China already dominates global sales of solar panels.  Now China is going after the wind turbine market Bloomberg reports that China’s windmill makers, armed with $15.5 billion in state credit, are going after the $70 billion wind turbine market, which is currently dominated by GE and Vestas.

Sinovel Wind Group Co. and Xinjiang Goldwind Science & Technology Co. won their first major foreign orders in the past year and now they plan to set up plants abroad, including in the U.S.  Indeed, China could become the market leader by as early as 2015.  Next year the Chinese are forecast to have 11% of global sales.

That can erode sales and margins for suppliers such as GE and Vestas that already face cutbacks in European subsidies and a 22 percent plunge in turbine prices from their 2008 peak.

“The Chinese dragon is coming,” said Jose Antunes Sobrinho, chief executive officer of Brazil’s Desenvix SA, a wind developer that ordered 23 Sinovel turbines in September.

The deal, South America’s first contract with a Chinese supplier, “is going to be a stepping stone for them” to showcase machines that are about 10 percent cheaper than those sold by competitors in Brazil such as GE and Germany’s Siemens AG, he said by telephone on Oct. 3.

Bloomberg suggests that switching to Chinese suppliers could lower the cost of wind power enough for it to compete with coal and natural gas in the U.S. and Europe when the wind is blowing.  This might threaten fossil fuel-based business models at utilities such as Germany’s RWE AG and Centrica Plc of the U.K.

More and more Western turbine developers are sourcing their parts in China and India, which are often 15% cheaper than elsewhere.

Gamesa Corp Tecnologica SA, Spain’s biggest turbine maker, didn’t sell a single turbine in its home market last quarter and is ramping up manufacturing capacity in China, Brazil and India, where it expects to source as much as 70 percent of turbine components locally by 2012, according to CEO Jorge Calvet.

Western manufacturers worried about price competition need only look at solar panels. In three years, the Chinese went from 30 percent market share to more than half by improving quality and slashing prices, New Energy Finance data shows.

Meanwhile other larger manufacturers like Vestas, GE and Siemens are either producing in China or entering into joint ventures with Chinese companies for their parts and assembly in an effort to reduce their costs.

With demand slowing in Europe and the US, the Chinese companies are focussing on Australia, India and Brazil where business is booming.

Tags: , ,

1 Comment on China Going After Wind Turbine Market

  1. Elroy Jetson says:

    More turbulence for the wind turbine market. And in the face of declining subsidies when does wind fall flat on its face? Eventually governments will have to return to policies that reflect rational economic calculation, and not the whims and fancies of political leaders trying to buy votes and create legacy projects.