Mainstream freezes 1GW Sinovel deal over AMSC dispute

Mainstream Renewable Power (MRP) confirms it will kit-out its wind project pipeline in Ireland with alternative turbine suppliers, leaving Sinovel on the sidelines until its legal dispute with AMSC is settled.

MRP’s decision is the clearest evidence yet of the potential damage Sinovel faces in Western markets as a result of its legal battle with AMSC, which is pursuing the turbine supplier in several Chinese courts for $1.2bn in compensation and damages over alleged intellectual-property (IP) infringement and unpaid bills.

In July, Dublin-based MRP signed a deal with China’s Sinovel – the world’s second-largest maker of wind turbines – to jointly build 1GW of wind capacity in Ireland by 2016.

MRP said that a “significant” amount of the necessary funding would come from the China Development Bank. Under the terms of the deal, MRP was to shoulder the development work while Sinovel would provide the turbines and technology.

Initially the turbines were to come from China, although Sinovel signalled that it was open to establishing a factory on Irish soil if Ireland appeared sufficiently committed to renewables – a commitment the country seems increasingly likely to deliver.

But MRP now says Sinovel’s quarrel with AMSC has led it into the arms of other turbine suppliers, at least until the dust has cleared.

“We are fully aware of the legal dispute between Sinovel and AMSC which arose after our agreement with Sinovel,” an MRP spokesman tells Recharge, adding: “We have discussed it in depth with both Sinovel and AMSC.”

“We are progressing our projects in Ireland with alternative suppliers and we intend to close the first turbine supply agreement by mid-December,” he says. “Our target was to build 50MW in Ireland in 2012 and that plan is very much on track.”

Allegations of IP theft by AMSC against Sinovel – formerly its biggest customer – exploded in September, when the US company said one of its employees in Austria – who has since been jailed – was paid by the Chinese company to steal wind-turbine software code.

At the time, AMSC chief executive Daniel McGahn said: “We believe it is important for all wind developers to know the wind turbine Sinovel is producing and upgrading today may contain stolen intellectual property from AMSC".

Observers believe the AMSC-Sinovel case represents a key litmus test for future energy cooperation deals between Chinese and Western companies.