The Chinese Wind Energy Market
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The Chinese Wind Energy Market

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Wind energy is expected to account for 20% of global electricity consumption by 2010. Will China indeed become the global wind energy market's supply chain hotspot if current trends persist? What ...

Wind energy is expected to account for 20% of global electricity consumption by 2010. Will China indeed become the global wind energy market's supply chain hotspot if current trends persist? What makes China's position in the global wind energy market unique? This GIA white paper, The Chinese Wind Energy Market, outlines developments in the Chinese wind energy market, and discusses the Chinese wind energy market drivers, restraints, regulations and key players.

This presentation shows selected slides from a GIA white paper. To download the entire white paper that you are interested in, please visit http://bit.ly/GIAinsightWP

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    The Chinese Wind Energy Market The Chinese Wind Energy Market Presentation Transcript

    • The Chinese Wind Energy Market Industry Briefing White Paper September 2009 Global Intelligence Alliance ©2009. All rights reserved. Contact: Kim Khoo, Manager, Intelligence Services kim.khoo@globalintelligence.com, Saraswati Diah, Analyst saraswati.diah@globalintelligence.com Web: www.globalintelligence.com Tel: Singapore (65) 6423 1681 All Rights Reserved ©2009 www.globalintelligence.com
    • Content This document contains excerpts from GIA’s “The Chinese Wind Energy Market” Webinar. For the free white paper, please visit www.globalintelligence.com or email info@globalintelligence.com. Market overview Market drivers & restraints Key manufacturers Not included here Future trends Not included here About Global Intelligence Alliance Not included here This Industry Briefing report provides an overview of the wind energy market in China.The report is provided as is, free of charge and without any warranty or guarantee. Global Intelligence Alliance rejects responsibility for errors or omissions, or for any loss or consequential loss arising as a result of decisions taken based on its contents. ©2009 Global Intelligence Alliance. All rights reserved. This report is copyright, however individual pages or portions thereof may be copied referencing “Global Intelligence Alliance” as the source. Global Intelligence Alliance (GIA) is a strategic market intelligence and advisory group. GIA was formed in 1995 when a team of market intelligence specialists, management consultants, industry analysts and technology experts came together to build a powerful suite of customized solutions ranging from outsourced market monitoring services and software, to strategic analysis and advisory. Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide. For further information please see the About Global Intelligence Alliance section at the end of this report, contact the author or visit www.globalintelligence.com China wind energy industry briefing | September 2009 www.globalintelligence.com 2
    • Abbreviations and acronyms AMSC American Superconductor A&R Abeking & Rasmussen Rotec BERR-UK (previously DTI-UK) Department for Business, Enterprise & Regulatory Reform – United Kingdom CASC China Aerospace Corporation CHEC China Huadian Engineering Co., Ltd. CHSTE China High Speed Transmission Equipment CWEA China Wind Energy Association CREIA China Renewable Energy Industry Association DEC Dalian Electric DHI Dalian Heavy Industries DTI-UK (now BERR-UK) Department of Trade and Industry – United Kingdom EREC European Renewable Energy Council GE The General Electric Company GW Giga Watt MW Mega Watt R&D Research & Development SAM Stahlturm- & Apparatebau Magdeburg SHFRP Shanghai FRP Research Institute SIAG Schaaf Industrie AG. VAT Value Added Tax WWEA World Wind Energy Association XEMC Xiangtan Electric Manufacturing Corporation YoY Year on Year China wind energy industry briefing | September 2009 www.globalintelligence.com 3
    • Market overview www.globalintelligence.com
    • Market overview Wind energy installations worldwide is expected to grow, with government policy being a key driver Worldwide wind turbine total installed capacity forecast (MW) •  With increasing wind turbine capacity, the unit cost of power generated by wind energy is expected to decrease¹. •  WWEA forecasts that by 2020, wind turbine total installed capacity will reach an estimate 1,500,000MW worldwide accounting for 20% of global electricity consumption. At the end of 2008, wind energy accounted for 1.5% of global electricity Source: World Wind Energy Association, 2008 consumption. ¹ Unit cost for wind energy is dependent on many factors besides turbine capacity. There are many variables that may influence the unit cost of wind energy, for example the site of the wind farm, operation and maintenance costs over the life of the facility, backup unit or units of generation costs, extra costs imposed on transmission and grid management cost may also vary widely depending on the control area involved, the output and variability of output from the generator, load on the grid, etc. China wind energy industry briefing | September 2009 www.globalintelligence.com 5
