China's wind power sector faces challenges

Feb. 22, 2010 at 3:51 PM
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BEIJING, Feb. 22 (UPI) -- Amid steep competition and lower profit margins, some industry insiders say China's wind turbine sector grew at the expense of quality.

In 2004, there were six wind turbine manufacturers in China. By 2009 that number increased to more than 70 companies. During the same period, China's wind power capacity increased from 760 megawatts to 20,000 megawatts. Now the country is the world's third largest wind power market.

Turbine blade prices have decreased by about one-third since 2004, an industry insider tells China Daily. In 2004, profit margins for some turbine companies were about 25 to 30 percent. Now they are about 10 percent.

"We are not losing money but not making much profit, either," said Liang Xiaobing, deputy general manager of Dongfang Electric Wind Power Technology Co.

Some insiders say the drop in price is because some companies are forsaking quality to sell their products cheaply.

In the beginning of 2009, the cost for each kilowatt for a 1.5-megawatt wind power turbine was about $879. Now the price is less than $732, Liang said to China Daily.

Other insiders say that China's wind power industry suffers from inadequate research and planning.

When companies rushed to enter the wind power sector in 2007 and 2008, many of them didn't have a good understanding of wind power, said Xu Zhichun, vice-general manager of Tianjin Dongqi Wind Turbine Blade Engineering Co. Inadequate research and lack of planning, he said, has led the industry to expand rapidly at the expense of quality.

"And the government, although it drew up favorable policies, didn't come out with a clear plan for the industry," Xu said.

Fewer than 10 of China's 70 wind power equipment producers have the capability to conduct large-scale research and development to improve the technology, said Han Junliang, president of Sinovel Wind Group Company.

"The Chinese wind power industry is in urgent need of advanced technology," Han said.

Sinovel is building a national offshore wind power technology and equipment R & D center, approved by the National Energy Administration, to study the technical difficulties challenging China's offshore wind power development.

"I think the so-called overcapacity just refers to those small players with outdated technology. There will be more consolidation in the domestic wind power sector," Han said.

Wu Gang, chairman of Goldwind Science & Technology Ltd., another leading wind turbine manufacturer in China, said his company would consider acquiring small firms should the industry enter a consolidation phase.

Wu said Goldwind is also exploring markets in the United States, Australia, Central Europe and Africa, either for investing in local wind farms or to sell wind power products.

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