Vestas Bulks Up in China

Danish Firm Opens Turbine-Making Site for the Wind Market

By SHAI OSTER
BEIJING -- Vestas Wind Systems AS of Denmark, aiming to capture more of China's growing wind-energy market, has opened a facility in Inner Mongolia to build a turbine with bigger blades tailored for Chinese conditions.
The Danish company's facility will produce 800 turbines a year when it reaches full capacity by year end, said Lars Andersen, president of Vestas China operations.
Vestas is ramping up production in China at a time Beijing is promoting alternative energy to deal with worsening pollution. China's strong economic growth has been mostly fueled by coal. While coal will long remain the dominant source of energy, the pace of growth in the wind sector has surprised even industry insiders.
Propelled by the government mandates for clean energy, China's wind-power sector is on track to generate 100 gigawatts by 2020, more than triple the original target, Fang Junshi, an official with the National Energy Administration, said Monday.
At present, China gets only a small part of its 700 gigawatts of power from wind -- about 12.5 gigawatts -- but even that is higher than an earlier goal of reaching 10 gigawatts only in 2012.
Mr. Fang said that by 2020, China is expected to have a total of 1,400 to 1,500 gigawatts of power-generation capacity. At that time, he said, coal-fired power generation capacity will be around 900 to 1,000 gigawatts.
Chinese manufacturers have roughly three-quarters of the domestic wind-turbine market, but foreign players are trying to break in by capitalizing on better technology. Last year, Vestas had about 10% market- share in China, the company's second-biggest market after the U.S.
Vestas, which entered China in 2005 with 45 employees, expects to have more than 3,000 by year end. The company has invested $550 million in the country so far. "We are very aggressive in our expansion in China," Mr. Andersen said.
Despite the government's commitment to expanding wind power at a rate that outpaces planned growth in nuclear power, there are still problems in how the wind farms are managed and connected to the nation's larger electricity grid. China's best wind conditions are remote parts of Inner Mongolia, in China's arid north, not far from some of its richest coal mines, but thousands of kilometers away from the power-hungry coastal centers such as Shanghai and Shenzhen.
That has left some wind farms basically stranded. But the country's giant stimulus package includes upgrades to the national electricity grid that could help alleviate those problems. Other wind-power developers complain that China's system of tariff bidding, which gives preference to the lowest bidder rather than the cleanest technology, makes wind-power uneconomical. Mr. Andersen said that system can work when developers know the long-term cost of their energy output.
The new Vestas turbine, the V60, is the first one developed for a particular market, Inner Mongolia, and was designed to be easily packed into trucks for hauling over rough roads, and to operate in low-wind conditions, Mr. Andersen said.
World-wide, Vestas in 2007 produced turbines with a total capacity of 5,000 megawatts. It plans to double its capacity by 2010. In China last year, Vestas sold turbines that can generate 600 megawatts of power.—Wan Xu contributed to this article.
Write to Shai Oster at shai.oster@wsj.com