China has started construction of a 10 gigawatt wind farm, the first of seven giant wind farms that it plans to build before 2020.
But western turbine makers may face a tougher time winning orders for these mega farms than they did in the recent past because of a new policy that appears to strongly favour home-grown turbine manufacturers.
The first giant wind farm is located in Jiuquan, Gansu province and the province plans to expand its installed wind power capacity to 20GW by 2020, surpassing even the 18GW capacity of the Three Gorges Dam.
For that reason the wind farm has been unofficially dubbed “the Three Gorges Dam on the land”.
The Jiuquan wind farm is the first of a new generation of giant wind farms that will help reduce the country's traditionally heavy dependence on fossil fuels to generate electricity, an issue will no doubt be raised once more at the Climate Conference in Copenhagen later this year.
While China plans to keep building building coal-fired plants, it also has set an ambitious target to get 20% of its energy from wind and other renewable sources by 2020. The country just revised its projected wind power capacity target up to 100 GW by 2020, which is eight times the current level.
To achieve that goal, China has decided it must scale up the size of its wind farms, which inevitably means siting them in remote regions where wind is abundant and vast areas of of land unused. In Jiuquan, an area of about 10,000 square km could be developed for wind power generation with a capacity of at least 40GW.
The other mega wind power farms are Hami in Xinjiang Uygur autonomous region, Hebei province, western Jilin province, eastern Inner Mongolia, western Inner Mongolia and Jiangsu province.
In the past, China has been one of the juiciest export markets for western wind turbine manufacturers like Vestas and Gamesa, and they have invested heavily in facilities in China. But it looks like they will face much stiffer competition winning orders from these new giant wind farms.
Wang Jianxin, director of the Jiuquan Development and Reform Commission, told China Daily that leading domestic turbine makers like Sinovel Wind, Goldwind and Dongfang Electric would benefit the most from the new business, take around 80% of the orders the first phase of the giant wind farm project.
He said local and foreign turbine manufacturers had traditionally taken around 50% each of the wind power market in Jiuquan area, so he appears to be forecasting a significant shift toward home-grown technology.
If mega wind farms in other regions also adopt this “buy local” strategy, western manufacturers will have to get used to a much diminished share of the cake, albeit a cake that is currently growing rapidly– China's wind power generation has doubled over the past few years.
Vestas, the world's largest turbine maker, recently sought to play down investors' fears that the winds in China might be blowing less favourably for western vendors.
The Danish company employs more than 1,800 people in China and it said that its China operations were “very solid” despite market concerns about the growing threat posed by China's home-grown turbine manufacturers. Vestas executive Michael Holm said:
There has been a lot of speculation and rumour. We're dealing with a market where some things are open to all bidders and competitors, and other things are only open to Chinese companies. But we've just announced a small local Chinese order today.”
This latest order is relatively modest and is for 32MW of wind turbines for the Pingtan Aoqian wind farm project, located on Pingtan Island in the eastern part of Fujian province.
The contract, with China Fujian (Pingtan) Wind Energy, includes supply and commissioning seventeen 2MW turbines, a control system and a two-year and maintenance agreement.
This marks Vestas' first sales agreement with Fujian Investment Group, of which China (Pingtan) Wind Energy is a subsidiary. It is the investment arm of the Fujian government, which hopes to make Fujian one of the key provinces for the wind energy industry in China.
In its Q1 results, Vestas said it continues to expand its operations, and is investing heavily in China. It recently opened a plant in Inner Mongolia to increase its manufacturing capacity in China. But Vestas is also shifting its focus to offshore wind, which is undeveloped in China. It is in the process of opening a new office in China to service the offshore wind power business.
This seems a tacit admission that the onshore wind market has become a lot more competitive while offshore wind is an area where Vestas has a competitive edge. Vestas Offshore President Anders Søe-Jensen said:
We see the Chinese offshore market as one of most important future wind energy markets in the world. Offshore wind requires very specific skills and knowledge, something that Vestas has gained through years of experience.
Vesta's Q1 deliveries to China amounted to 62MW out of a total of 103MW for the Asia-Pacific region as a whole.