debt to ramp up production, says Ajay Relan, who heads Citibank's private-equity business in India. He recalls suggesting that Mr. Tanti sell Suzlon to a rival. Mr. Tanti countered that within a few years, Suzlon would be buying the leading European companies, Mr. Relan recalls.
By 2005, foreign money was pouring into India's stock market. Suzlon was meeting sales targets and, because of low manufacturing costs, had profit margins of more than 20%, compared with the industry average of 8%. Later that year, Suzlon raised $340 million in an initial public offering. Citibank sold a majority of its stake in the IPO, and expects to make a $1 billion profit in all from its Suzlon investment.
Mr. Tanti became one of India's richest people overnight. The extended Tanti family owns about 66% of the company, worth about $11 billion at the stock's height earlier this year and more than $7 billion currently. Mr. Tanti owns about 16% of Suzlon, according to the Mumbai Stock Exchange.
Flush with IPO funds, Mr. Tanti moved to buy international component makers. Foreign bankers lined up to lend. Borrowing from Barclays and Deutsche Bank, Suzlon bought Belgian gearbox maker Hansen Transmissions International NV, for $565 million, in 2006. The same year, it set up a factory in Tianjin, China.
To compete in developed markets, Suzlon needed bigger and more efficient turbines than those it had sold in India. Its German R&D center designed the company's biggest model yet, a 2.1-megawatt turbine. Its blades, measuring nearly 50 yards from hub to tip, were the company's most technically demanding to date.
Suzlon's main factory is in the former French enclave of Pondicherry, on India's southeast coast. Executives ride golf buggies between open hangars on the massive palm-tree-dotted site, where some 1,200 employees assemble turbines and mold, sand and paint the giant fiberglass blades. Suzlon also built a plant in Pipestone, Minn., to manufacture blades closer to its key U.S. market.
[IS THIS PLANT ON-LINE YET?? HOW MANY U.S. 'GREEN COLLAR' MANUFACTURING JOBS??]
Edison Mission of Irvine, Calif., placed its first orders for Suzlon's 2.1-megawatt turbines in early 2006. Spokesman Douglas McFarlan says Edison Mission was attracted by Suzlon's record in Asia and "attractive" pricing. Suzlon's turbines cost about $1.5 million per megawatt, about 20% less than U.S. and European models, industry experts say.
To date, Edison has signed agreements for enough turbines to generate 1,000 megawatts, making it Suzlon's largest global customer.
Soon after operations began, blades began splitting, Edison said in its February SEC filing. The company says blade problems may delay new wind-power projects it has under development. Deere & Co., another big U.S. customer, has also seen some of its blades crack, says Suzlon spokesman Vivek Kher. A Deere spokesman declined to comment.
Violent Weather
Mr. Kher blamed the cracks on the Midwest's unexpectedly violent changes in wind direction. Though Mr. Tanti says that only 45 blades have cracked, Suzlon says it will add an extra lamination layer to almost all of the blades it has shipped to the U.S. To repair cracked blades and reinforce the rest, the company expects to spend $30 million.
[IF THE BLADES ARE SHIPPED TO THE U.S., THEN WHAT IS IT MANUFACTURING, IF ANYTHING, IN ITS U.S. FACTORY??]
Its eventual cost may be much higher. In its SEC filing, Edison Mission says its contract with Suzlon entitles it to seek compensation for business lost while turbines are down. It says it may also seek compensation for delays in starting new wind-power projects.
Suzlon has been aware for a year and a half that its technology is "not world-class," says Ashish Dhawan, senior managing director of ChrysCapital, an Indian private-equity firm that invested in Suzlon before the IPO. ChrysCapital has sold its stake but Mr. Dhawan remains an independent director on Suzlon's board. "It's not that their technology is bad," he says. "But they've been a laggard."
Mr. Tanti has sought to close the gap. Last May, Suzlon agreed to take over struggling German turbine manufacturer REpower, which has developed some of the industry's most advanced wind technology. Its 5-megawatt turbines, among the world's largest, sit offshore to catch stronger sea gusts.
The deal, valued at $1.7 billion, calls for Suzlon to take over REpower in stages over two years, in part by buying large stakes currently held by two European shareholders, French state-controlled nuclear-engineering company Areva SA and Martifer SA of Portugal.
The two shareholders have granted Suzlon the right to vote their shares, giving the Indian company 86.5% of REpower's voting rights. But Suzlon's current ownership stake comes to just 33.6%. By German law, minority owners such as Suzlon are deemed competitors. REpower is under no obligation to transfer its technology until Suzlon is able to complete a so-called "domination agreement" that requires, among other things, that Suzlon also offer to buy out minority shareholders who control 13.5% of REpower's shares.
