Consolidation Among China’s Wind Power Manufacturers Likely

This month the Chinese government formally released a new set of rules and restrictions for wind power equipment manufacturers relating to energy, land, in-house capital and technologies. The standards had been under review for a year.

In particular, two new standards for wind power equipment manufacturers will certainly result in a shake-up of the industry:

  • Unit generating capacity must be 2.5 MW or above and manufacturers must have an annual generating capacity of more than 1 GW and provide complete support facilities.
  • They must have more than five years experience in the sector.

In addition, they are required to have a minimum installed generating capacity of 0.5 GW before any expansion.

Harbin Air Conditioning, an air cooler provider in China, announced on that the company will abandon its efforts in the research and development of wind power equipment, due to a combination of fierce competition and the stricter standards for market access. In 2009, the company’s board of directors had approved a proposal to invest RMB30 million (approx. US$4 million) into the research and development of wind power. Its exit is likely to signal the beginning of further consolidation across the wind power sector this year.

China is home to approximately 80 wind power equipment makers, hierarchically divided into three classes. At the top, the three “Class I” wind power equipment gurus including SinovelGoldwind and Dongfang Electric Corporation. In the middle, the “Class II” segment, are the leading manufacturers such as Shanghai Electric Group and XEMC Windpower. The wide array of small and medium-sized players falls into the bottom or “Class III” rung. According to Ma Xuelu, deputy director of Chinese Wind Energy Association, at most only ten of them are capable of meeting the new requirements.

Twelve wind power generator makers are listed on China’s A-share market, and expansion remains one of their priorities this year. Some of these industry players however may have to exit the wind power sector, due to difficulties in meeting the requirements. The top 15 wind power equipment makers in China now make up 95 percent of the country’s total production capacity, while dozens of manufacturers have vied for the remaining 5 percent.

Given the relatively high industry consolidation, a good number of the small manufacturers will be forced out or acquired by their larger rivals.

China has overtaken the US as the world’s largest wind power generator, installing 16 GW of wind power capacity in 2010 bringing the country’s total installed capacity to 41.827 GW.

But Chinese wind power equipment makers still have to tackle several issues, among them, their high dependence on imported equipment, overheated investment activities, repetitive introduction of outdated technologies and lack of core technologies. Quality remains another issue especially if the local producers wish to establish a solid footprint in the sector.

Several equipment makers including Hauneng Tongliao Wind Power have reported quality issues over the past few years. 

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Nanjing Shanglong Communications Liu Yuanyuan is Director of Operations and Co-Founder of Nanjing Shanglong Communications. Liu Yuanyuan previously held the position of office manager at the London Financial Times' China translation and editorial bureau in Nanjing overseeing 33 translators, editors and IT support personnel. Ms. Liu brought her many years experience of delivering, under deadline, more than 200 English-language news summaries of articles selected from Chinese-language newspapers and newswires daily as well as supervising the timely completion of 500,000+ word English-to-Chinese translation and localization projects to her role as co-founder and general manager at Shanglong. Ms. Liu joined Shanglong in 2002. In 2006, she added China Business News Service to the product suite – the service provides a continuous flow of well-researched and documented news articles to trade publishers and industry-specific websites looking to supplement their content with the latest news from China in their sector. She manages Shanglong's staff of translators, editors, desktop publishing specialists and support staff, selected from the top universities across China and well versed in the art of translation and in the technology of DTP. Ms. Liu graduated from the People’s Liberation Army Institute of International Relations - China’s elite military academy responsible for the training of the country’s foreign language specialists.

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