Blowing in the wind

Confronted with a cooling global market, Chinese wind turbine manufacturers are introducing more advanced technologies in a bid to sharpen their competitive edge.

A 5-megawatt wind turbine made by Beijing-based Sinovel Wind Group Co passed a 240-hour continuous operating test at an offshore wind farm near the Donghai Bridge in Shanghai on August 27, the company said in a statement on its website on September 5.

It is the largest offshore wind turbine solely developed and tested by a Chinese company so far, and it operated with full utility and no glitches during the test, the statement said.

In August 2010, Sinovel installed 34 units of 3-megawatt wind turbines for the Donghai Bridge Offshore Wind Farm, the first offshore wind farm outside Europe.

Currently, the world's largest turbine is the 7.5-megawatt E-126 made by German company Enercon, Jorrit Gosens, a PhD candidate at the Research Center for Eco-Environmental Sciences at the Chinese Academy of Sciences (CAS), told the Global Times Thursday.

"It has 60-meter blades. That's almost as wide as the wingspan of an Airbus A380," said Gosens.

But as growth of the wind power market slows down, some are suggesting that Chinese companies should focus more on research and development, rather than racing to build larger turbines.

Shrinking profits

Sinovel's operating profit declined by 81 percent year-on-year to 100.7 million yuan ($15.9 million) in the first six months of 2012, the Shanghai-listed company said in its first-half financial statement on August 28.

Xinjiang-based Goldwind Science & Technology Co, another heavyweight in the wind turbine sector, reported an operating profit of 48.6 million yuan for the first half of 2012, down by 91 percent year-on-year, the Shenzhen-listed firm said in a financial report on August 25.

The market growth rates in Europe, Asia and North America, the world's three major wind power markets, have all declined drastically in 2009-11 from 2005-09, according to a 2o11 annual report released by Belgium-based Global Wind Energy Council in March.

"The market will not recover in the near future and turbine prices will continue to fall," the English version of Germany's New Energy magazine reported in March, citing experts at New York-based management consulting firm Oliver Wyman Group.

"They anticipate an annual growth rate of 7 percent from 2011 to 2016, and only expect to see an improvement sometime between 2016 and 2020, when growth could reach 11 or 12 percent. It will be interesting to see what share Chinese manufacturers have in this development," it said.

Bigger turbines

Both Sinovel and Goldwind have responded to the downturn with plans to upgrade to "super" turbines, or those with capacities of above 3 megawatts, to get through the market turbulence.

"The company has continuously carried out a series of optimization programs for 1.5-megawatt, 3-megatwatt, 5-megawatt and 6-megawatt wind turbines … the company has cumulatively acquired 152 patents, including six for invention," Sinovel said in its first-half report.

Its in-house development of 10-megawatt offshore super turbines has been listed as a key project of "indigenous energy technology innovation for 2012" by the National Energy Administration. This meant that the company received an extra 42 million yuan in investment from the central government, it said.

Meanwhile, Goldwind is developing 6-megawatt wind turbines, and has started preparations to develop 10-megawatt offshore super turbines, portal news website southcn.com reported on September 5.

But there is no need for Chinese turbine makers to rush to double the size just because Siemens or other leading companies have produced a 3-megawatt turbine, because efficiency is more important than size, Sebastian Meyer, director of Research and Advisory at Beijing-based Azure International Technology & Development, an investment and advisory company focused on China's clean tech energy sector, told the Global Times Friday.

"Ultimately, it's cost per kilowatt hour that (users) really care about. Two smaller turbines are more effective and cost less to make than a big one," Meyer said.

"Where you need really big turbines are offshore or in countries where real estate is very expensive. But in China … the land they're putting wind farms on doesn't cost very much," he said.

Indigenous innovation

From being able to produce only towers and simple steel tubes in the 1990s, Chinese manufacturers have gradually taken control of the technologies to make generators, gearboxes, bearings, blades, converters and other major wind power components over the past decade, Gosens from the CAS told the Global Times.

But the road has not been easy, or cheap. In 2008, Goldwind paid 41.2 million euros ($52.7 million) for a 70 percent stake in German turbine maker Vensys Energy AG, in order to acquire its expertise in making larger turbines.

Meanwile, Sinovel has been involved in a dispute with US-based AMSC (American Superconductor). In April, AMSC submitted an appeal to China's Supreme People's Court after provincial courts in Hainan Province dismissed one of its software copyright infringement cases against Sinovel, its former customer.

The US company is seeking total compensation of over $1.2 billion. Sinovel said in its half-year report that because the cases filed by AMSC and its subsidiaries were either dismissed by the court or judgments are still pending, they have no clear impact on the firm's profits.

Sinovel was not available for comment when contacted by the Global Times.

"Right now the Chinese have very competitive products already … and the only further steps would be in turbine management," which controls the position and speed of the machine appropriately, Gosens said.

Meyer suggested that Chinese companies should avail themselves of the global technology market and invest in some early-stage technology developed by scientists around the world.

"In order to do that, Chinese companies are going to have to take on certain capital risks; they are going to have to learn how to identify technologies internationally."

Meanwhile, Gosens argued that China should develop the new, core wind power technologies internally because they have higher added value, and it would be good for the national economy.

Therefore, the government needs to make policies to protect innovations by companies like Sinovel and Goldwind, Gosens said, citing an example of the Danish policies in the 1970s.

To encourage innovation, he urged that more government subsidies should tilt toward academic research rather than manufacturing of the turbines.