    • Market overview At the end of 2008, China overtook India with the highest total installed capacity of wind energy in Asia Top ten countries with the highest total installed capacity of wind energy worldwide (GW) and total installed capacity YoY growth between 2007-2008 (%) Note: The installed capacity is rounded to the nearest decimal place; growth YoY is generated from the original installed capacity, rounded to the nearest whole number. Source: World Wind Energy Association, 2008 China wind energy industry briefing | September 2009 www.globalintelligence.com 6
    • Market overview China’s total capacity is expected to increase rapidly with more units of higher capacity turbines installed China installed capacity (GW) and YoY growth (%) Affected by global economic downturn 60% 60% 33% Total installed 23% 107% capacity (GW) and 127% YoY growth (%) 140% 433% 297% Breakdown of 14% 12% 17% installed capacity 34% 293% 146% 35% (GW) and YoY 9% 7% 309% 198% 28% 24% growth (%) 308% 161% 14% 10% 4% 4% 78% 55% Produced by wind turbines of the following capacities: Note: The installed capacity are rounded to the nearest tenth; the YoY are generated from the original installed capacity, rounded to the nearest whole number. Source: China Wind Energy Association, 2009, China Renewable Energy Industry Association 2009, GIA estimates 2009 China wind energy industry briefing | September 2009 www.globalintelligence.com 7
    • Market overview Global players have seized opportunities in China, rapid advancement also made by local companies China wind energy activities Jan 2009 Feb 2009 Mar 2009 Mar 2009 Construction of an industrial China Wind Systems starts GE Drivetrain Technologies Sinovel installs a 3MW wind park for wind power gearbox production in Wuxi. signs an agreement with A- turbine in the Shanghai East equipment production is to Supply agreements signed with Power to supply gearboxes and Sea Bridge’s 100MW offshore start in Jilin Province with Wuxi Lida Gear to establish a JV partnership for wind farm – the Chinese first capital from Sany Group Manufacturing, Gansu Keyao gearbox manufacturing. pilot offshore wind project. and Tongyu Asset Electrical Power and Management. Hangzhou Advanced Mar 2009 Apr 2009 Gearbox. Suzlon Energy signed an Vestas introduces the new Jan 2009 agreement to supply wind V60-850kW wind turbine. American Feb 2009 turbines to Inner Mongolia Manufactured in Vestas’ new Superconductor (AMSC) GE plans to increase wind North Longyuan Wind Power facility in Inner Mongolia, over receives an order for wind turbine deliveries to Chinese Corporation. 90% of its components are turbine core electrical customers from 159 units in Chinese made. The turbine components from China's 2008 to 320 units by 2009, and Mar 2009 design includes innovation in CSR Zhuzhou Electric 600 units by 2010. Hansen Transmission delivers blade design and temperature Locomotive Research its first gearbox from its new control system which addresses Institute, that will be used Mar 2009 facility at the Beichen Hi-tech Inner Mongolia’s harsh climate. for wind turbines designed CLP Group announces it will Industrial Park, Tianjin. The by AMSC's subsidiary. acquire 50% equity interest in a gearbox will be deployed in wholly owned subsidiary of 2.1MW Suzlon turbine. China Wind Power Group Ltd for HK$101.3 million. Note: For reference only; this is not an exhaustive list. China wind energy industry briefing | September 2009 www.globalintelligence.com 8
    • Market overview Repeat orders, second orders or an increase in current contract sizes seen amongst the existing players China wind energy activities May 2009 Jul 2009 Jul 2009 Aug 2009 Siemens is building a new Suzlon China receives Suzlon China receives repeat AMSC has received the 2nd rotor blade and nacelle plant repeat orders of 40 units orders of 39 units of 1.25MW wind order for its D-VAR system for in Shanghai. The new of 1.25MW wind turbines turbines from Datang Power a Chinese smart grid from facility is scheduled to take from Honiton Energy Generation. China National Machinery up operation in the second Group, who has secured Industry Complete half of 2010, initially with development in Inner Jul 2009 Engineering. 