Newsletter No.1
Release Date: 2009-02-25 00:00:00
Chapter 1
US and China race to the top of the global wind industry
February 2009 (www.greetechfocus.com ) - The United States passed Germany to become world #1 in wind power installations, and China’s total capacity doubled for the fourth year in a row, according to figures released by Global Wind Energy Council (GWEC).
Over 27 GW of new wind power generation capacity came online in 2008, 36% more than in 2007, reaching total global installations of more than 120.8 GW at the end of the year. “Wind energy is the only power generation technology that can deliver the necessary cuts in CO2 in the critical period up to 2020, when greenhouse cases must peak and begin to decline to avoid dangerous climate change,” said Steve Sawyer, Secretary General of GWEC in a statement. The 120 GW of global wind capacity will produce 260 TWh (terawatt-hour) and save 158 million tons of CO2 every year.
Wind energy is now an important player in the world’s energy markets. The global wind market for turbine installations in 2008 was worth about 36.5bn EUR or 47.5bn US$.
The leading markets in terms of new installed capacity in 2008 were the US and China. New US wind energy installations totalled 8,358 MW for a total installed capacity of 25,170 MW. The US has now officially overtaken Germany (23,902 MW) as number one in wind power. Europe and North America are running neck-to-neck, with about 8.9 GW each of new installed capacity in 2008, with Asia closely following with 8.6 GW.
The growth in Asia’s markets was also breathtaking; close to a third of all new capacity in 2008 was installed on the Asian continent. In particular, the wind energy boom is continuing in China, which once again doubled its installed capacity by adding about 6.3 GW, reaching a total of 12.2 GW.
“The Chinese wind energy market is going from strength to strength, and has once again doubled in size compared to 2007, reaching over 12 GW of total installed capacity,” said Shi Pengfei, Vice President of the Chinese Wind Energy Association (CWEA).
The outlook for the coming years is also very healthy, as in its response to the financial crisis, the Chinese government has identified the development of wind energy as one of the key economic growth areas.
“In 2009, new installed capacity is expected to nearly double again, which will be one third or more of the world’s total new installed capacity for the year,” said Li Junfeng, Secretary General of the Chinese Renewable Energy Industry Association (CREIA).
At this rate, China would be well on its way to overtake Germany and Spain to reach second place in terms of total wind power capacity in 2010. China would then have met its 2020 target of 30 GW ten years ahead of time. “Now, the supply is starting to not only satisfy domestic demand, but also meet international needs, especially for components, ”said Li Junfeng.
In 2009, Chinese companies will start to enter the UK and Japanese markets, and orders for 200 blades have already been placed. There are also ambitions for exploring the US market in the coming years.
In Europe, for the first time, wind energy was the leading technology. A total of 64,949 MW of installed wind energy capacity was operating in the EU by end 2008, 15% higher than in 2007. According to Christian Kjaer, CEO of the European Wind Energy Association(EWEA), ¡°Wind energy is an example of an intelligent investment that puts EU citizens money to work in their own economies rather than transferring it to a handful of fuel-exporting nations.
Vestas to deliver its first Chinese-made wind turbines at the end of 2009
Feb 2009 (www.greentechfocus.com) - Despite the current financial crisis, Danish wind power leader Vestas expects to continue growing in 2009 and is committed to expanding its production capacity in its principal markets. In China, where Vestas is building a new foundry, the new factory in Hohhot, Inner Mongolia, will deliver its first kW turbines in the second quarter of 2009.
The world’s N1 company in modern energy solutions, Vestas, not only posted strong results in 2008, with the biggest fourth quarter ever, but also announced it expects to continue growing this year, although at a slightly lower rate. A total revenue of EUR 6,035m in 2008 exceeded expectations by more than EUR 300m, a 24 per cent increase over 2007.
In 2008, Vestas shipped wind power systems with an aggregate capacity of 6,160 MW and handed over wind turbines with a capacity of 5,580 MW to its customers ¨C an increase of 24 per cent each in relation to 2007.
However, new market players especially from China are sharpening competition.
Vestas forecasts that the installed wind power capacity on average will experience an annual growth rate of about 20 per cent in the coming ten years mainly due to the fact that wind power neither uses water nor emit CO2 when generating electricity, while reducing the dependence on fossil fuels which are often imported. Vestas expects that wind power will account for at least 10 per cent of the world’s electricity consumption by 2020.
The company has also announced that in the coming months will launch two new turbines ¨C first a V112-3.0 MW turbine and shortly thereafter a V100-1.8 MW turbine. The first turbines will be ready for delivery in 2010.
In 2009, revenue is forecast to rise to EUR 7.2bn, and investments to amount to EUR 1.2bn at end of the year.
However, if orders do not materialise as hoped for, the investment programme will be adjusted. To date, Vestas has not experienced cancellations or postponements in its order backlog.
Vestas will produce, ship and install 10,000 MW in 2010. In Colorado, USA, Vestas blade capacity will more than double to 4,000 blades in 2010. As a parallel to the establishment of the world¡¯s largest tower factory in Colorado, Vestas is establishing its first nacelle factory in the USA ¨C also in Colorado.
