Home Blog Ndrc Removes Localization Limits On Wind Power Equipment In China

Ndrc Removes Localization Limits On Wind Power Equipment In China

Release time : 2015-06-15 07:49:38
The National Development and Reform Commission (NDRC) has formally removed the localization limits that the country's wind energy projects should be equipped with a minimum 70 percent of equipment made in China. The move aims to open China's wind power market to foreign equipment providers. Experts warned that domestic wind turbines equipment manufacturers need to be alert to the challenge. They are also advised to strengthen innovation and research to sharpen competitiveness to meet the coming foreign competition. --Localization limits removed China's wind power has experienced rapid growth in the past thre e years. According to statistics from the NDRC, the country acquired some 8,000 MW of additional wind power installations in 2009, bringing the total installation up to 20,000 MW. China's wind power equipment manufacturers devoured some 55 percent of China's additional installation market share since 2007 when it has been supported by favorable government policies, such as the compulsory minimum 70 percent home-made equipment. The wind energy equipment made by the homegrown companies and Sino-foreign joint ventures were involved with 76 percent of new wind power installations in 2008. Sinovel Wind Corporation Ltd., Xinjiang Goldwind Science & Technology Co., Ltd (Goldwind Science & Technology, 002202.SZ) and Dongfang Electric Corporation Limited (Dongfang Electric, 600875.SH ), the leading Chinese home-grown wind power players, occupy some 55 percent of China's total wind power market. Government policy has been the major reason that the Chinese wind power manufacturers have achieved such growth in market share. Prior to the adoption of the policy, the foreign companies' market share was more than 55 percent in 2006. Chinese companies overtaking their foreign competitors in such a short space of time is mostly due to govern ment support, but not with their own operational efforts or technology In a widely circulated statement, which has not been publicized but has been issued to governments at all levels in the country, the NDRC said the abolition of the restrictions that favors the home-made equipment is to promote the orderly development of China's wind power i ndustry. --Complaint works The localization limit actually makes it impossible for foreign wind power equipment providers to get contracts in China's government- invested wind power projects. Faulo Fernando Soare, an official of an Indian wind power company (Suzlon), said such regulation is a kind of international trade barrier. Zou Hui, an analyst of Dongfang Securities, rebutted such an accusation, saying that China's limitation is only a temporary measure to protect the country's industry. The policy could be allowed under the rules of the World Trade Organization (WTO). The policy has allowed Chinese wind power companies a period of time to build up their strength, said Zou, adding that it is an intern ational practice on fostering the development of a new industry. Partly because of foreign wind energy companies' complaints, but mostly due to Chinese government's own plan, the policy has come to an end as expected. Putting Chinese and foreign wind power players under a uniform market could encourage Chinese companies to intensify technological innovation and enhance management so as to win in competition. In the meantime, foreign players could bring their advance technologies to China to boost the development of the country's wind power industry. More competition expected As soon as the NDRC announced the decision, Liu Yanjun, a spokes person with the Chinese Office of Denmark-based Vestas, the world's le ading wind power equipment manufacturer, expressed his appreciation fo r the decision. He said that it is important that foreign wind power companies r eceive equal treatment in China. According to him, the company's wind power equipment sold in the country has adopted 80 percent made-in-China parts; the V60-850kW wind turbine, specially designed for the Chinese market, has even had about 90 percent of its parts made in China. He said abolishing the limitation could enable foreign equipment providers to get contracts in government wind power projects, which now represent an increasingly important part of the country's wind power market. Zou Hui also agreed that the removal could attract more foreign investment into the country's wind power industry, which is still in i ts childhood in China and in great need of investment. He urged Chinese companies, especially small- and medium-sized wind power players, to seize the opportunity to learn from foreign technology and management to build up their own expertise. He forecasted that more foreign technology developers and equipm ent providers would come to explore business opportunities in China af ter the removal of limits in the industry. He advised that establishin g joint ventures with Chinese companies would be a better way for fore ign investors to break into the wind power market, which is now mostly occupied by top Chinese wind-power equipment manufacturers thanks to the localization limits of the past several years. He said the Chinese government encourages the development of large sized wind turbines with installation more than 2 MW. However, currently China's original wind power equipment manufacturers would be stretched to supply such generators. At present, Xinjiang Goldwind Science & Technology Co., Ltd (Goldwind Science & Technology, 002202.SZ) and Dongfang Electric Corporati on Limited (Dongfang Electric, 600875.SH), China's leading wind power players listed in domestic stock markets, are just at the very beginning of the research and development of such large sized wind turbines. Besides these two companies, Shanghai Electronic (601727.SH) is also engaged in the manufacture of this type of wind turbine. However, it s production line of 3.6 MW wind turbineswill not be ready until the second half of 2010. Generally speaking, Chinese equipment providers are notable to produce all parts required by a 3.6 MW wind turbine. They have to import foreign parts to complete production. Zou said some of the international wind power equipment providers have already got such technology and products ready for Chinese market. The removal of the limits would be good news for their sales. He noted that even domestic wind power giants have taken measures to face the coming competition from small- and medium-sized companies and foreign counterparts. The evidence is that the Goldwind Science & Technology lowered its contract prices for sales on January 5, 2009. This has been the sixth such gesture since the beginning of 2009, indicating that domestic majors are trying to make their offers more attractive under the pressure of cheaper deals flooding the market. Wang Liusheng, an analyst with the China Merchants Securities, hailed the removal of limits in the industry. He also welcomes more competitors into the market, saying that the current level of China's wind energy development needs an outside push to higher levels. In this sense, market forces could be the most effective way to achieve the upgrade of the wind power