Standing under the enormous swinging blades of the world’s most powerful wind turbine near the German city of Magdeburg, it is hard to imagine that Europe’s wind industry has much to worry about when it comes to foreign rivals.
The turbine, which is almost as high as the Great Pyramid of Giza, was built by Germany’s Enercon, the fifth-biggest turbine supplier in the world.
The biggest, Denmark’s Vestas, is six hours’ drive away. Germany’s Siemens, the ninth-largest, according to the BTM wind industry consultancy, is nearby. And Gamesa, the eighth-biggest is a few hours flight away in Spain.
Altogether, Europe’s manufacturers account for 89 per cent of their own region; 32 per cent of the US and 37 per cent of the global market, says the European Wind Energy Association.
But even in this stronghold of homegrown might, apprehension is growing about an emerging force in the global wind industry: China.
Five years ago, there was not a single Chinese wind turbine maker among the world’s top 10 manufacturers. Now there are four: Sinovel, number two behind Vestas; Goldwind, Dongfang and United Power.
China is putting up new turbines at the rate of one an hour, says a report co-authored by the Global Wind Energy Council, which estimates the country’s wind power could be 13 times the capacity of the Three Gorges dam by 2020.
China overtook the US for the first time last year in terms of total installed wind generating capacity, as Beijing strives to address the country’s huge energy needs and pollution problems.
But as China’s electricity system struggles to absorb thousands of new turbines, the government has slowed the growth of new wind farms. Against that backdrop the country’s turbine makers – whose machines can be 30 per cent cheaper than western rivals – are increasingly looking abroad.
At Sinovel, “internationalisation” is a “top priority”, says company spokesman Tao Gang. “Overseas business deals will play a decisive role in making Sinovel a truly international company” and Europe is “undoubtedly one of Sinovel’s most important markets”, he says.
At Enercon’s Magdeburg plant, Ruth Brand-Schock, head of the company’s Berlin office, answers with a simple “yes” when asked if she is concerned about China.
“We see the solar example and their aggressive strategy to take over the world market,” she says, referring to China’s emergence as the world’s biggest supplier of solar panels. ”And in wind, this is only just the beginning.
“Their turbines are not yet as high-quality as the European ones. So this gives us some time, but not too much.”
So far, the progress of Chinese companies in Europe has been slow.
Goldwind bought into a German turbine designer, Vensys, in 2008 and Sinovel signed an agreement with Greece’s main power generation company, PPC, in April to develop wind power projects.
The most notable deal so far came in July when Sinovel announced a €1.5bn ($2.2bn) wind farm deal with Irish wind park developer, Mainstream Renewable Power.
Over a lunch of herring and fruit at Siemens Wind Power’s plant in Brande, Denmark, Henrik Stiesdal, the company’s chief technology officer, agrees that “you have to take the challenge from China and other low-cost countries seriously, that’s obvious”, though he adds that for now, “there is a gap in quality confidence”.
The quality of Chinese-made wind turbines has been a source of concern for the Chinese government, which launched an investigation into the issue last November and tightened certification requirements for turbines at the start of this year.
“There is an element of snobbishness and fear among western manufacturers,” says Colin Morgan, of GL Garrad Hassan, the renewable energy consultancy. The design of Chinese turbines is only “slightly behind” that of western companies, he says, and there is “a lot of commonality in the supply chains” for both Chinese and western turbines.
Mr Morgan also dismisses another argument frequently heard in the European wind industry – that the cost advantage of Chinese turbines disappears once they are shipped abroad.
While some of this advantage obviously declines because of transportation, the Chinese still have an edge because of their access to finance, he says.
Sinovel’s Ireland deal was financed by the China Development Bank, which has also made a $6bn credit facility available to Goldwind.
”For an onshore project, 80 per cent of the capital spend is on the turbine purchase,” says Mr Morgan. “If finance comes with the turbines, that clinches it really.”
(Source: Financial Times)