JCNE eyes 5.5MW turbine for China

JCNE hopes to begin production “sometime in the near-term” in China of a 5.5MW wind turbine for the domestic market that will utilize AMSC electrical control systems, AMSC chief executive Dan McGahn told analysts Thursday.

AMSC has been working to help expand the product line of JCNE, its most important customer in China since parting ways with Sinovel earlier this decade. AMSC has brought legal cases against Sinovel in China for alleged intellectual property theft, breach of contract and software copyright infringement.

AMSC’s increasingly important commercial relationship with JCNE includes technology transfer for a 2MW wind turbine, the vendor’s workhorse, and 3MW and 5.5MW units. The 5.5MW would be among the largest onshore wind turbines in the country.

Hyundai is the other known licensee developing a 5.5MW unit with AMSC technology, although South Korea's focus is on offshore.

AMSC previous announced that the partners had developed the 3MW machine and McGahn says it now is entering production. JCNE has obtained in-country certification for low-voltage ride-through (LVRT) for the unit.

JCNE remains a small player in China although McGahn says he believes that is beginning to change. He says JCNE has won an order from one of the country’s five major power generators for a “significant size wind farm,” declining to provide further details.

JCNE had two divisions – one that manufactures wind turbines and the other that develops wind farms. “What we’re seeing now is the ability to generate business outside that model and really sell to the large power producers,” McGahn says. Selling to the “overall market” in China means potential sales of higher horsepower wind turbines and by extension, more business for AMSC.

“The fact that they’re selling the full wind farm means that they have to fully understand all of their customer’ issues,” McGahn says, adding this learning process is similar to that experienced earlier by INOX, AMSC’s key technology licensee in India.

For the balance of 2014, JCNE is working to reduce inventory in response to a slowdown in the Chinese wind market. Even so, JCNE has placed a contracted order for additional electrical control systems with AMSC in expectation of a 2015 uptick, although McGahn did not say for which wind turbine model.

Going forward, he says that for AMSC to achieve its objective of sustainable positive cash flows that it will need two wind customers to be in “meaningful production simultaneously.” Most likely those will need to be JCNE and INOX.

AMSC intends to continue manufacturing wind turbine electrical control systems in China for the domestic market, while serving other global licensees from a new plant to be built in Romania.