BEIJING May 13 China's drive into wind power
has been a boon to the young industry, but foreign turbine
makers say China has stacked the odds so firmly against them
that its own clean energy goals could be in jeopardy.
China's wind power generation has doubled in the last year
and is expected to surpass nuclear within a decade as China
seeks to wean itself off cheap but dirty coal. [ID:nPEK336151]
But Beijing is making it impossible for foreigners to
compete for "national-level concession projects" aimed at
lifting wind's share of the overall energy mix, said Paulo
Fernando Soares, China chief executive of India's Suzlon Energy
Those projects, usually snapped up by domestic turbine
producers like Shenzhen-listed Goldwind (002202.SZ), will make
up about 65 percent of China's expanded wind-power market,
leaving foreign firms like Suzlon, Spain's Gamesa (GAM.MC) and
Denmark's Vestas (VWS.CO) to compete for the remaining 35
"I cannot say it's deliberate, but the facts show that no
turbine suppliers from international companies established here
have been selected," Soares told Reuters on the sidelines of a
Euromoney renewable energy forum in Beijing.
"Obviously, the government can argue that the prices of
international companies are too high compared to local
companies. But nowhere in the world are projects evaluated on a
yuan per kilowatt basis, because that takes away your
performance, your quality, so nobody does it and no banker does
"But in China they use the argument that turbine prices are
coming down, but they forget to mention that there are issues
with locally made turbines regarding performance, maintenance."
The government seemed more concerned with meeting capacity
targets than ensuring the actual flow of power, he said, with
the result that some turbines were installed in a way that
would make it impossible to generate the maximum theoretical
An executive at another foreign turbine manufacturer said
Chinese turbines were far below international standards.
"Domestic producers are in a bubble and they're not forced
to compete or innovate and they can't compete overseas right
Goldwind Chief Financial Officer Yu Danke rejected Soares'
remarks and said there was plenty of room for foreign
manufacturers in the Chinese wind power market.
"The policies are designed to level the playing field. My
personal view is the policies are affirmative action," he said.
"The customer has various needs -- lower end, higher end. Some
focus on costs, some on service. You have to fit your products
to customer needs."
The foreign executive, who asked that his company not be
named because of the sensitivity of the issue, said overseas
firms found it hard to keep up with all the regulatory changes.
Frustrated by the moving goalposts, many were starting to
reconsider their strategy, he said.
"Whenever foreign companies meet the conditions set by the
state, the conditions are raised again," he said. "If we knew
in 2006 what we know now in 2009, we would not have agreed to
such big expansion plans."
Other rules that appear to work against foreign firms
include a ban on turbines with capacity of less than 1
"That decision was crazy. No other country has ever done
that," he said.
"I fail to understand the benefit of this restriction, how
a (bigger) turbine is better than one that is proven, working
in tough conditions in the U.S. and Europe and which is fully
certified ... I fail to understand what benefit this
restrictive policy brings to the industry."
But it does help domestic suppliers to compete.
Foreign-made 850 KW turbines are 10-15 percent pricier than
Chinese versions, but the gap jumps to about 30 percent for
turbines of 2 MW.
China also insists 70 percent of the components for every
turbine installed must come from China. To meet that goal,
Suzlon has a plant in Tianjin and Vestas created its own
Chinese supply chain, although it has said it would have used
Chinese suppliers anyway. [ID:nPEK44264]
Despite the frustrations, there is only one China.
"There are things we don't like but the market is too
significant," said Soares. "We may have lost market share but
we have increased our market participation in terms of absolute
numbers. We are happy with what we have got."
(Editing by Ian Geoghegan)