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Gamesa expects double-digit growth in China this year

Spanish turbine maker Gamesa will see double-digit growth in turbine sales in China this year as strong relationships with developers bring in new orders, says country chief executive José Antonio Miranda.

At the end of November, the company signed a contract with Datang Renewable to develop a 48MW wind farm in Liaoning province. It follows a deal with Longyuan last month to supply 24 of its low-wind 2MW turbines to a project in Ningxia province.

The company’s success in China comes as other turbine makers have endured a sales slump, blamed on fierce competition and tighter controls on project approvals.

Miranda puts Gamesa’s momentum in the challenging market down to rapid deployment of its new products and a growing development pipeline.

Gamesa has also recently signed two separate deals with Huadian, another of the “big five” Chinese developers, amounting to 248MW, and a 50MW deal with Datang Renewable in Inner Mongolia.

Gamesa started manufacturing its 2MW turbine in China in 2010 and delivered the first 200MW order to Longyuan’s Chifeng wind farm in the same year. Its first 2MW machines for low-wind sites will be delivered this year, and it hopes to install its 4.5MW prototype in China in 2012.

“This is one of Gamesa’s strengths,” says Miranda. “We are fast in localising manufacturing. Perhaps it goes back to our early history in other industrial areas.”

The company is also making sales off the back of its project pipeline, which is about 3GW in China.

Gamesa takes minority stakes in special entities set up to develop wind farms with major shareholders such as Longyuan, Datang, Huadian and Guangdong Nuclear. Although it has only 200MW in operation, its pipeline and development expertise is attractive to large power companies.

“There’s no written agreement. But when they [power companies] see you as a partner, and they see your pipeline, and they think you can have frequent co-operation, then they may tend to buy your equipment too,” says Miranda.

Gamesa will need to keep up its strong sales momentum. Last year, it announced plans to spend more than €90m ($122m) in China between 2010 and 2012. So far, most of this has gone towards new factories.

It has more than 1GW of ­production capacity, but not all is being used. Capacity will increase to 1.5GW next year, with two new facilities in Jilin and ­Inner Mongolia.

“Jilin ­province is going to be an important source of demand. But the situation in Inner Mongolia is not as clear. There’s a bottleneck in the grid and there’s overcapacity of suppliers,” says Miranda.

Gamesa is counting on consolidation to eliminate some of the competition. “From the supply side, it’s going to be tough,” says Miranda. “Some people will have to exit the market and others will have to merge — both foreigners and Chinese. We hope this situation means that the remaining ones will take more share.”

Gamesa has “something like 4-5%” of the market, he says.

Miranda also sees “genuine concern” from the government about the quality of wind farms, after a spate of outages this year. “That will bring some new customers” to suppliers of high-performance turbines, he says.

Gamesa is aiming to have an offshore product ready for China before 2014, with the bulk of orders starting in 2015.