Chinese makers up their fight to sell turbines overseas
China's leading wind turbine-makers are working hard to win orders abroad, despite their scant experience in the industry.
"Wherever we find potential for our products, we will go there. Right now, the most interesting markets are Europe and North America, but we are also looking at Brazil," says Tao Gang, vice-president of Sinovel.
The company is currently selecting a location for a UK office from which it wants to explore the European offshore market. "We're doing pretty intensive market research to identify which city we should go to," Tao told Recharge at the China Wind Power event in Beijing last week.
Some analysts and industry insiders dismiss Chinese overseas ambitions as largely idealistic. No Chinese turbine company has yet established a track record in wind-energy projects. Sinovel, the leading firm in terms of capacity and sales, started pilot production in 2006, and its turbines have been operating for barely two years. But it has expanded rapidly, and is now ramping up capacity to a level well beyond domestic needs.
Last year, it added a new manufacturing base in Yancheng, Jiangsu province, and it will complete two more plants — one in Gansu province and the other in Inner Mongolia — by the end of 2009. There are also plans to add another three in coming years, according to a Sinovel project manager who did not want to be named.
This rapid capacity buildup comes in anticipation of price wars at home, says Caitlin Pollock, senior Asia analyst at Emerging Energy Research. "Turbine prices decreased last year by 15%. They're anticipating sales decreases of 10% annually in the next few years," she says.
The prospect of lower-priced turbines entering the global market has other manufacturers increasingly nervous, says Steve Sawyer, secretary-general of the Global Wind Energy Council. Chinese turbines are typically priced up to 15% lower than international brands.
"There will probably be a substantial presence of Chinese manufacturers in the US market in five years. They're on a steep learning curve," says Sawyer. "With the amount of expansion they do, efficiency will get better and the quality will improve. It's like what we saw with Japanese cars."
So far, Chinese companies have only won small orders for one-off projects in the US. Baoding Huide delivered 10 of its one-megawatt (MW) units to a project in Texas last year. CPC New Unite has delivered one 1.5MW turbine to Minnesota. Goldwind, China's number-two turbine-maker, is currently shipping three turbines to the US to test the market.
Foreign companies claim that while Chinese turbines are cheaper, their availability — or the time when they are actively producing energy — is much lower than foreign brands, resulting in a less efficient investment.
There is no data to prove such claims but with little track record in turbine manufacturing and no reputation overseas, Chinese companies will find it tough to access financing, particularly in today's climate, says Pollock. "If you compare them with the Korean companies now moving into the US, they have less than no track record. The Koreans, on the other hand, are riding on their reputation as global players in other industries like automotive manufacturing," she says.
However, Sinovel staff claim to be ready to export. Tao says the firm is close to signing a new export deal, but declines to reveal any details.
Analysts say China may get round its lack of reputation by supplying its own financing. China Eximbank is reported to be preparing loans for wind farm projects in Africa. There could also be financing available to develop the US market. In May, Tang Energy group signed an agreement with CATIC, a Chinese government-owned industrial group, to seek US wind-project opportunities worth $300m. The deal requires the use of Chinese turbines. "If the financial crisis deepens and more big trading companies go to the US and offer financing for turbines, we may see a couple more deals," says Paolo Soares, chief executive of Suzlon China.