Developers of wind-power projects in China are increasing installations of larger capacity turbines to reduce costs in the world’s biggest market, the chief executive officer of China Ming Yang Wind Power Group Ltd. (MY) said.
More than 40 percent of new installations in China in 2012 will comprise turbines with capacities above 2 megawatts, Zhang Chuanwei, the CEO of the company that is China’s only maker of the machines with shares traded in the U.S., said in a Feb. 15 telephone interview. The market is dominated by 1.5-megawatt turbines, according to Bloomberg New Energy Finance, which estimated that the larger machines accounted for less than 10 percent of installations last year.
“Developers have started leaning toward buying 2.5- or 3- megawatt turbines to enable them to use fewer machines to save on land costs,” said Zhang, whose company is the country’s fourth-biggest producer of the machines.
Growth in China’s wind industry is slowing after the government tightened approval for wind projects on concern over the ability of grids to carry electricity load. Turbine-makers including Ming Yang and the three biggest, Sinovel Wind Group Co. (601558), Xinjiang Goldwind Science & Technology Co. and Guodian United Power Technology Co., produce machines that have larger capacities than the standard 1.5 megawatts.
China led the world in wind capacity last year, installing 18 gigawatts of wind farms, a 9 percent increase from the previous year, according to the Global Wind Energy Council. Zhang expects the country to add 18 to 20 gigawatts this year.
“The 1.5-megawatt turbines will continue its dominance this year,” said Demi Zhu, a Beijing-based analyst at New Energy Finance. She only expects larger turbines to supply a majority of the market after 2013.
Zhang expects prices of wind turbines to rebound this year. The average price of Chinese turbines for onshore projects declined 3.8 percent to about 3,853 yuan ($612) a kilowatt in the fourth quarter from a year earlier, according to New Energy Finance data.
Producers can’t afford to only compete by offering lowest prices, as developers also “care about the durability of the turbines, the track record of suppliers and their after-sale services,” Zhang said.
China in 2011 stopped allowing local governments to approve the construction of new turbine-production plants to control the crowded market for smaller turbines on fears overcapacity could damage the industry.
Zhongshan-based Ming Yang, whose shares have gained 14 percent this year in New York trading, won orders in a tender in October to supply 2.5- or-3-megawatt turbines for projects in Jiuquan city in China’s northwestern province of Gansu, Zhang said, without elaborating.
Ming Yang is “interested in expanding our presence in emerging wind markets in Mongolia, South Africa, India, South Asia and Eastern Europe,” Zhang said. The company on Feb. 7 agreed to supply turbines to 125 megawatts of wind farms in Bulgaria.
To contact Bloomberg News staff for this story: Feifei Shen in Beijing at Fshen11@bloomberg.net
To contact the editor responsible for this story: Reed Landberg at firstname.lastname@example.org.