China’s growth works for Windtec

I n April this year American Superconductor received an order worth more than $18 million for wind turbine electrical systems and core electrical components from Beijing-based Sinovel Wind Corp. It is the latest of several large orders during the last nine months that have resulted from last year’s deal that saw the setting up of a technology joint venture between the two companies.

Under the terms of this latest contract AMSC will deliver components to Sinovel over the next year or so to be incorporated in the 3 MW wind turbines Sinovel is jointly developing with AMSC Windtec, a subsidiary of AMSC, under the terms of the 2007 contract. Although it has not been revealed exactly which components are being supplied, the list will include AMSC’s proprietary PowerModule power converters, designed to control power flows, regulate voltage, monitor system performance and control the pitch of wind turbine blades.

All this has happened at a time when China’s wind installation effort is proceeding at such a pace that it prompted the Global Wind Energy Council to report ‘breathtaking’ growth in Asia’s wind energy markets, where over a quarter of all new world capacity in 2007 was installed. China alone added more than 3.4 GW of wind energy capacity during the year, bringing its total installed capacity to more than 6 GW. The China Wind Power Report 2007 – published jointly by the GWEC, Greenpeace and the Chinese Renewable Energy Industry Association – predicts that China is positioned to lead the world in wind energy development and play a correspondingly larger role in combating climate change. The report projects China’s installed wind power capacity to 10 GW by 2010 and to more than 120 GW by 2020.

Developing technology

Last year AMSC’s subsidiary Windtec, acquired in January 2007 in what looks increasingly like a brilliant coup, signed a multi-million-dollar wind energy system joint development contract with Sinovel Wind Co, a high tech wind energy systems manufacturer headquartered in Beijing. This is a form of technology partnership becoming familiar in Chinese wind industry circles as manufacturers attempt to catch up with the West. This trend is by no means unpopular in Europe and the USA, where turbine makers are struggling to meet demand. Bringing Chinese makers into the global business arena will ease the shortfall and increase trade, and is in fact the stated policy of EWEA, the European wind industry trade association.

Windtec and Sinovel are designing and jointly developing the 3 and 5 MW wind energy systems that Sinovel plans to market and sell worldwide. Sinovel will have the exclusive ownership and complete industrial and intellectual property rights for large-scale onshore and offshore wind turbines developed under this contract, enabling the company to compete effectively with established leaders in the market, and plans to begin series production of 3 MW systems during 2009 and 5 MW systems in 2010. Meanwhile it is continuing to manufacture and deploy the 1.5 MW wind turbines it began producing in 2005. AMSC has a prior delivery right to sell future electrical components under the same conditions as other suppliers to Sinovel for the wind energy systems covered under the contract, creating a substantial follow-on business opportunity for AMSC.

‘We look forward to benefiting from our expanded relationship with Windtec’ said Han Junliang, chairman and president of Sinovel, ‘as we continue to implement our plan to manufacture 500 wind energy systems in 2007, 800 in 2008 and reach an annual capacity of 1000 wind energy systems in 2010.’

The Chinese government has mandated that at least 70 % of the equipment used in Chinese wind farms must be made in China. By December 2006, Sinovel had already signed more than US$1 billion in contracts to supply domestically made wind energy systems to help meet China's rising demand for clean energy. Windtec is a regular supplier of Sinovel’s. Since 2005, Sinovel has ordered electrical components from Windtec for 785 wind energy systems rated at 1.5 MW.

AMSC paid $12.4 million for Windtec. Since its acquisition the company has brought in $120 million worth of orders from Sinovel, and landed additional deals with Dongfang Steam Turbine Works Corp. and Zhuzhou Electric Locomotive Research Institute, both based in China.

Closing the gap

Chinese companies initially lagged behind foreign-based manufacturers, producing less than a quarter of China’s installed turbines, in part because domestic manufacturers have been slower to ramp up to utility-scale (1 MW or larger) turbines. Also, domestic turbines usually featured fixed-pitch, constant-speed control systems, which are less efficient than the variable-pitch, variable-speed control systems now common in the West.

To close the technology gap, many Chinese manufacturers have acquired foreign technology, either by purchasing production licences from

or by forming joint ventures/co-operative agreements with major turbine producers. Although licences can give Chinese companies more control, the most accessible technology is usually somewhat outdated. Co-operative development, by contrast, grants domestic turbine manufacturers access to newer designs and the right to manufacture turbines locally, albeit with greater foreign involvement.

The first JV was formed by Spain-based MADE Renewable Technology and Luoyang-based China YiTuo Group. By 2000, the company was producing 330 kW and 660 kW turbines, the latter being 60 % locally sourced, although Yituo-MADE is now defunct.

The second JV was a 40/60 arrangement between Nordex and Xi’an Aero-Engine Group, which produced a 600 kW turbine. Xi’an Nordex remains active, producing both 600 kW and 250 kW turbines, with a capacity of between 150 and 250 units annually. Nonetheless China’s oldest, largest and most experienced wind manufacturer Goldwind Science and Technology Co. Ltd comes from the original group of domestic producers. Its 20 % share of the Chinese market in 2005 has grown to nearly 40 %, thanks not only to the Renewable Energy Law’s local-content mandate but its early push to produce turbines of 1.5 MW and larger.