Shuttle to Hamburg
Suzlon's challenge, say analysts and people familiar with the company, will be to fund its latest aggressive expansion plans and its buyout of REpower's large shareholders, as well as raise funds to compensate minority shareholders.
Meanwhile, according to those familiar with the company, a frustrated Mr. Tanti and his top executives have shuttled to REpower's Hamburg headquarters repeatedly in recent months, trying to persuade REpower to license its technology to Suzlon. In late January, the vice president of Suzlon's Netherlands-based design unit asked REpower for the blueprints for two of its blades, according to an email reviewed by The Wall Street Journal.
Mindful of exposing itself to complaints by minority shareholders, REpower has declined Suzlon's requests. "We're not sure we want to give [the technical know-how] to a competitor," said Thomas Schnorrenberg, a REpower spokesman.
Mr. Tanti says he's managing REpower at arm's length and that there's nothing wrong with seeking licenses for its technologies.
In spite of the headwind, Suzlon's sales have continued to grow. Its unconsolidated revenue in the last quarter of 2007 totaled $410 million, up 50% from the year before.
But Suzlon's shares, listed on the Bombay Stock Exchange, have fallen 34% since its early January high, compared with a 21% fall in the market's benchmark Sensex index during the same period.
Mr. Dhawan, the board member, says it's unclear how Mr. Tanti's aggressive expansion and ambition will play out. "There's a risk with Tanti," he said. "It's going to be a huge success -- or it's going to blow up."
Write to Tom Wright at tom.wright@wsj.com
Web link: http://online.wsj.com/article/SB120846287761023921.html?mod=googlenews_wsj
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http://www.bloomberg.com/apps/news?pid=20601089&sid=a6x.LjxlExh0&refer=china
Vestas Aims to Reclaim Wind-Turbine Share Lost to China Rivals
By Lee Spears
April 10, 2008 (Bloomberg) -- Vestas Wind Systems A/S, the world's largest wind-turbine maker, said it will reclaim market share lost to Chinese competitors with the help of new factories in North America, Europe and Asia.
The company aims to grab 25 percent of the global market, up from 23 percent last year, Chief Executive Officer Ditlev Engel said in an interview in Beijing today. The Randers, Denmark-based company's share was 28 percent in 2006.
Vestas' shipments in Asia fell by almost 6 percent last year, as Chinese rivals including Xinjiang Goldwind Science & Technology Co. expanded production. The company plans to almost double investments to 620 million euros ($982 million) this year to start production at four factories in the U.S. and Europe and at three plants in China in 2009.
``Our market share went down mainly because we had a number of new players coming on stream in China,'' said Engel, 43. ``We went as fast as we could.''
Vestas aims to book revenue of 5.7 billion euros this year, a threefold increase from 1.88 billion euros in 2007, Engel said, reiterating an earlier company forecast. The company's 2007 sales gained 21 percent in China, a market that more than doubled in the year, according to the Global Wind Energy Council.
Wind-turbine equipment sales amounted to 25 billion euros ($40 billion) last year, according to the Brussels-based council.
Vestas shares fell 1 percent to 507 kroner in Copenhagen yesterday.
Suzlon has been aware for a year and a half that its technology is "not world-class," says Ashish Dhawan, senior managing director of ChrysCapital, an Indian private-equity firm that invested in Suzlon before the IPO. ChrysCapital has sold its stake but Mr. Dhawan remains an independent director on Suzlon's board. "It's not that their technology is bad," he says. "But they've been a laggard."
Mr. Tanti has sought to close the gap. Last May, Suzlon agreed to take over struggling German turbine manufacturer REpower, which has developed some of the industry's most advanced wind technology. Its 5-megawatt turbines, among the world's largest, sit offshore to catch stronger sea gusts.
The deal, valued at $1.7 billion, calls for Suzlon to take over REpower in stages over two years, in part by buying large stakes currently held by two European shareholders, French state-controlled nuclear-engineering company Areva SA and Martifer SA of Portugal.
The two shareholders have granted Suzlon the right to vote their shares, giving the Indian company 86.5% of REpower's voting rights. But Suzlon's current ownership stake comes to just 33.6%. By German law, minority owners such as Suzlon are deemed competitors. REpower is under no obligation to transfer its technology until Suzlon is able to complete a so-called "domination agreement" that requires, among other things, that Suzlon also offer to buy out minority shareholders who control 13.5% of REpower's shares.
