As China endures grave pollution problems, the Chinese government is promoting more environmentally-friendly alternative sources of energy.
The country has transformed into a pivotal global player of the solar and wind energy industries. China has already sold more than half of the world’s solar panels since 2010. Chinese wind turbine companies seek to capture a major portion of the $70 billion U.S. dollar wind turbine market.
As the San Francisco Chronicle reports, “Armed with at least $15.5 billion in state-backed credit, China’s biggest windmill makers Sinovel Wind Group Co. and Xinjiang Goldwind Science & Technology Co. won their first major foreign orders in the past year. They plan to set up plants abroad, including China’s first in the U.S., easing entry into markets for delivering machines that can weigh 750 tons each.”
However, Sinovel and Goldwind face quality concerns from customers due to technological mishaps. These issues must be resolved to overtake Denmark’s Vestas Wind Systems A/S as the largest supplier by 2015, according to a Bloomberg New Energy Finance survey forecast.
China’s bold wind strategy could slash the sales and margins of foreign competitors including GE and Vestas, which are already contending with cutbacks in European subsidies and a 22 percent drop of turbine prices from their 2008 peak.
Chinese companies are positioning themselves to build wind power plants in South America. Jose Antunes Sobrinho, chief executive officer of Brazil’s Desenvix, SA, a wind developer that ordered 23 Sinovel turbines in September, said, “The
Chinese dragon is coming.”
The deal is South America’s first contract with a supplier from China. Sobrinho added that it “is going to be a stepping stone for them,” since the turbines are approximately 10 percent cheaper than those sold by competitors in Brazil that include GE and Siemens AG of Germany, he said in a telephone interview on October 3.
According to the San Francisco Chronicle, “A shift to Chinese suppliers could even nudge down the cost of wind power enough for it to compete with coal and natural gas in the U.S. and Europe when the wind is blowing, threatening fossil-fuel-based models at utilities such as Germany’s RWE AG and Centrico PLc. of the UK.”
Yet relying upon wind energy too much poses a risk. When the wind is blowing turbines generate electricity, but the wind doesn’t blow 24 hours a day/7 days a week even in windy regions. Problems arise when electricity consumers depend solely on wind energy that can lead to unexpected power shortages.
China is moving towards the manufacturing base for equipment needed to curtail their economies from fossil fuels. Actually, turbines marketed by Western companies are mostly assembled by cheaper parts made elsewhere.
Accordingly, Spain’s biggest turbine maker, Gomesa Corp. Technoligica SA, didn’t sell a single turbine in its domestic market last quarter and is raising manufacturing capacity in China, Brazil and India, where it anticipates sourcing as much as 70 percent of turbine components locally by 2012, CEO Jorge Calvert told the San Francisco Chronicle.
Meanwhile, U.S. Congressman Cliff Stevens, a Florida Republican, admitted on National Public Radio on October 4 that the nation “can’t compete with China to make solar panels and wind turbines.”
John Krenicki, CE vice chairman and CEO of GE Energy Infrastructure, reaffirmed those views by telling investors on September 20 that, “At the heart of the matter, we just got to have a better product. We got to have better stuff.”
Sinovel and Goldwind garnered more than 99 percent of their revenues in 2010 from China, the world’s largest wind market. Yet, the domestic wind industry must expand globally or face dwindling sales growth in the future.
As reported by the San Francisco Chronicle, “wind turbines sales set to peak at home this year, Chinese manufacturers are ‘looking outwards to maintain sales’ especially in markets like Brazil, India and Australia where there’s more growth to be tapped than in Europe or the U.S., said Lawrence Brader, investment analyst for Hong Kong-based Environmental Investment Services Asia Ltd. Its Green Dragon Fund invests in regional clean-technology companies.”
Since November, Chinese wind turbine companies have publicly disclosed at least 2,800 megawatts in global orders from Australia, Greece and Ireland that accounts for about 7 percent of last year’s global sales, according to data compiled by Bloomberg.
A-Power Energy Generation Systems Ltd., A Shenyang-based company, intends to construct a turbine plant in Nevada, the first by a Chinese supplier in the United States, which is expected to supply a 615-megawatt Texas wind park and attract more North and South American customers. The company is pursuing external financing for that plan, it announced in April.
Chinese windmill and component makers can sell in the domestic market at prices on average 40 to 50 percent below those of foreign counterparts due to less expensive steel costs and easier access to project financing, as disclosed by Clarisse Pan, a Hong Kong-based analyst for CCB International.
August New Energy Finance, a London-based researcher, told the San Francisco Chronicle that if wind park developers in the U.S. or Europe focus on the “buy Chinese, borrow Chinese” approach, they could produce power more cheaply than a coal-fired power plant and on par with a natural gas plant.
Therefore, Chinese wind turbine companies are poised to surpass their global competitors.
Source: CRIENGLISH.com Arthur: Tom McGregor
Original article: http://english.cri.cn/6909/2011/10/17/2821s663162.htm