2.1 Current Status of Equipment Manufacturing Industry
2.1.1 Industry Scale and Market Structure
In 2011, there were a total of 29 original equipment manufacturers (OEMs) active OEMs in China. Compared to 43 suppliers in 2009 and 38 in 2010, the number of OEMs showed a decreasing trend, being basically equal to the number of 30 suppliers in 2008. It should be noted that the term "OEM" is used here to distinguish from "manufacturer". An "OEM" means a wind turbine manufacturer that has sold/ installed one or more prototype machines in the market during the year. Currently, there are still over 70 registered wind turbine "manufacturers" in China, but they do not necessarily make a contribution to the market every year.
In 2011, the Top Five manufacturers in the Chinese market were Goldwind 3,600MW (20.4%), Sinovel 2,939MW (16.7%), United Power 2,847MW (16.1%), Mingyang 1,177.5MW (6.7%) and Dongfang Turbine 946MW (5.4%), respectively. As of 2011, the Top Five enterprises in China's cumulative installed wind power market were Sinovel 12977MW (20.8%), Goldwind 12678.9MW (20.3%), Dongfang Turbine 6898MW (11.1%), United Power 5282MW (8.5%) and Vestas 3565.5MW (5.7%), respectively. For details, see Table 2-1.
Table 2-1 Installation data for China's Top 20 wind power complete-machine
(Rankings based on new installation data for 2011) Source: "Wind Energy" magazine, March 2012 issue
The total market share of the Top 15 suppliers in 2011 was 93.9%, a 0.6% decrease compared to 94.5% in 2010. In 2011, the total market share of the Top 10 suppliers was 83.18%, a 4.07% decrease compared to 87.25% in 2010. In 2011, the total market share of the Top 5 suppliers was 65.3%, a 5.7% decrease compared to 71% in 2010, as shown in Figure 2-1.
Based on the above analysis, the following conclusions can be drawn: first, although the number of OEMs is still big, but the number has been decreasing in the past three years; secondly, the market share of the top 5 OEMs is getting smaller, while the contrast of the projects are more scatter with lower ranking OEMs.
It can be seen from Figure 2-2 that among the Top 15 enterprises in 2011, the sales volume of 10 of them increased, including United Power, Mingyang Wind, XEMC Wind Power, and Shanghai Electric Group, etc.; while the sales volume of 5 enterprises, i.e. Sinovel, Goldwind, Dongfang Turbine, Vestas and Gamesa, decreased their volume compared with 2010.
With an installed capacity of 2,847MW in 2011 - a 73.0% increase over the previous year - Guodian United Power Technology Company Limited became the enterprise to watch in 2012. With its first batch of 1.5MW wind turbine generator systems launched in 2008 and with an installed capacity of 768MW in 2009, United Power ranked the 4th in the Chinese market. It secured its 4th place again in 2010 with an installed capacity of 1643MW, and then entered the Top 3 ranking list in 2011 with significant advantages. Also, United Power was very fast in new product R&D, producing its 3MW turbine in 2010, and its 6 MW turbine was completed in late 2011.
Another notable enterprise is CSR Zhuzhou Electric Locomotive Research Institute. Since 2008, when its first 1.65MW generator unit was manufactured and installed, this company has maintained stable, constant growth. In 2011, CSR Zhuzhou Institute installed 451MW and entered the Top 10 ranking list for the first time, becoming a rising star in the industry. Nor was CSR Zhuzhou Institute left behind in the field of new product R&D. The prototype machine of the 2.5MW generator unit that it developed was already installed, and its 5MW generator unit will be available soon.
The installed capacities of both Goldwind and Sinovel decreased somewhat in 2011, although they maintained their first and second positions in the Chinese market.. Moreover, Goldwind and Sinovel were also active in fields such as new product R&D, and the exploration of international markets. Goldwind, Sinovel, United Power and Mingyang were all ranked in the 2011 Global Top 10 Manufacturers list.
Figure 2-1 Market shares of Top 15 suppliers in China's wind power market during 2010-2011
Figure 2-2 Installations of Top 15 suppliers in China's wind power market in 2011
The Chinese operations of foreign-funded enterprises have been dramatically challenged by Chinese companies during the past two years. The primary reasons for this are that over the past several years Chinese-made wind power equipment has achieved batch supply capability, and due to intense competition and an oversupply in the market, prices have decreased year after year. The products of foreign funded enterprises scored badly during the equipment tendering process, due to their comparatively higher price. Nevertheless, their products were still more trusted by the market in areas such as reliability, which is the major reason why international companies such as Vestas and Gamesa possess such a large global market share. The early Chinese wind power market was characterized by a lack of competition due to insufficient supply of equipment. During the past several years, however, as products from a large number of Chinese enterprises have become available, market competition has exploded, and price competition has become increasingly important. As rationality returns to market competition, core values such as product quality and post-sales services will definitely regain market emphasis, as competition between Chinese enterprises and foreign companies return to the same starting point. It is expected that both Chinese enterprises and foreign companies will show excellent market performances and work together to drive advances in wind power technology, ensuring the stable and healthy development of the industry.
