GE Wind Newsletter Article –September 23, 2003

Wind Power takes off in Asia

By Jack Urso

Power-Gen Asia takes place this year in Ho Chi Minh City, Vietnam, September 23 to 25. Renewable energy is a growing market in the region and Alan Sides, General Manager for GE Wind Energy in Asia, plans to grow his business right along with it. Sides represents GEWE throughout the entire Asian region including China, Japan, Taiwan, Philippines, Thailand, Indonesia, Malaysia, Singapore, Australia as well as India.

Strongest Markets in Japan, Australia, India

Over the next five years Sides reports that GEWE will continue to see strong growth in Japan and Australia. China will also see some growth, although not to the same extent as in Japan and Australia.

"We're beginning to work in favor of renewables in the Philippines and Taiwan," said Sides. "We are also beginning to have discussions in Indonesia and Thailand as well."

Sides observed that when discussing the "Asian region" it is important to break it down into sub-regions. There is a tremendous amount of variance throughout the area. While Japan has a requirement that by 2010 at least 1.35-percent of power generated will come from renewable energy sources, others are just beginning to discuss how feasible wind energy development may be for their country.

"The strongest countries are Japan, Australia and India because they have very developed wind subsidies in place that drive the business," notes Sides. "Then you have other places like Taiwan, the Philippines and China who are just trying to figure out what it will take to develop wind energy, and we have Indonesia and Thailand, which have absolutely no infrastructure to support wind power development."

India, although on the periphery of the Asia region, promises to be a steady market, if not with unique challenges of its own.

"Some people might not realize this, but India is the fifth or sixth largest market worldwide for wind energy, so we expect to build about 300-350 MW a year of wind installed in India as well," commented Sides. "The challenge in India is to localize the product. An imported machine gets hit between something like 30 to 50-percent import duties, so it's very difficult to compete in India with an imported machine, which is what we do today."

China Brings Wind Power to Inner Mongolia

Compared to the United States, the actual number of GE Wind turbines throughout Asia is relatively small. GE Wind reports only about 75 of its wind turbines are in operation in the Asian market, while that approximately two thousand are installed in the US. The potential for growth, however, makes the entire region ripe for a "windfall" in future development. One good example of this is GEWE's recent order to supply 10 of its 1.5-megawatt wind turbines for the Huitengxile Wind Power Plant in Inner Mongolia.

"There's a tremendous amount of wind energy in Inner Mongolia," said Sides. "There's not a lot of people around, so there's a lot of land and good wind regimes. The wind developer we work with in China is an agency of government, as are most agencies in China, making it relatively easy to secure the needed permits to develop the site."

Since Inner Mongolia gets very cold in the wintertime, GEWE installed special packages on the wind turbines, appropriately dubbed, "Cold Weather Extreme," This package enables a wind turbine to operate in temperatures down to -30-degrees centigrade and to sustain itself down to -40 degrees centigrade.

China recently announced wind turbine projects totaling 2,100 megawatts slated for completion over the next two years. Progress has been set back a little due to the SARS epidemic that stalled a number of projects, but China's interest in wind power is, according to Sides, "growing and intensifying."

Local Production a Key Strategy

Localizing the production and assembly of wind turbine components is part of the long-term strategy for doing business in Asia, if not because of high import duties, then because of laws which require a certain amount of local content to comprise the turbine components. China has a number of state-government sponsored projects that require 50-percent local Chinese content to even compete for contracts. The result is that wind turbine providers are forced to source-out major components such as, blades, towers, generators, converters, hubs, bedplates and nacelles.

"In addition to meeting the 50-percent content rule in China, most of these major items are quite large and bulky," Sides reported. "It doesn't make a lot of sense to buy those items in China, ship them to Germany to be assembled and then ship them back to China. So, we're looking at moving into local assembly and considering a possible location."

GE's China Technical Center (CTC) in Shanghai is a key component of GEWE's strategy to further innovation in the Asian region. At the CTC, a team of GE Wind engineers work on new product development, primarily on the improved 900 kW Class One and Class Two turbines as well as services related root-cause analysis services issues.

"It’s a small team, but we're looking forward to some really great things from them in 2004," said Sides.

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