Shuttle to Hamburg
Suzlon's challenge, say analysts and people familiar with the company, will be to fund its latest aggressive expansion plans and its buyout of REpower's large shareholders, as well as raise funds to compensate minority shareholders.
Meanwhile, according to those familiar with the company, a frustrated Mr. Tanti and his top executives have shuttled to REpower's Hamburg headquarters repeatedly in recent months, trying to persuade REpower to license its technology to Suzlon. In late January, the vice president of Suzlon's Netherlands-based design unit asked REpower for the blueprints for two of its blades, according to an email reviewed by The Wall Street Journal.
Mindful of exposing itself to complaints by minority shareholders, REpower has declined Suzlon's requests. "We're not sure we want to give [the technical know-how] to a competitor," said Thomas Schnorrenberg, a REpower spokesman.
Mr. Tanti says he's managing REpower at arm's length and that there's nothing wrong with seeking licenses for its technologies.
In spite of the headwind, Suzlon's sales have continued to grow. Its unconsolidated revenue in the last quarter of 2007 totaled $410 million, up 50% from the year before.
But Suzlon's shares, listed on the Bombay Stock Exchange, have fallen 34% since its early January high, compared with a 21% fall in the market's benchmark Sensex index during the same period.
Mr. Dhawan, the board member, says it's unclear how Mr. Tanti's aggressive expansion and ambition will play out. "There's a risk with Tanti," he said. "It's going to be a huge success -- or it's going to blow up."
Write to Tom Wright at tom.wright@wsj.com
Web link: http://online.wsj.com/article/SB120846287761023921.html?mod=googlenews_wsj
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http://www.bloomberg.com/apps/news?pid=20601089&sid=a6x.LjxlExh0&refer=china
Vestas Aims to Reclaim Wind-Turbine Share Lost to China Rivals
By Lee Spears
April 10, 2008 (Bloomberg) -- Vestas Wind Systems A/S, the world's largest wind-turbine maker, said it will reclaim market share lost to Chinese competitors with the help of new factories in North America, Europe and Asia.
The company aims to grab 25 percent of the global market, up from 23 percent last year, Chief Executive Officer Ditlev Engel said in an interview in Beijing today. The Randers, Denmark-based company's share was 28 percent in 2006.
Vestas' shipments in Asia fell by almost 6 percent last year, as Chinese rivals including Xinjiang Goldwind Science & Technology Co. expanded production. The company plans to almost double investments to 620 million euros ($982 million) this year to start production at four factories in the U.S. and Europe and at three plants in China in 2009.
``Our market share went down mainly because we had a number of new players coming on stream in China,'' said Engel, 43. ``We went as fast as we could.''
Vestas aims to book revenue of 5.7 billion euros this year, a threefold increase from 1.88 billion euros in 2007, Engel said, reiterating an earlier company forecast. The company's 2007 sales gained 21 percent in China, a market that more than doubled in the year, according to the Global Wind Energy Council.
Wind-turbine equipment sales amounted to 25 billion euros ($40 billion) last year, according to the Brussels-based council.
Vestas shares fell 1 percent to 507 kroner in Copenhagen yesterday.
More Turbines
Vestas plans to have global production capacity of 10,000 megawatts in 2010, he said. He declined to provide the company's current capacity or give projections.
The company is also expanding in China to guard against losses from a weakening U.S. dollar, he said.
``One of the reasons we're developing the supply chain in China is to get a better natural hedge on our currency spread,'' Engel said. “The drop of the dollar is a challenge for Vestas, particularly because we have about half of our business in Europe and the rest in Asia and North America.”
China may become the world's leading market for wind-power generation within three to five years, Engel said on Sept. 21. The country, the world's biggest energy consumer after the U.S., last year more than doubled its wind-power generation capacity to 5,600 megawatts, Shi Pengfei, vice-president of government-owned China Wind Energy Association, said on Jan. 16.
To contact the reporter on this story: Lee Spears in Beijing at lspears2@bloomberg.net.
Last Updated: April 10, 2008 05:21 EDT
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http://www.ec21.com/ec-market/wind_turbines.html
Location
China (480)
Korea (23)
USA (9)
India (6)
Australia (3)
United Kingdom (2)
Japan (1)
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http://www.pickensplan.com/theplan/
In the Texas panhandle, just north of Sweetwater, is the town of Pampa, where T. Boone Pickens' Mesa Power is currently building the largest wind farm in the world. In addition to creating new construction and maintenance jobs, thousands of Americans will be employed to manufacture the turbines and blades. These are high skill jobs that pay on a scale comparable to aerospace jobs.