Figure 2-3 Trend of the average turbine size in the Chinese market
In 2011, 11409 wind turbine generator systems were installed in China with an average power of 1545.4kW, showing a continuous growth compared to 2010, as shown in Figure 2-3. Among all the wind turbine generator systems installed last year, the 1.5MW models dominated, with a 74.1% market share. 2MW models accounted for 14.7%, models with a power of over 2.5MW accounted for 3.5%, other models with a power, for example, of 1MW, 1.25MW, 1.6MW, 1.65MW, 2.1MW and 2.3MW accounted cumulatively for 5.3%, while wind turbine generator systems with a power less than 1MW only accounted for 2.4%.
As far as the technical characteristics of wind turbine generator systems are concerned, the market supply of pitch variable-speed wind turbine generator systems using gearboxes and doubly fed induction generators was greater, owing to the maturity of the technology. Direct-drive wind turbine generator systems using synchronous generators and full-power converters instead of speed-increasing gearboxes became increasingly attractive, however, with more and more enterprises beginning to participate in the R&D, design and manufacture of such generator units.
It is worth noting that full-power current conversion technology has become gradually more mature over recent years. The application of full-power converters gradually increased and they were no longer limited to direct-drive systems. A combination of technologies using synchronous generators, full-power converters and was flexibly applied to both 100kW-scale and multi-MW-scale wind turbine generator systems.
Since 2008, the supply of wind power parts and components in China has mostly satisfied the market demand. These parts and component enterprises included both Chinese enterprises and foreign-owned factories set up in China. The number of wind power blade enterprises was the largest. Excluding the in-house blade factories of complete-machine enterprises, there were over 30 blade manufacturers in China. Among these blade enterprises, however, some had never started batch production, and some had already expressly indicated they would exit this market. Currently, the independent blade manufacturers with large market shares are still China Composites Group Corporation, Sinoma,Zhonghang Huiteng, and LM. The change in market structure of parts (gearboxes, generators, etc.) manufacturers was insignificant. It is worth noting that those components previously most difficult to obtain in China, such as main shaft bearings, gearbox bearings and converters, have now entered the localized batch production stage.
As mentioned above, the current trend among Chinese OEMs is to make their own parts and components in-house, leaving scant market space for enterprises specializing in components.
By making their own parts and components in-house, the wind power OEM's main aim is to ensure market supply, guarantee product quality, and maintain minimum costs. As the wind power parts and components supply system increasingly improves, enterprises specialized in the production of wind power parts and components must, in addition to meeting the above mentioned requirements of complete-machine enterprises, also maintain their advantages in areas such as innovative R&D, quality control, and cost control. Only in this way can they win back a larger share of the market.
2.1.2 Development Characteristics and Trends
Based on the evaluation of the development of China's wind power equipment manufacturing industry over recent years and the status of industry development in 2011, this report summarizes the following characteristics and trends: industry administration, capacity building, business strategy, and product R&D:
1) Operational reliability of wind power equipment gained increasing attention
During 2010 and 2011, the National Energy Bureau authorized the Chinese Wind Energy Association (CWEA) to conduct a survey of the quality of wind power equipment, which attracted both industry and media attention. In addition to submitting the survey results to the National Energy Bureau, CWEA also recommended safety measures based on the problems discovered during the survey, which in turn provide an early warning to the industry.
In November 2011, the National Energy Bureau issued the "Notice on Relevant Requirements for Strengthening Wind Farm Safety Management", requiring wind farm owners to improve wind farm quality and safety management and promptly report possible wind power equipment quality problems, requiring wind power equipment manufacturers to strengthen process control and quality management and continue to enhance the reliability and technological level of their generator units, and authorized CWEA to periodically conduct quality surveys on operational wind turbine generator systems, announce the survey results and quality evaluation results to the general public, and publish corresponding safety measures and industry early-warning information regarding similar problems or typical accidents.
