Only 14 months after agreeing to work together, China's State-owned rocket
maker and its Spanish partner are churning out wind turbines from this plant
north of Shanghai.
The speed with which China Aerospace Science and Technology Group and
road-to-property group Acciona assembled their first turbine reflects a wind
energy fever in China.
The lure of China's huge but underexploited market, the government's drive
for renewable energy and low production costs for exports to fast-growing bigger
markets in the United States and Europe have foreign and domestic firms rushing
to set up wind farms or build production plants across the country.
"The cake is so big that I could afford an office made out of gold," said a
senior official from one of the world's top turbine makers, based in China, who
declined to be named. "There will be orders for everyone."
To tackle worsening air pollution, China recently raised its wind power
target for the year 2020 to 30 gigawatts (GW) from 20 gigawatts, compared with
its plan to achieve 40 gigawatts of nuclear power capacity by 2015.
More importantly, government officials have said that major power firms must
generate at least 5 percent of their electricity from renewable sources by 2010
and 10 percent by 2020, a mandate that should fuel investment despite the
prevalence of cheap coal.
China's vast and accessible interior and coasts make wind power a favorite,
generating business for the top equipment makers, Vestas Wind Systems, Spain's
Gamesa and U.S. General Electric.
"There?¡¥s a big pull in the industry," said Javier Ojeda, general manager of
the Chinese-Spanish venture Nantong CASC Wanyuan Acciona Wind Turbine
Manufacture, as he checked a newly erected logo at the factory on the Yangtze
It can now assemble 400 of the 1.5-megawatt turbines equipped with 40-meter
blades every year, twice as large as the turbines common in China in the past.
The company has decided to double its capacity in a second phase.
China lags other countries, both developed and emerging, in developing its
wind power potential.
Last year China's wind generation capacity came to 1.3 gigawatts, a
two-thirds increase on the year before, but still only 0.2 percent of the
world's second-biggest market, data compiled by the China Wind Energy
Denmark gets one-fifth of its electricity from the wind, the highest ratio in
the world, while top generator Germany holds nearly 15 times as much capacity as
China. Even India has three times more than China.
While developers agree the domestic potential is vast, they are also racing
into China to reduce costs on export sales, improving the economic viability of
the ultra-clean energy.
An estimated 11.8 GW of wind power capacity was installed worldwide last
year, 43 percent more than in 2004, as soaring oil and natural gas prices plus
environmental imperatives such as the UN's Kyoto protocol fuel a boom in demand
for wind turbines.
Gamesa, which opened its first non-European plant recently, hopes to cut
costs by about a quarter in the coming years by focusing on China for component
Other global leaders, including India's Suzlon Energy, are also building
factories here, in part driven by China's rule requiring 70 percent of turbine
parts to be locally manufactured since mid-2005.
Vestas, an industry pioneer with experience of building the world's first
offshore wind farm in Europe, is doubling capacity at its blade factory, which
opened last month to make 600 units annually in the northern city of Tianjin.
Additional facilities to make components will start operation early next year.
"The plant will not only supply the market in China. It is part of our global
supply chain," said Srikanth Pasupuleti, chief representative of Vestas in
So far the market has been dominated by the top three foreign wind-turbine
firms, who grabbed 77 percent of the new projects in China last year, a study by
Wind Power Monthly showed.
But local upstarts are catching up.
Goldwind Science and Technology Co, which had 17.5 percent share last year,
said recently it planned to launch an overseas IPO to bankroll expansion.
Competitor Zhejiang Windey Wind Generating Engineering plans to do the same.
While some risks to the industry remain ?a including the government's tariff
regime that threatens to disadvantage smaller firms ?a few players are willing
to wait on the sidelines.