CHINA’S WIND MAKERS

GE, Vestas Fall Behind in China’s ‘Tough’ Wind Turbine Market
Mark Scott (w/Stuart Biggs., Dexter Roberts, Wang Ying, Reed Landberg and Mike Anderson), May 13, 2010 (Bloomberg BusinessWeek)

"Western wind turbine manufacturers are losing ground in China, the world’s fastest-growing green energy market…The combined market share for companies such as General Electric Co. and its European rivals Vestas Wind Systems A/S and Siemens AG fell to 14 percent last year from 71 percent in 2005…Sales are being eroded by local companies including Sinovel Wind Co. Ltd. and Xinjiang Goldwind Science & Technology Co. Ltd…

"To get back in the game, the foreign companies are introducing newer technology. Siemens…expects to open an $80 million plant this year in Shanghai that can build 3.6-megawatt turbines…bigger than anything now made by a Chinese company…[Spain’s] Gamesa plans to build 2-megawatt turbines after retrofitting its existing plants…[and] open its fifth factory in China next year…[Its] machines cost a third more and are more reliable than Chinese models…Chinese manufacturers say they are improving their quality. Goldwind and Sinovel plan to introduce higher-output turbines next year…"

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"The head start in technology may pay off for western companies, particularly as the Chinese venture abroad…Western bankers, who would finance the majority of projects outside of China, have more faith in U.S. and European turbine makers because of the companies’ experience…But the Chinese are catching up…

"Buoyed by $47 billion in stimulus spending for environmentally friendly power over two years, China installed more than double the number of wind turbines in 2009 than in the previous year. This year, the country plans to add 18 gigawatts of wind capacity, the equivalent of 15 nuclear power plants. That’s double what’s expected in the U.S., the No. 2 market…Germany and Spain, Europe’s largest wind energy markets, will add 1.8 gigawatts and 1 gigawatt in 2010, respectively."

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"Vestas, the top foreign wind turbine maker in China, installed turbines with a total capacity of 620 megawatts…Despite losing market share, Western turbine makers still are selling more units in China…The biggest domestic competitor [was] Sinovel…Goldwind [was] the second-biggest Chinese wind- turbine maker…[Neither has significant] sales overseas…Vestas and GE were respectively the first and second- largest suppliers of turbines worldwide in 2009…Sinovel finished third, followed by Germany’s Enercon GmbH. Goldwind was fifth…

"Chinese companies have kept costs down by licensing older technology from overseas rivals, including Vestas, Japan’s Mitsubishi and others that sell their own turbines in China…While the Chinese pay royalties to the foreign firms, those payments don’t come close to making up for the business the foreign companies are losing in China…[and] China’s so-called “buy local” policy steers most state- financed energy contracts to domestic players…"