Moreover, at the China Wind Power Conference 2011 in Beijing, press conferences were held for the "China Wind Power Generation Evaluation System Research Report" jointly researched and written by CWEA, Vestas and industry experts; as well as the "China Wind Power Development Road Map 2050" jointly published by the Energy Research Institute of the National Development and Reform Commission and organizations such as the International Energy Agency. These research reports, which had considered foreign development experiences, provided valuable insight into all relevant issues, including wind power equipment quality evaluation, wind power equipment operation management, and the development trends of wind turbine generator system technology.
Government departments, industry associations, research institutes and the industrial community all considered the healthy, stable development of the wind power industry to be of utmost importance, using different approaches to promote the improvement of wind power equipment operational reliability. As the industry continues to develop and mature with guidance from government departments, a more healthy, orderly and sustainable wind power industry chain will develop.
2) Further improvements in enterprise-backed wind power technology R&D systems
In 2010, the Ministry of Science and Technology and the National Energy Bureau established multiple R&D centers and key laboratories for the wind power industry to carry out fundamental research and promote technological advances as supported by major Chinese scientific research institutions and leading enterprises.
In November 2011, the National Energy Bureau authorized the establishment of the "National Energy Key Laboratory for Wind Energy & Solar Energy Emulation and Inspection Certification Technology", based at the China General Certification Center. This signified the initiation of a public technical service platform for China's wind and solar energy industries, integrating technical standards research, inspection certification technology research and inspection certification practices, in order that technological advancement and the internationalization of China's wind and solar energy industries would continue to accelerate.
The China General Certification Center is a scientific research and technical service agency specialized in the inspection and certification of renewable energy products such as wind and solar energy. It has an inspection and certification team equipped with advanced technology in the wind and solar energy field and has set up a blade inspection and testing center in Baoding, as shown in Figure 2-4. The establishment of the National Energy Key Laboratory for Wind Energy & Solar Energy Emulation and Inspection Certification Technology will further enhance China's capabilities in the field of wind and solar energy inspection and certification.
Figure 2-4 Baoding Blade Inspection and Testing Center of the National Energy Key Laboratory for Wind Energy & Solar Energy Emulation and Inspection Technology Certification
The state-level R&D centers, engineering technology centers or key laboratories that China's wind energy industry has set up at superior enterprises, including the engineering technology centers or laboratories established with the approval of the Ministry of Science and Technology, already cover most relevant technical elements, including wind power blades, generators, wind power systems, control systems, offshore technical equipment, offshore wind power projects, wind farm operation, wind power grid-connecting, emulation, and inspection and certification. China's wind energy scientific R&D system continues to improve, as shown in Table 2-2 below.
3) R&D of onshore wind turbine generator systems suitable for different operating environment characteristics gained increasing attention
The distribution characteristics of China's wind energy resources determine that China's wind farms are mostly distributed in remote areas far from central cities and are formed in accordance with the "large-scale, high-concentration" wind power development model. With the grid connection and power consumption issues faced by major wind power bases becoming increasingly significant, China has proposed a new concept, focusing on both large-scale bases and distributed development, providing the momentum needed to drive stable development of this industry.
Table 2-2 Research Institutions approved by the Ministry of Science and Technology and the National Energy Bureau and established during 2010-2011
In 2011, while steadily promoting construction of large-scale wind power bases, China was also actively studying how to develop distributed wind power access technology and decentralized wind power project development planning. Many of the wind power projects of over several GW tentatively approved by the National Energy Bureau for the "Twelfth Five-Year Plan" period were also located in areas outside the planned, large-scale inland bases.
The areas where such projects are located typically feature low average annual wind speeds or high altitudes, being significantly different from the environmental characteristics of those areas where large-scale bases are planned. To meet the developmental requirements of these projects, equipment manufacturers are, when developing their wind turbine generator systems, introducing "low wind speed" or "high altitude" models to ensure higher developmental potential for these projects.
Regarding China's distributed wind power development, the goal for installations by 2015 is 30GW (including both completed and projects under construction). This means that tailor-made wind turbine generator systems will not only have a very large share of the market in the future but will also become an increasing part of China's wind power development as it continues to mature.
4) Acceleration of multi-MW-scale offshore wind turbine generator systems suitable for coastal wind farms R&D
During the "Eleventh Five-Year Plan" period, China acquired MW-scale wind turbine generator system R&D technology and realized batch production capability through various modes, providing strong support to the large-scale development of China's wind power market. By the end of the "Eleventh Five-Year Plan" period, multiple Chinese enterprises had successively and successfully developed wind turbine generator systems with a power of 3MW and higher, and had become powerful bidders for China's first group of offshore wind power concession tendering projects.