[REALLY???? HOW WOULD THAT BE POSSIBLE IF MOST OF THE WORLDS TURBINE & BLADE PRODUCTION IS SOURCED IN CHINA, INDIA AND EUROPE???]
In the Texas panhandle, just north of Sweetwater, is the town of Pampa, where T. Boone Pickens' Mesa Power is currently building the largest wind farm in the world. In addition to creating new construction and maintenance jobs, thousands of Americans will be employed to manufacture the turbines and blades. These are high skill jobs that pay on a scale comparable to aerospace jobs.
[REALLY???? HOW WOULD THAT BE POSSIBLE IF MOST OF THE WORLDS TURBINE & BLADE PRODUCTION IS SOURCED IN CHINA, INDIA AND EUROPE???]
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http://www.capecodtoday.com/blogs/index.php/2008/01/13/ni_hao_and_yi_huir_jian?blog=94
Very clever, these Chinese
01/13/08 · 9:30 am :: posted by CCToday Link to Post Email to a Friend
'Ni hao !' That's Chinese for 'Hi there !'
It's not a 'developing' country any more
By Richard C. Bartlett
...They are leaping into the wind turbine parade of nations. Google offers 1,860,000 entries for 'China wind power ! They have the potential for 1,000,000+ megawatts of production, 1/4 of it on land, 3/4 of it offshore. Lin Yuan, head of the Zhangbei county energy department says the only problem is they can't get turbines to buy fast enough.
To satisfy that appetite for turbines GE has contracted to spend $50 million on research and manufacturing facilities. Spain's ENH has signed on for a $31 million plant to construct turbines. The Danish firm Vesta is spending $30 million on a turbine blade factory. Shares of Xinjiang Goldwind Science and Technology Co. soared 234% on their first day on the Shenzhen Stock Exchange.
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http://www.lmglasfiber.com/Download/Image%20Archive/Windmills.aspx
http://www.capecodtoday.com/blogs/index.php/2008/01/13/ni_hao_and_yi_huir_jian?blog=94
Very clever, these Chinese
01/13/08 · 9:30 am :: posted by CCToday Link to Post Email to a Friend
'Ni hao !' That's Chinese for 'Hi there !'
It's not a 'developing' country any more
By Richard C. Bartlett
...They are leaping into the wind turbine parade of nations. Google offers 1,860,000 entries for 'China wind power ! They have the potential for 1,000,000+ megawatts of production, 1/4 of it on land, 3/4 of it offshore. Lin Yuan, head of the Zhangbei county energy department says the only problem is they can't get turbines to buy fast enough.
To satisfy that appetite for turbines GE has contracted to spend $50 million on research and manufacturing facilities. Spain's ENH has signed on for a $31 million plant to construct turbines. The Danish firm Vesta is spending $30 million on a turbine blade factory. Shares of Xinjiang Goldwind Science and Technology Co. soared 234% on their first day on the Shenzhen Stock Exchange.
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http://www.lmglasfiber.com/Download/Image%20Archive/Windmills.aspx
LM Glasfiber - Blades and wind turbines
Progress in this industry is heading towards larger wind turbines with longer blades – and wind energy is thus able to provide electricity at lower and lower prices.
The world’s leading supplier of wind turbine blades
LM Glasfiber [Denmark] has produced a total of more than 105,500 wind turbine blades since 1978. This amounts to more than one in three of all the blades in operation today, worldwide.
More about global blade production
Rotor blades produced by one of LM Glasfiber’s Spanish factories in the storage area in front of the plant at Ponferrada.
Download photos of our factories in the USA, Canada, India, China, Spain and Denmark from the picture archive. ...LM Glasfiber has been producing rotor blades in Tianjin since 2001 and in Urumqi as of mid 2007.
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Danish wind turbine blades manufacturer LM Glasfiber A/S opens new factory in India
Oct 31, 2007
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http://www.investindk.com/visNyhed.asp?artikelID=18340
LM Glasfiber opens a second wind turbine blade plant in China
(2007.10.12)
The Danish wind turbine blade manufacturer opens a new facility in Urumqi, Xinjiang province, where China's leading wind turbine manufacturer Goldwind is based. Danish wind turbine blade manufacturer LM Glasfiber announced in a press release yesterday that it has reached another milestone in its global plan to expand capacity, with the official opening of a new blade factory in Urumqi, Xinjiang province. The facility, which according to the company will produce around 500 blades annually, is LM Glasfiber’s second blade manufacturing plant in China. The modular layout of the factory makes it easy to upgrade capacity in response to the expected rapid growth on the Chinese market.
