China’s No. 2 turbine maker secures $5.5B from state bank

Source: Daniel Cusick, E&E reporter  • E&E • Posted: Thursday, February 2, 2012

U.S. development ambitions for Chinese turbine manufacturer XinJiang Goldwind received a major boost yesterday as the company signed a new financing agreement with China Development Bank Corp., providing an estimated 35 billion yuan ($5.5 billion) in new capital for 2012.

The deal, announced in a statement to the Hong King stock exchange, will allow the company to solidify its No. 2 standing in the Chinese turbine market behind Sinovel Wind Group Co., but will also help propel its recent expansion into the U.S. wind power market.

“They’re very active globally, and this basically shows they’re gearing up not just for the U.S. markets, but to compete in all of the major emerging markets,” said Amy Grace, head of North American wind analysis for Bloomberg New Energy Finance in New York.

Earlier this month, Goldwind, which operates a U.S. office in Chicago, said it had purchased from Volkswind USA two 10-megawatt wind farms in central Montana, where it will install 12 of its advanced permanent-magnet direct-drive turbines. The turbines are attractive to developers because they don’t require a gearbox, reducing their maintenance requirements and improving their efficiency.

“Goldwind’s gearless technology is relatively unique in the U.S. market; its megawatt size, efficiency and reliability perfectly matches the requirements of the wind farm,” said Jeffrey Wagner, president of Volkswind USA, in a statement announcing the deal.

The Shawmut, Mont., wind project, called MusselShell, represents Goldwing’s third U.S. wind farm acquisition. The company also owns a small wind farm in Pipestone, Minn., and in December 2010 purchased the 109.5 MW Shady Oaks project in Lee County, Ill. Goldwind turbines are also in use or on order for projects in Iowa, Massachusetts, Ohio and Rhode Island, according to company officials.

Volkswind had already acquired state permits to build the MusselShell project and had signed power purchase and transmission agreements with NorthWestern Energy, which provides electricity to roughly 665,000 customers in Montana, South Dakota and Nebraska.

Turbine makers fear shrinking market

Goldwind’s growing foothold in the United States is unlikely to be welcomed by other turbine manufacturers, which are girding for dwindling sales as U.S. government subsidies for wind power development near expiration without congressional action.

Vestas Wind Systems of Denmark, which holds the largest market share among U.S. turbine manufacturers, said earlier this month that more than half of its 3,000-person U.S. workforce could be laid off this year if Congress does not renew the renewable energy production tax credit (ClimateWire, Jan. 13).

Bloomberg’s Grace noted that the U.S. turbine market has become increasingly crowded, with major players like Vestas, General Electric Co. and Siemens AG of Germany being joined by up-and-coming players like China’s Goldwing and Spain’s Gamesa Technologica and Acciona.

“The U.S. really doesn’t need any more turbine manufacturers,” Grace said. “But Goldwind is going in with sharp elbows, and they will find their place in the market.”

Goldwind’s 35 billion-yuan agreement with China Development Bank is the second major investment that Chinese state-run banks have made in the firm since November, when Goldwind received a 10 billion-yuan credit facility from Industrial & Commercial Bank of China Ltd. In 2010, China Development Bank offered a $6 billion credit facility to Goldwind to help foster international expansion, according to Bloomberg.

Rising scrutiny of imports

The expansion of China’s renewable energy sector — in both wind and solar component manufacturing — has drawn increased scrutiny from U.S. trade officials, who are under pressure to investigate anti-competitive practices of Chinese energy firms and the Beijing government, which has provided major subsidies for its renewable energy sector over the past several years.

Last week, President Obama announced during his State of the Union address that he would create a Trade Enforcement Unit within the Commerce Department to investigate with unfair trade practices, and the president specifically singled out China as a likely target of those probes (Greenwire, Jan. 25).

U.S. firms have also witnessed increasingly frosty relations with their Chinese counterparts as accusations of unfair trade practices proliferate.

Four U.S. wind tower manufacturers last month brought anti-dumping and countervailing duty complaints against China and Vietnam before the International Trade Commission and the Commerce Department. The firms charge that China is selling utility-scale turbine towers at 64 percent of their value, while Vietnam is selling its towers at 59 percent of their value (Greenwire, Jan. 6).

Meanwhile, Devens, Mass.-based American Superconductor Corp. is accusing China’s Sinovel Wind Group, the world’s second-largest wind turbine maker, of stealing valuable trade secrets, copying protected software used for controlling turbines and canceling purchase agreements with the U.S. technology company (ClimateWire, Jan. 27).