Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors. China's Wind Power Equipment Industry Received a Huge Order of 5.25 Million KW - On April 20th, 2009, Gold Wind won the bid of wind power concession projects of Inner Mongolia and Hebei, totaling 775,500 KW. The 517 bid machines are all GW77-1500 and the total value reaches RMB 4.187 billion (611 million USD). The delivery period spans from 2009 to 2012. XEMC won the bid of wind power concession projects of Fengning Wansheng wind power plant on Hebei Chengde wind power base, altogether 150,000 KW totaling RMB 797 million (116.3 million USD). In addition, XEMC also won the bid of wind power projects of Weichang Yudaokou wind power plant on Hebei Chengde wind power base, altogether 200,000 KW totaling RMB 796 million (116.2 million USD).


This wind power project of 5.25 million KW involves 25 wind power plants. Over 20 wind power entire-machine enterprises participate in bidding. Compared with the 3.8 million KW project bid of Gansu Jiuquan, the number of enterprises which have won the bids shows a slight increase. In the project of Gansu Jiuquan, besides Gold Wind, Sinovel and DEC, CSIC (Chongqing) Haizhuang also won a small bid. It is estimated that about 5 enterprises will win the bids this time and the share made up by the additional enterprises except the three tycoons will see an apparent increment. At present, after developing technologies and establishing productivity at early stage, altogether 70 plus wind power entire-machine enterprises have owned capability of bulk supply. Therefore, they all make great efforts to win the huge bid this time. In addition, what’s worth noticing is that Guodian United Power Technology Company Ltd, a subsidiary of China Guodian Corporation, also participates in bidding for four wind power plants, some of which belong to the China Longyuan Electric Power Group Corporation, another subsidiary of China Guodian Corporation. In this way, the combination of wind power operator and wind power supplier might be a trend of China’s domestic wind power market in future.


In this bidding, the price of wind power machines witnesses an apparent drop. The price of GW77-1500 bid won by Gold Wind in June 2008 stood at RMB 6398/KW that time and slipped to RMB 5399/KW this time. Although the prices of raw materials and spare parts affect the prices of bid machines, another factor of fierce competition within China’s wind power equipment industry can not be ignored as well. It is predicted that the total output of Gold Wind, Sinovel and DEC in 2009 will reach 7 million KW. Even if the demand will perhaps jump to 120 million KW in 2020, China’s wind power industry will represent an inevitable trend of surplus. In general, wind power entire-machine industry will see an increasingly apparent decline in gross profits in future. Certainly, there are differences between enterprises. Some will be kicked out and some excellent ones will create more profits than the average amount of the whole industry.


The increased installed capacity of China’s wind power machines rose by 89 percent to 6.25 million KW in 2008 and the amount of this bid reached 5.25 million KW. It is predicted that China’s demand for wind power will see an annual growth rate of 30 percent to 50 percent, for China is actively planning to build six 10-million-KW wind power bases.


Source: China Research and Intelligence

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Eileen Gu