As reported on this website earlier in the year, LM Glasfiber has entered a strategic cooperation agreement with China's leading wind turbine manufacturer Goldwind, which is also based in Urumqi. Xinjiang province has some of the best wind energy resources in China and is the location of China's biggest wind farm to date.
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http://www.climatechangecorp.com/content.asp?ContentID=5344
Who'll solve the wind turbine supply crisis?
Explosive growth in the demand for wind power has created a global waiting list for wind turbines. Chinese turbine companies may be part of the solution as they ramp up production and get ready to export.
...Zhang Guobao, vice president of China’s NDRC, says: “We are planning several measures to support the wind power industry including localisation of equipment production.” According to the Global Wind Energy Council (www.worldenergy.org), China will become the top wind turbine manufacturer by 2009.
To encourage production, China increased tariffs on imported wind turbines in May, while slashing import taxes on components.
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http://money.cnn.com/2007/02/20/news/international/china_wind/index.htm
Wind power blows through China
The central government's heavy hand helps spark opportunities for Chinese and international players to green up the coal-fired country.
By Steve Hargreaves, CNNMoney.com staff writer
February 26 2007: 10:25 AM EST
Wind power blows through China
The central government's heavy hand helps spark opportunities for Chinese and international players to green up the coal-fired country.
By Steve Hargreaves, CNNMoney.com staff writer
February 26 2007: 10:25 AM EST
NEW YORK (CNNMoney.com) -- China, known worldwide for its smog-choked cities and rising status as global-superpolluter, may be cleaning up its act.
The country that has let coal-belching power plants fuel its economic miracle is now eyeing a cleaner, more benign form of electricity: wind power.
'[The wind-power business] is going gangbusters,' said Greg Yurek, chief executive of American Superconductor, a company with $51 million in 2006 sales that, among other things, licenses wind turbine designs to Chinese firms. 'They need electricity, and wind is a nice way to do it.'
U.S. companies in the wind-power business, along with their foreign counterparts, could stand to gain as they license wind-turbine designs and construct windmills in China for the domestic market.
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http://blueskieschina.com/mambo/content/view/120/84
Alstom plans global turbine production base in China
Written by James Ockenden
BlueSkiesChina.com
Jun 11, 2006 at 12:00 AM
BEIJING, June 11 -- French power and transportation equipment maker Alstom plans to set up a global production base in China, according to Xinhua's Shanghai Securities News.
The newspaper quoted Alstom China president Alain Berger as saying that the production base will manufacture mainly turbine power generating equipment, which will be exported. He did not give details.
He said that Alstom will consider, as a next step, increasing its share of the market for thermal power generating equipment.
Alstom has 24% of the China market for hydroelectric equipment and 50% of the market for nuclear power generating equipment.
"Alstom's market share in China's thermal power markets was much lower than that in the other two markets," Berger was quoted as saying.
And according to Xinhua, a RMB240 million (US$30.7 million) joint venture between Alstom (China) Investment Co and Beijing Heavy Electric Machinery Works began operations in Beijing on Friday.
Alstom has 60% of the joint venture, called Alstom Beizhong Power (Beijing) Co, which is manufacturing six 600MW steam turbines and generators for the Pingwei, Dabieshan and Longshan power plants in China. The products are planned to be delivered between 2006 and 2007.
Alstom entered the joint venture in 2004, saying at the time it hoped to increase its China revenues to US$1 billion (RMB7.8 billion) by 2006. Alstom's overall group sales to Asia in 2005 were EUR2.1 billion (RMB21.6 billion) in the first nine months of its 2005/2006 financial reporting year.
Alstom enjoys the reputation as the largest power generation supplier to the Three Gorges Project - the company provides advanced technology and equipment to altogether 16 turbine generator units among the total of 26 units.
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http://www.worldwatch.org/node/3931
Made in China, or Made by China? Chinese Wind Turbine Manufacturers Struggle to Enter Own Market
by Yingling Liu
May 19, 2006
World Watch Institute
China, a country with one of the world’s largest wind energy potentials, has seen tremendous growth in its wind power development in recent years. Yet Chinese manufacturers are still struggling to break into their own nation’s lucrative wind turbine industry. In 2005, domestic companies accounted for only 23 percent of China’s cumulative installed turbine market. The remainder of the production was dominated by foreign wind turbine giants, including Spain’s Gamesa, Denmark’s Vestas, and Germany’s Nordex.