Offshore wind power is an important direction for wind power development, both inside and outside China. According to unofficial statistics, as of 2011, about 20 Chinese OEMs had announced plans for the R&D of multi-MW high-power wind turbine, with power ranges mostly concentrated between 3MW-6MW, as shown in Table 2-3. Sinovel's 6MW turbine was completed in May, 2011, and Guodian United Power Technology Company Limited's 6MW wind turbine generator system in December, 2011, signifying that China's large-scale wind turbine generator system R&D capabilities had stepped up to the next level.
The manufacturing industry is actively researching and developing multi-MW-scale wind turbine generator systems for offshore wind power, which will provide more model selections for China to develop offshore wind power equipment in the future. However, the development of offshore wind turbine generator systems will face more challenges in areas such as technology, experience, and marketability, requiring that extra attention be given to R&D organizations as early as possible.
Table 2-3 R&D advances of some Chinese enterprises in high-power offshore wind turbine generator systems
Source: "Wind Energy" magazine, December 2011 issue
5) Significant upstream/downstream integration development trend in the wind power complete-machine manufacturing industry
The precedent that wind power complete-machine manufacturers should get engaged in wind farm development has already existed overseas for a very long time. For example, Suzlon Energy Ltd. of India, and Gamesa of Spain, have all been involved in wind farm development. Gamesa had already introduced this model into China, improving its wind turbine generator system sales performance through cooperation with development enterprises such as China Guangdong Nuclear Power, and China Huadian Corporation. Among all Chinese complete-machine enterprises, Goldwind was the first to adopt this model. Through its subsidiary Beijing Tianrun, Goldwind now boasts successful projects both inside and outside China. Recently, enterprises such as Zhejiang Huayi, Baoding Tianwei, XEMC Wind Power, Changxing Wind Power, and Tiandi Wind Power, have also started to operate their own wind power projects.
Table 2-4 Descriptions of some Chinese complete-machine enterprises in making their own parts and components
Source: "Wind Energy" magazine, February 2012 issue
Another current trend is that many Chinese OEMs make their own auxiliary parts and components. Many companies such as Goldwind, Sinovel, United Power, Mingyang Wind, and Sany Electric, are all developing and producing parts and components based on their own capabilities. Among them, the group of OEMs making their own blades, generators, converters and control systems is the largest, while some other enterprises are engaged in the production of other parts and components of their own, such as gearboxes.
Although OEMs do have many advantages in integrating the wind power industry chain, they must ensure that this is kept in moderation. For R&D and the production of parts and components, it is necessary to invest a lot of capital, organize professional R&D and production teams, and buy expensive processing, production and inspection equipment. When the market is rising rapidly, industry chain integration will bring about a decrease in costs. However, in difficult times, an excessively integrated industry chain would instead become a non-performing asset, and may encumber the continued development of the enterprise.
6) Significant acceleration in the deployment of Chinese wind power enterprises in overseas markets
As China's wind power industry continues to mature and develop, Chinese enterprises continue to strengthen their strategic approach to overseas markets. Since the end of 2007, multiple Chinese enterprises have successively realized the export of wind power equipment. Although the quantity is limited, this was still a strategically important event in the process of merging into the international market.
By 2011, the pace of Chinese enterprises' overseas investment accelerated significantly. Many wind power equipment manufacturers established overseas marketing divisions in order to actively expand into the international market. According to the information published by such enterprises, in 2011, Sinovel acquired a wind turbine purchase order in Brazil and South Africa; United Power, Sany Electric, and Chongqing Haizhuang won orders in the USA; Shanghai Electric acquired an order in India; and Goldwind acquired orders in the USA, Australia, Chile, Ecuador and Ethiopia. For the achievements of other enterprises, see Table 2-5.
Table 2-5 Descriptions of participation of some Chinese enterprises in foreign markets in 2011
Source: "Wind Energy" magazine, November 2011 issue
In addition, some other enterprises such as China Development Bank, HydroChina Corporation, China Datang Corporation, and CECEP Investment Company, also actively explored overseas wind farm investment and construction projects, boosting the export of Chinese-made wind power equipment while acquiring the construction and operation rights in a variety of overseas wind power projects. As a Chinese wind power equipment inspection and certification agency, the China General Certification Center actively promoted international recognition of Chinese wind power equipment inspection and certification and has already obtained recognition by some countries in Africa, Latin America and Southeast Asia, eliminating trade barriers in export of Chinese wind power equipment.
As Chinese wind power enterprises become increasingly important in the international market, the industrial community should also work hard to study foreign economic/trade policies and patent protection knowledge to avoid conflicts in areas such as intellectual property rights, employment, and economic/trade cooperation. Fair competition should also be maintained among Chinese enterprises so that the overall interests of Chinese wind power enterprises can be protected.