industry. He urged Chinese companies to face the challenge of foreign companies bravely.The National Development and Reform Commission (NDRC) has formally removed the localization limits that the country's wind energy projects should be equipped with a minimum 70 percent of equipment made in China. The move aims to open China's wind power market to foreign equipment providers. Experts warned that domestic wind turbines equipment manufacturers need to be alert to the challenge. They are also advised to strengthen innovation and research to sharpen competitiveness to meet the coming foreign competition. --Localization limits removed China's wind power has experienced rapid growth in the past thre e years. According to statistics from the NDRC, the country acquired some 8,000 MW of additional wind power installations in 2009, bringing the total installation up to 20,000 MW. China's wind power equipment manufacturers devoured some 55 percent of China's additional installation market share since 2007 when it has been supported by favorable government policies, such as the compulsory minimum 70 percent home-made equipment. The wind energy equipment made by the homegrown companies and Sino-foreign joint ventures were involved with 76 percent of new wind power installations in 2008. Sinovel Wind Corporation Ltd., Xinjiang Goldwind Science & Technology Co., Ltd (Goldwind Science & Technology, 002202.SZ) and Dongfang Electric Corporation Limited (Dongfang Electric, 600875.SH ), the leading Chinese home-grown wind power players, occupy some 55 percent of China's total wind power market. Government policy has been the major reason that the Chinese wind power manufacturers have achieved such growth in market share. Prior to the adoption of the policy, the foreign companies' market share was more than 55 percent in 2006. Chinese companies overtaking their foreign competitors in such a short space of time is mostly due to govern ment support, but not with their own operational efforts or technology In a widely circulated statement, which has not been publicized but has been issued to governments at all levels in the country, the NDRC said the abolition of the restrictions that favors the home-made equipment is to promote the orderly development of China's wind power i ndustry. --Complaint works The localization limit actually makes it impossible for foreign wind power equipment providers to get contracts in China's government- invested wind power projects. Faulo Fernando Soare, an official of an Indian wind power company (Suzlon), said such regulation is a kind of international trade barrier. Zou Hui, an analyst of Dongfang Securities, rebutted such an accusation, saying that China's limitation is only a temporary measure to protect the country's industry. The policy could be allowed under the rules of the World Trade Organization (WTO). The policy has allowed Chinese wind power companies a period of time to build up their strength, said Zou, adding that it is an intern ational practice on fostering the development of a new industry. Partly because of foreign wind energy companies' complaints, but mostly due to Chinese government's own plan, the policy has come to an end as expected. Putting Chinese and foreign wind power players under a uniform market could encourage Chinese companies to intensify technological innovation and enhance management so as to win in competition. In the meantime, foreign players could bring their advance technologies to China to boost the development of the country's wind power industry. More competition expected As soon as the NDRC announced the decision, Liu Yanjun, a spokes person with the Chinese Office of Denmark-based Vestas, the world's le ading wind power equipment manufacturer, expressed his appreciation fo r the decision. He said that it is important that foreign wind power companies r eceive equal treatment in China. According to him, the company's wind power equipment sold in the country has adopted 80 percent made-in-China parts; the V60-850kW wind turbine, specially designed for the Chinese market, has even had about 90 percent of its parts made in China. He said abolishing the limitation could enable foreign equipment providers to get contracts in government wind power projects, which now represent an increasingly important part of the country's wind power market. Zou Hui also agreed that the removal could attract more foreign investment into the country's wind power industry, which is still in i ts childhood in China and in great need of investment. He urged Chinese companies, especially small- and medium-sized wind power players, to seize the opportunity to learn from foreign technology and management to build up their own expertise. He forecasted that more foreign technology developers and equipm ent providers would come to explore business opportunities in China af ter the removal of limits in the industry. He advised that establishin g joint ventures with Chinese companies would be a better way for fore ign investors to break into the wind power market, which is now mostly occupied by top Chinese wind-power equipment manufacturers thanks to the localization limits of the past several years. He said the Chinese government encourages the development of large sized wind turbines with installation more than 2 MW. However, currently China's original wind power equipment manufacturers would be stretched to supply such generators. At present, Xinjiang Goldwind Science & Technology Co., Ltd (Goldwind Science & Technology, 002202.SZ) and Dongfang Electric Corporati on Limited (Dongfang Electric, 600875.SH), China's leading wind power players listed in domestic stock markets, are just at the very beginning of the research and development of such large sized wind turbines. Besides these two companies, Shanghai Electronic (601727.SH) is also engaged in the manufacture of this type of wind turbine. However, it s production line of 3.6 MW wind turbineswill not be ready until the second half of 2010. Generally speaking, Chinese equipment providers are notable to produce all parts required by a 3.6 MW wind turbine. They have to import foreign parts to complete production. Zou said some of the international wind power equipment providers have already got such technology and products ready for Chinese market. The removal of the limits would be good news for their sales. He noted that even domestic wind power giants have taken measures to face the coming competition from small- and medium-sized companies and foreign counterparts. The evidence is that the Goldwind Science & Technology lowered its contract prices for sales on January 5, 2009. This has been the sixth such gesture since the beginning of 2009, indicating that domestic majors are trying to make their offers more attractive under the pressure of cheaper deals flooding the market. Wang Liusheng, an analyst with the China Merchants Securities, hailed the removal of limits in the industry. He also welcomes more competitors into the market, saying that the current level of China's wind energy development needs an outside push to higher levels. In this sense, market forces could be the most effective way to achieve the upgrade of the wind power industry. He urged Chinese companies to face the challenge of foreign companies bravely.