At the end of 2010, Vestas in-house production capacity in the USA will amount to 3,000 MW.
Vestas has pledged to make production of wind turbines as green as its gets. By 2010 it anticipates that more than 90 per cent of its internal electricity consumption will be green, as well as half of the company’s total energy consumption. As metal extraction and processing account for about 50 per cent of the total energy consumption for turbine production, Vestas will aim to increase the turbines’ efficiency measured as MWh output per kg of wind turbine.
Novozymes and Sinopec will produce 2nd-generation bioethanol in China
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February 2009 (www.greentechfocus.com) ¨C Novozymes and Chinese partner COFCO have entered a new partnership with the major Chinese oil and energy company Sinopec to develop bioethanol from agricultural waste. Together the three partners cover the entire value chain of bioethanol production and distribution. The three partners aim to develop a commercial-scale process for producing second-generation bioethanol from one type of plant crop waste: corn stover.
According to a company statement posted in the first pan-European Green Technologies website www.greentechfocus.com, Steen Riisgaard, CEO at Novozymes, said: "With this partnership Novozymes has once again demonstrated its position as the leader in developing enzymes able to convert waste to fuel.
This puts us one step closer to being able to produce commercial quantities of bioethanol from agricultural waste. Second-generation bioethanol production in China holds vast potential for Novozymes as the technology leader, and we expect to be the first company with enzymes ready for large-scale production by 2010."
Bioethanol is currently one of few viable renewable alternatives to gasoline and is capable of replacing gasoline partially or even totally for automobiles. The transport sector is currently responsible for about 25% of global energy-related CO2 emissions, and its share is rising. Second-generation bioethanol is expected to be able to reduce greenhouse gas emissions by at least 90% compared to oil-based fuels.
Bold ambitions in China
By 2020, the number of cars in China is expected to increase significantly, which will lead to substantial growth in the demand for vehicle fuels. By 2010 China aims to more than double its bioethanol production to cover 5% of the total transport fuel used with a target of 3 million tons fuel ethanol.
At the end of 2008, Novozymes inaugurated the newest expansion of its Hongda production facility in Taicang, China, making it the largest enzyme fermentation facility in the world.
The facility, Suzhou Hongda Enzymes Co., is located in Taicang, Suzhou, Jiangsu Province, about 50 km north of Shanghai. The expanded capacity will primarily focus on products for the bioethanol industry.
According to Peder Holk Nielsen, Executive Vice President of Novozymes, The Suzhou facility is one of Novozymes¡¯ strategic manufacturing locations, and this new expansion will enable us to accomplish more.
Despite the recent downturn in the global economy, Novozymes has increased its investment in Taicang.
Europe’s top Renewable Energy Man welcomes Chinese competition
The current huge development of the wind sector, total wind turbine installations reached 20,000 MW and are forecasted to reach 80.000 to 100.000 MW in the coming years, means that there is space for everyone as more manufacturing capacity is needed, Professor Arthouros Zervos, President of the European Renewable Energy Council (EREC), told www.greentechfocus.com during an exclusive interview in December 2008.
As the growing wind power market in China encourages domestic production of wind turbines and components, and the Chinese manufacturing industry becomes increasingly mature, Prof Zervos talked about the roles that China, Europe and the United States are to play in the development of the renewable energy sector, as three powerful elements ¨C the environment, the current economic crisis and the need to secure power supplies ¨C drive the industry forward. He also dwelled on the market prospects for all players and the ways to make sure developing countries such as China and India get a fair deal in the upcoming United Nations Climate Change Conference (COP15) later this year in Copenhagen.
The EREC unites the major European industry and trade associations of RE (wind, photovoltaics (PV), biomass, solar thermal, geothermal and small hydro). Prof. Zervos is also the President of the European Wind Energy Association and, more recently, has been appointed Chairman of the Global Wind Energy Council. He has dedicated more than 20 years to renewable energies, authored two books and published more than 80 papers on the issue.
GTF.com: China is the fastest growing economy with the fastest growing energy needs. Which role do you think that China will play in the development of the Global Renewable Energy Sector, in particular in the fields of wind and solar energies?
AZ: I have been going to China for many years and I have to say that over the last 2 years I have seen great improvements and changes in their attitude towards the environment. At the beginning of this decade the environment was not one of their priorities. There has been a complete change in the mindset of policymakers.
Of course their view is different from that of the Germans, the French or the Americans but they have realized that they should work on the environment’s Pollution in China is not sustainable and has linked costs that will come afterwards such as health. Over the last few years they have realized it and that is why we see China moving towards the renewable sector.
China is quickly emerging as a major player in wind power generation. Will Europe and China will be working together or rather competing?
For me it’s a positive development that China is now not only installing capacity but also manufacturing for the wind industry. Of course, the scale would be the major difference and that is why the international companies have already established themselves in China in order to compete on the same basis. Since the international companies are present in China and they are producing there we can not enter a discussion about the costs of production. However, in terms of scale probably we will not see just one manufacturer that succeeds, as it happened in most European countries, but we will see three or four. We are experiencing a huge development in the wind sector. Last year we installed 20,000 MW and we foresee that 80.000 to 100.000 MW will be installed annually within a number of years. This means that there is space for everyone, so more manufacturing capacity is needed.
