Mitsubishi Heavy Industries and Chinese utility Ningxia Electric Power Group have been in discussions to hammer out the details of a licensing agreement for the production technology of MHI’s 2.4 MW wind turbines. They expect to come to an agreement int he autumn. In 2007 MHI agreed to license the technology for its 1MW wind turbine to Ningxia.

The Japanese company is moving to expand the scope of its licensing arrangements because price competition is intensifying in China, with local manufacturers turning out wind turbines cheaply after introducing technology from overseas.

In addition to earning licensing fees, the agreement with Ningxia will enable Mitsubishi to reduce its own turbine production costs by jointly with Ningxia procuring parts from Chinese suppliers.

With typically 15 000 parts making up a wind turbine, cutting the costs to procure them will be key to reducing prices for the finished product. The 2.4 MW model is the main earner for MHI’s wind turbine operations, accounting for most of its sales, especially in the USA where its wind turbine business generates 90% of its sales. But prices for its wind power generators there have dropped more than 20% in the past two years, as the impact of the global financial crisis continues to affect the market. A patent dispute with General Electric Co. has reportedly made the situation worse by driving away potential customers.