Since the 1990s, major European turbine manufacturers have gradually gobbled up the Chinese market with the support of low-interest loans and incentives from their governments. The sudden rise in market demand in the past three years, however, has served as a wake-up call for domestic producers, who have discovered that they lag far behind their European counterparts in both technology and scale.
The typical mainstream Chinese wind turbine has a capacity of 750 kilowatts (kW), while most European products generate more than 2,000 kW. (In 2005, REpower of Germany installed an experimental 5,000 kW turbine, currently the world’s largest, at a wind farm in Germany.) Additionally, most Chinese turbines use an older “fixed pitch, constant speed” control system, compared with the more sophisticated international “variable pitch, variable speed” system.
Super-heated wind energy development in China has driven up turbine demand. As of late 2005, the country was home to 1,864 turbines, with a cumulative capacity of nearly 1,270 megawatts (MW), distributed among 61 wind farms in 15 provinces and regions. Last year alone, 592 wind turbines, capable of generating approximately 500 MW in total, were newly installed, reflecting a 254-percent growth in newly installed capacity over 2004. Demand will continue to skyrocket as the government works to meet its ambitious target of 30 gigawatts of cumulative installed turbine capacity by 2020.
The Chinese turbine industry is playing much-needed catch-up. Due to insufficient knowledge and investment and inconsistent government support, domestic turbine manufacturers have been pervasively weak in research and development. A common method for acquiring technology in recent years has been to purchase production licenses from foreign counterparts, even though most of the more accessible technologies are outdated. “This is a dead end. Most of the technology is already 10 to 15 years old,” says Wang Wenqi, a senior expert in the wind industry and the former general manager of Xinjiang Tianfeng, China’s biggest wind energy company. “Turbine technology is being developed so fast. We would never catch up in this way.”
Another way for China to acquire technology is to set up joint ventures with international wind turbine giants. This is unlikely to happen, however, due to foreign concerns about nurturing the potential competition. In the 1990s, in a push to enter Spain’s market, Vestas of Denmark formed its first joint venture with the local electric company, Gamesa. After several years, the companies split, and Gamesa and Vestas have since become major global competitors.
The more feasible alternative, says Wang, is to cooperate directly with foreign turbine designers, rather than with the large manufacturers. L’Aerodyn, an independent German company that designs turbines for medium- and small-scale European producers, recently collaborated with four leading Chinese electrical equipment makers. This is a far more practical arrangement, according to Wang: “The cost of design is only one-third of license purchase. Through joint design, we get the core technology, and we own the intellectual property rights.”
GoldWind, China’s largest domestic turbine manufacturer, has also chosen this route. It began working with a German design company as early as 2001, and in 2005 GoldWind accounted for nearly 90 percent of the increased domestic share in the Chinese turbine market. The manufacturer has already tested its own 1,200 kW turbine and is currently designing a 1,500 kW variable pitch model.
Experts believe the key for domestic producers is to build up their own innovation capacity. “Without your own R&D capability, you will not know what technologies you should bring in, and you will not know how to digest them even if you have brought them in, let alone make innovations based on them,” explains He Dexin, president of the Chinese Wind Energy Association. He believes domestic manufacturers should stop trying to obtain core technology from overseas. “Core technology can only be generated through self-innovation efforts,” he contends.
The Chinese government is likely to provide at least some financial support to local producers. Ren Dongming, Deputy Director of the Renewable Energy Development Center of the Energy Research Institute at the National Development Reform Commission, says his organization has already submitted a Public Benefits Fund (PBF) proposal to the Ministry of Finance. As with the similar System Benefits Funds that exist in some U.S. states, the PBF is designed to fund certain “public benefits” that are generally not accounted for in electricity markets. “The fund will be used to support research and development of renewable energy and assist renewable energy companies with subsidized loans and the like,” Ren explains. The proposal is likely to be approved in the near term.
The maturation of China’s domestic wind turbine industry is having an immediate effect on turbine prices, even though most Chinese products are currently aimed at the local market. The cost of imported wind turbines is roughly 10,000 RMB (US$1,200) per kilowatt, while the domestic equivalent is about one-third less. Since turbines account for 60–70 percent of overall expenses for wind energy developers, embracing the cheaper Chinese alternatives will instantly reduce costs. As the quality of the Chinese turbines improves, analysts have reason to be optimistic about increased domestic production and the positive impact on world turbine prices more generally.
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