Do you expect the rise in wind turbine manufacturing capacity in China to change the dynamics of the global wind industry?
I would say partially... We have realized that Chinese manufacturers are competing with lower prices than the international manufacturers producing in China. However, we will always have to consider quality and I think that the Chinese government and the Chinese manufacturers have already realized it. Because if the Chinese manufacturers want to enter international markets they will have to compete not only in price but also in quality and this will raise the prices. I am not saying that they will not be cheaper which at the end of the day could have a positive effect in the sense that it will keep the prices lower for the sector’s What China can do in the coming years is to open the market. Africa and Latin America are markets where offering the cheapest product will play a crucial role in order to do business. China has already special relations with many of these countries which creates the ideal scenario. Most of the European manufactures do not want to enter those markets because on the one hand they are already well established in their markets and because they risk involved is higher than the benefits that they foresee.
Which role do you think that photovoltaic's (PV) will play in China?
I think that PV is already playing a major role in China and the reason why it does not yet have an internal market in China is because it is too expensive. I think the question is reducing the prices of the PV industry in order to address the internal Chinese market. If the PV has to play a role globally it has also to play a role in China. Not only manufacturing in China but installing in China and this will only happen if the prices go down.
With such huge imports from China, how do you see the development of the European PV sector?
It is much more difficult that it is for the wind industry as we already have many Chinese manufacturers¡ If the market continues to develop strongly there will be a place for everybody. If 30% are Chinese, 20% American and 50% European, the question is not the ownership but where they are manufacturing because it is there that there is investment and jobs are created. This is a critical point in terms of industrial development. The manufacturing is cheaper in China and that is why the industry has well developed there but this should be taken as a lesson for our industry because in the end this is what competition is all about.
India's Suzlon has recently acquired Belgium’s Hansen Transmission, and PUT A LINE ON GOLDWIND AND VENSYS. Do you expect Chinese turbine manufacturers to make a move towards Europe in the coming years, following Suzlon’s lead and how do you think the European industry would react? We have seen it in many other sectors so why should we not see it in ours? What could the European wind industry say about it?
They have to compete The solution for the European manufacturers is to globalize. It doesn’t make sense to produce in Europe and then having to ship the product abroad. European companies have the know-how and have been at the forefront of the wind industry for many years. Therefore the solution is to open new markets and to continue to innovate.
In the US, another important player, President Obama has pledged to promote renewable energies. How do you envision the battle between European, Indian, Chinese and American companies for the global market?
I think is already happening in the wind industry as you can find all the global players. We will see much stronger American presence that we have seen up to now. In the shorter term it is much more dangerous for the European companies than for the Chinese. Let me put it in another way. It's also a question of innovation. The Chinese are not yet up to speed in innovation and they are just copying as the Japanese and Koreans did 20years ago. The European manufacturers will have to keep innovating in the sector.
Would it be interesting to invite Chinese and American companies to participate in Upwind (the European Union-funded project, uniting over 40 companies and research institutes to design very large wind turbines)?
The Chinese are really keen to encourage technology transfer which is really understandable because they want to develop their technology. However we have to see what technology transfer means because sometimes it seems as if the Chinese have their own definition of this term. Of course you will never have Enercon, Vestas or Gamesa transferring their technology, not only to China, but elsewhere. What is necessary is to provide the framework so that other companies will be able to produce similar products¡The companies that are participating in this project do not want to share their technology with other companies of the sector but they are willing to collaborate together and share their knowledge. Upwind is trying to look forward into designing the machine of the future and the elements that need to be designed. For sure it could be part of a technology transfer between China and the EU.
The next big event in the renewable energy agenda will be will be the United Nations Conference on Climate Change in Copenhagen (COP15) this december. What will be the role of China at the negotiating table?
The expectations are really big and I think that they have become more concrete after the election of President Obama in the US. First of all, the most critical country is the US¡ Now China is also playing an important role so how can you reach and agreement without considering two of the major players? Hopefully they will collaborate but it will be difficult because their approach is different to ours, the European. Therefore, we need to find a balance, but things look positive. Firstly, because President Obama stated that renewable energy will be a priority despite the financial crisis and, secondly, because the Chinese Government has realized that renewable energy is a priority but, of course as they stated, they consider that the rules for the developing world can not be applied to them, which I have to say that I understand; China and India have not been the countries that have contributed significantly to the amount of CO2 that we have in the atmosphere today, but the US and Europe. So, there has to be a difference in the approach and, on the other hand, also and engagement from China’s That we should have a different approach for China and India it’s clear. Developed countries have to make a much better and bigger effort than China and India, but China and India need to be engaged because otherwise it is going to be an impaired agreement.
You have been in the sector for a really long time and you are really passionate about it. What is the one thing that you would like to see happening in the next 10 years?
I would like to see a good agreement in Copenhagen. I really think that it is crucial for the further development of the sector and we can not wait because things are going worst and worst in terms of climate. Therefore, I think that this agreement at a global level as well as the European directive will have a positive impact in the global development.