Rapid Growth in China’s Wind-Power Market Offers Opportunities

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Researched by Industrial Info Resources (Sugar Land, Texas)--Wind power has rapidly grown in China in the past two years. By the end of 2006, the total installed capacity had reached 2,600 megawatts (MW), representing a 166% year-over-year increase. In 2006, 1,337 MW of wind power were generated. At the current rate, the 2010 goal of 5,000 MW of wind power could be reached by 2008.

It is estimated that the total installed capacity of China's windfarms amounts to 1 billion kilowatts, as much as the installed capacity of 50 Three Georges Hydropower Projects. Wind power is expected to surpass nuclear power in 2020 to become the third major power source. Hydropower is expected to become the second major power source in 2050. In 2006, the State Development and Reform Commission (SDRC) set a goal of 30 million kilowatts for 2020.

Currently, there are more than 50 domestic wind power equipment manufacturers in China, including Dongfang Electrical Machinery (Deyang City, Sichuan Province, southwestern China), Changzheng Group (Zhongshan City, Guangdong Province, southern China) and Heag (Leqing City, Zhejiang Province, eastern China), among others. Though wind power equipment manufacturing has not yet garnered profits for these companies, they have full confidence that with the constant maturity of technology and products, wind power equipment is set to become a growth point.

Gold Wind (Xinjiang Autonomous Region, western China), a company set to be listed in China's A share market by the end of 2007, is considered the most promising air-blower manufacturer. Gold Wind produces 80% of all Chinese-made air blowers. Gold Wind entered the industry in 1998. Its revenues and net earnings have doubled for each year from 2000 to 2006. In 2006, Gold Wind accounted for 33.3% of the newly added installed capacity, with Denmark Vestas at second place with 23.55%.

International wind power groups have been trying to gain a share of the Chinese market since 2006. Denmark Vestas opened a plant in the Tianjin Municipality last June, and its annual capacity now is 1,200 rotor blades. GE, one of the world’s major air-blower suppliers, built an assembly plant in Shenyang City in Liaoning Province last June, specializing in the production of the 1.5 MW wind turbine system.

Opportunities in China's wind power industry lie in three areas: manufacturing air-blower parts, manufacturing air blowers and operating windfarms. State policy demands that at least 70% of operational wind-power equipment be made in China, or a windfarm is not allowed to go into operation. Major parts of air-blowers include axis, blades and gear cases. Major Chinese manufacturers include Xinmao China (Tianjin), Tianma Industrial (Zhejiang Province) and Miracle Logistics (Jiangsu Province). For wind turbines, overseas turbine manufacturers hold 70% of the Chinese market. Chinese manufacturers that show the most promise to gain a share are Gold Wind, Heag and Hunan General Electric Group. For windfarm operations, the per-kilowatt cost of wind turbines is expected to drop from the current $950 to $650 in 2010 and then to $500 in 2020.

The prospect of building offshore windfarms represents a new trend in China's wind-power industry. Shanghai East China Sea Bridge’s 100 MW windfarm project, the first offshore windfarm approved by SDRC, has begun construction and is expected to go into production in 2009. Effective power generating hours of this wind field exceed 8,000 hours per year. After production begins, its full-load operation hours can exceed 2,600 hours, 30% more efficient than typical windfarms on land.

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