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How Tianjin became the worlds wind turbine manufacturing hub.

WIND power is a priority for Chinese policy makers, who see turbines as a way to wean the power-hungry nation off coal and oil. Wind is also potentially an industry in which China can lead the world, as turbine producers crowd into the country to cash in on a remarkable ramp-up in local wind capacity. Wind farm operators are guaranteed a market as the government compels power companies to buy their electricity. Operators also sell credits to Western corporations as carbon offsets under the Kyoto Protocols Clean Development Mechanism (CDM).

Four of the largest windmill and wind power organizations in the world have offices in the northern Chinese city of Tianjin: Vestas, Gamesa, Winenergy and Suslon. World number-two wind energy manufacturer Gamesa employs 1,000 people at its Tianjin operation, making the companys 850 kilowatt (kW) G52 and G58 models. Danish company Vestas manufactures generators, nacelles and hubs at its Tianjin facility. A factory opened last year to make blades is “state of the art,” says the companys China head, Jorn Dalsgaard Pedersen.

Tianjins location has made it the center of Chinas wind turbine/equipment industry, explains Gamesas China manager Jesus Zaldua. “It makes for easier transportation because wind farms are mainly located in the north of China.” The citys port and history of heavy industry are also draws, along with a proximity to the headquarters of Chinas largest power companies. “Tianjin is located near Beijing, where customer decision-makers are located,” says Zaldua.

Tianjins turbine makers boast spectacularly full order books. The locally registered operation of Indian-owned Suzlon recently sold 100 megawatts (MW) of turbine capacity to Chinese power generator Jingneng. Suzlon claims an eight percent market share in China, with a per-annum manufacturing capacity of 220MW at its plant in Tianjin. The companys local chief Paulo Soares hopes that by the end of 2008 the company will be making turbines totaling 600MW capacity per year. That is considerable in the context of Chinas energy needs, given that 1MW is sufficient to provide a daily electricity supply for 900 households.

China had wind power facilities with a combined installed capacity of 6.05 million kW at the end of 2007, increasing from 2.67 million kW only a year earlier. Another 4.2 million kW will be added in 2008. At this rate, China will quickly catch up with Germany, the top wind power producer with a total installed capacity of 20.62 million kW. China plans to have wind capacity of 30 million kW installed by 2020 (China had an overall capacity of 713 million kW at the end of 2007 according to the policy-setting National Research and Development Commission).

Chinese government policy has encouraged the growth of a domestic turbine manufacturing base by demanding that turbines used on Chinese wind farms contain at least 70 percent locally made components. Hence companies like Gamesa have set up manufacturing operations in China. While 100 percent of the turbines produced in Tianjin are for the local market, in 2008 the company began shipping some Tianjin components to plants in Spain and the U.S. Gamesas G52 and G58 turbines, both 850kW capacity, boast a “robust design” which has been proven in global markets. More than 10,000 units are already operational worldwide, claims Jesus Zaldua. “Our turbines have a high and sustainable availability.”

Local wind turbine makers have grown quickly alongside foreign brands like Gamesa. Nine Chinese turbine makers, including market leaders Goldwind and Zhejiang Windey, have export capacity. Most Chinese turbine makers have licensed technology from overseas counterparts. Zhejiang Windey, which licensed its core technology from Germanys REPower, opened a factory in Zhangjiakou, Hebei Province late last year, with an annual output capacity of 600MW.

Lower labor costs mean Goldwind can sell its turbines cheaper than many foreign competitors. “But we dont want to be seen as competing solely on price,” says Eric de Vrij, international business director at the company. “We have the quality for export markets.”

Ding Jianping, marketing manager at Zhejiang Windey, says his firm can “totally” compete with foreign turbine makers on quality and price. “We are entitled to use the same advanced foreign technology, but our cost is lower by a third.” The company has installed its own R&D; team to build better turbines. The days when Chinese firms concentrated on small-capacity turbines are over. “We can make turbines of the same size and capacity as those big foreign brands.”

Others disagree. Chinese competitors will “take time” to produce turbines of the same quality and range as Gamesa, says Zaldua. “Long experience is needed to make robust machines. Gamesas G52 and G58 machines were first delivered in 2000.”

Wind turbines have improved drastically in size and efficiency since the 1970s. Todays 60-meter blades replaced their 10-meter predecessors, allowing for greatly increased power generation. More efficient turbines make wind-powered electricity cheaper to produce: US $2 per kWh in 1976 compared to US $0.03 with todays 5MW turbines.

Boasting more powerful machines, foreign turbine makers have so far dominated the Chinese market. Yet Chinese counterparts, hitherto soaking up the market for small-capacity and lower-spec turbines, are catching up.

China may revolutionize the business with a new turbine that uses magnetic levitation to replace conventional bearings in wind turbines. A recent design by the Guangzhou Energy Research Institute of the Chinese Academy of Sciences allows turbine blades to turn with much slower wind speeds. Power output at such velocities is low however.

A firm linked to the Institute, Guangzhou Zhongke Hengyuan Energy Science & Technology Co., Ltd, which invested RMB 400 million in building a prototype of the Maglev turbines, predicts revenue of RMB 1.6 billion from the generators. The new machine boosts wind energy generating capacity by as much as 20 percent over traditional wind turbines, explains company marketing manager Du Hainan. The Maglev turbines will also be 20 percent more expensive than conventional ones, he adds.

Though most of the customers are domestic, orders are also “pouring in” from overseas, says Du. Makers of conventional turbines have reason to worry. “Im sure well take away part of those conventional turbine makers market, but only a small part.” Price-conscious customers and smaller-scale wind farms will stick with conventional turbines, he predicts. “Its like a racing car in that its much more advanced in its capabilities compared to a family passenger car, but it can never occupy the whole market.”