400 employees. The wind Mongolia. Vestas has received an order for 17 turbine plants produced in units of 2.0MW wind turbines from Aug 2009 Shanghai will be for the Jul 2009 China Fujian Wind Energy Construction has started at Chinese market and for Gamesa and Huadian Company. The contract includes China’s first 10million kW wind export. have reached an supply and commissioning of the power station in Gansu agreement for the supply wind turbines, a VestasOnline® province. With 120 billion Yuan Siemens is investing more of wind turbines totaling Business SCADA system and a two investment, the station was than EUR60 million in capacity of 300MW. It year service and maintenance designed to have an installed setting up this new location. includes 200MW to be agreement. capacity of 5.16million kW by installed at a jointly the end of 2010 and 12.71 developed wind farm in Aug 2009 million kW by the end of 2015. Inner Mongolia, and AMSC has amended its contract It will be China’s largest wind 100MW for another with Sinovel, to increase its core power facility upon completion. Huadian project. electrical components to meet Sinovel’s demand. Note: For reference only; this is not an exhaustive list. China wind energy industry briefing | September 2009 www.globalintelligence.com 9
    • Market drivers and restraints www.globalintelligence.com
    • Market drivers and restraints China has a unique position combining low labour costs, abundant wind resources and favourable policies China wind energy market drivers and restraints Chinese government firm commitment towards wind Chinese abundant energy Improvement in Chinese DRIVERS Chinese low resources component manufacturing labour costs technology RESTRAINTS Component Global economic Chinese under-developed supply shortage Relative immaturity downturn infrastructure in some “Buy Chinese of China’s wind areas Policy” hinders energy market growth Source: GIA 2009 China wind energy industry briefing | September 2009 www.globalintelligence.com 11
    • Market drivers and restraints Government regulations on renewable energy targets and subsidies drive Chinese wind energy growth Chinese government firm commitment towards wind energy Chinese abundant resources •  China has untapped wind resources. Exploitable wind resources are estimated to represent a potential power generation capacity at ten metres above the ground of 253GW, whilst ocean-based wind resources represents an exploitable potential of about 750GW. Improvement in Chinese component manufacturing technology •  Partnerships or acquisitions between Chinese players and their foreign counterparts speed up technology transfer, e.g. Goldwind acquired Vensys to facilitate concentration on the development of direct drive wind turbines. Low labour costs •  China’s comparatively lower labour cost compared to North America and Europe’s, offers opportunities for cheaper manufacturing cost. •  China’s minimum wages are set locally according standards laid out by the central government. For example in April 2008, monthly minimum wages in the Tianjin municipality was 820 RMB, whilst the hourly minimum for non-full-time workers was 7.8 RMB. China wind energy industry briefing | September 2009 www.globalintelligence.com 12
    • Market drivers and restraints Protectionist policies towards Chinese made components in tenders is a market restraint Component supply shortage •  High demand of wind turbines especially in 2007-2008 caused a supply shortage of wind turbine parts, particularly for gearboxes and bearings, which was a market restraint in China. Relative immaturity of Chinese wind energy market •  As a relatively new industry in China, there is a shortage of skilled human resources particularly for the higher-wattage wind turbines. Chinese under-developed infrastructure in some areas •  Some areas, notably in the Northern part of China where abundant wind resources are available, infrastructure is not yet fully developed, hindering the development of full facilities. •  A lack of existing infrastructure also means a lack of grid availability and problems on grid connections. “Buy Chinese Policy” hinders growth •  As Chinese government regulation rules that at least 70% of wind turbine components in China must be locally made, foreign players face further difficulties to grow in the Chinese market unless they set up manufacturing facilities. •  In addition, a recently released edict states that “government investment projects should buy domestically made products unless (they) cannot be obtained in reasonable commercial conditions in China. China wind energy industry briefing | September 2009 www.globalintelligence.com 13
    • Market drivers and restraints Regulation on renewable energy target and subsidies drive Chinese wind energy growth Chinese government major regulations on wind energy •  Notice on Wind Power Generation Facility Construction and Management Requirement – July 2005 Specifying the domestic content of 70% or more as one of standards for approval of wind power generation plants and subjecting imported facilities to tariffs. •  Renewable Energy Industry Development Instruction List – November 2005 List of 88 projects (23 of them for wind power) for utilization of renewable energy and types of relevant equipment in a bid to promote relevant government at laboratories and enterprises, and instructions on investment and constructions. •  Renewable Energy Law – implemented since January 2006. The law prioritized energy policy in terms of its development. This included the utilization of renewable energy and required power utilities to purchase electricity generated with renewable energy. •  Administrative Provisions for Renewable Energy Power Generation – implemented since January 2006 The provisions specify the standards for administration of renewable energy power generation and the roles of power generation and grid enterprise in the development and utilisation of renewable energy. •  Provisional Administrative Measures on Pricing and Cost Sharing for Renewable Energy Power Generation – implemented since January 2006. The provision provides guidance on how to calculate prices and share costs for renewable energy power generation as approved by the government in and after January 2006 Note: For reference only; this is not a complete list of energy regulations. China wind energy industry briefing | September 2009 www.globalintelligence.com 14
    • Market drivers and restraints Policies and regulations built to increase renewable energy’s share of total energy consumption in China Chinese government major regulations on wind energy •  Tentative Management Method for Renewable Energy Development Special Fund – implemented since May 2006 The guide offers additional measures to enhance support for renewable energy development. It allows the central government to provide financial assistance for the development of renewable energy for oil substitution and construction areas; and of wind power, solar and other renewable energy sources for power generation. •  Medium to Long-term Renewable Energy Development Plan – August 2007 Aims to increase renewable energy’s share of total energy consumption. •  Management Method for Power Grid Enterprises’ Purchasing of Renewable Energy Electricity – implemented since September 2007. The method provides the regulatory commission’s supervision and management duties, measures and legal responsibilities regarding power grid enterprises’ purchasing of renewable energy electricity. •  Energy-Saving Power Generation and Power Dispatch Method (pilot program) – Aug 2007 Gives priority to renewable energy power generations, sets a priority order for power generation methods in accordance with energy consumption and pollutant emissions. This also places power dispatch priority on methods in the order of lower energy consumption and pollutant emission. Note: For reference only; this is not a complete list of energy regulations. China wind energy industry briefing | September 2009 www.globalintelligence.com 15
    • Market drivers and restraints In 2009, the Chinese government revised its 2020 target for wind power generation from 30 GW to 100GW Chinese government major regulations on wind energy •  11th Five-Year Renewable Energy Development Plan – March 2008 The plan though is basically in line with the medium to long-term plan, remarkably revised the wind power generation goal for 2010 onward from 5 GW in the medium to long-term plan to 10GW, and specified sites for and sizes of, wind power plants for development and other relevant numerical goals. Also, it calls for achieving domestic production of 1,500kW or larger onshore generation units and 3,000kW offshore units by 2010. •  Notice on Adjustment Regarding Import Tariffs for Large-Output Wind Power Generation Units, Their Main Components and Raw Materials – implemented from January 2008 To refund import tariffs and phase out import value-added-taxes for main components and raw materials for Chinese firms’ development and production of larger-output (1,200kW or more) wind power generation units and repeal tax incentives for purchases of certain wind power generation units. •  Note released by Chinese Finance Ministry, Sept 2008 Chinese wind turbine makers can get a payout of 600 yuan ($87.79) per kilowatt for the first 50 units they produce of any new turbine with capacity of 1 megawatt or more. The subsidy should be shared equally between manufacturers of key parts and the companies that assemble the finished product. •  Note release by National Development and Reform Commission, May 2009 The National Development and Reform Commission revised the wind power generation goal for 2020 from 30GW to 100GW. Note: For reference only; this is not a complete list of energy regulations. China wind energy industry briefing | September 2009 www.globalintelligence.com 16
    • Thank You for Your Attention These slides are excerpts from Contact Us the GIA White Paper: “The Chinese Wind Energy Market”. For additional information about the Global Intelligence Alliance and our services, please send email to Download the entire White Paper info@globalintelligence.com or log on for Free to the GIA website for the contact information of the GIA company nearest to you. The report has been published under the GIA White Paper series at www.globalintelligence.com.
    • About GIA www.globalintelligence.com
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