The initial bottleneck

According to statistics of CEIC (Central Asian Economic Macroeconomic Database), the installed capacity of renewable energy in China has grown rapidly in recent years, with a compound annual growth rate of 60.4% in 2001-2009. Among them, as of December 31, 2009, wind power accounted for more than 99% of the cumulative installed capacity of renewable energy in China. In 2009, the newly installed capacity of wind power was 13.8GW, which was the highest rate in the world for more than 100% for six consecutive years. However, the China Wind Energy Association predicts that the cumulative installed capacity of wind power in China in 2020 will be 247.8 GW, which is nearly 10 times that of 2009, but the compound annual growth rate is only 22.8%, and the growth rate will obviously slow down.

David believes that the issue of wind power internet access has limited downstream demand, while the upstream competition has become increasingly fierce, and the wind power industry is not as beautiful as it was then. Since the location of wind farms is mainly based on wind resources, many wind farms are far away from big cities and it is difficult to transmit power to major markets with higher power demand. In order to transport electric energy to high-demand areas, further construction of power grid facilities is needed. However, grid facilities are expensive and geographically very large. The lack of power grid facilities may hinder or delay the construction of new construction projects or limit the size of new wind farms, thereby limiting or influencing the development of wind farms. According to the timetable announced by the State Grid, China's smart grid is mainly in the R&D phase during 2009-2010, and it is an investment phase in 2011-2015, and will be upgraded in 2016-2020. According to the data released by the China Electric Power Enterprise Association, the total capacity of new wind turbines in China was 8.97 million kilowatts in 2009, and cumulative grid-connected capacity reached 16.13 million kilowatts, which means that 76% of all wind turbines in China have been connected to the grid. .

At the same time, in September 2009, the State Council issued the "Circular on Suppressing Some Industries' Overcapacity and Duplicate Construction and Guiding the Healthy Development of Industries". Wind Power Equipment and Steel, Cement, Flat Glass, Coal Chemicals and Polysilicon Become the object of production regulation. The development of the wind power industry has been subject to policy restrictions to some extent.

On the other hand, since the introduction of a series of wind power encouragement policies in 2005, the Chinese wind power industry has been developing rapidly. Compared with when China's wind turbine market was dominated by 89 Chinese and international suppliers in 2004, wind power now entering the Chinese market There are more than 80 generator manufacturers. Moreover, the industry's advantages continue to be concentrated in leading companies. As of the end of 2009, from the perspective of cumulative installed capacity, the top 10 companies in the market accounted for 85.3% of the country's cumulative market share (Figure 1). In 2009, a total of 13.8382 million kilowatts of wind power installed capacity in the country, the first three companies accounted for 59.8%, the top ten companies accounted for 84.9%.

The increase in competitors and overcapacity have brought pressure to the company in terms of product pricing and order competition. Since 2008, the market price of wind turbines in China has been declining. Since 2009, the market price of wind turbines has further declined rapidly. By the end of 2009, the market price of domestic wind turbines has dropped from around RMB 6,200 per kilowatt in early 2008 to less than RMB 5,000 per kilowatt, a drop of up to 20%. For the reason that the market price of domestic wind turbines has drastically decreased, the industry has given a variety of answers, such as increasing the degree of localization, lowering raw material prices, lowering transportation costs, and increasing economies of scale.

Move to wind farm

With the intensified competition in the domestic machine manufacturing market, some complete machine manufacturers have opened up new business growth points and opened up new sales models based on their own advantages and characteristics. Taking Goldwind as an example, in addition to continuing the model of sales through orders, based on the idea of ​​a foreign project general contract (EPC) contract, it began to explore the development of wind farms as a new business growth point.

Since the development of wind farms requires specialized technologies, coupled with long project development cycles and the risk of development failure, many large-scale power generation companies and wind farm investors in China hope to directly acquire wind farms that are operating in a mature manner. The wind farm sales model includes all transfer or partial transfer of the equity interests of the project company.

In 2007, Goldwind Technology registered and established Beijing Tianrun Xinneng Investment Co., Ltd., which is responsible for the development of wind farms and purchases wind power generators of Goldwind Technologies. After the construction of the wind farm was completed, the investment income was realized through the sale of equity, and at the same time, the sale of wind turbines was also stimulated. In addition, some complete machine manufacturers such as Ningxia Yinxing and Shandong Changxing also started to invest in the development of wind farms to open up markets for their own wind turbines.

During the three years from 2007 to 2009, the revenue of Goldwind Wind Power's investment development and sales business segment started from scratch, then increased to 88.5 million yuan and 103.7 million yuan, accounting for 0%, 1.4% and 1.0% of total revenue, respectively. . Goldwind believes that the investment, development and sales of wind farms is a potential source of new profit growth, and can generate synergies with R&D, manufacturing and sales of wind turbines.

Although the whole machine manufacturers have jumped into the wind airport business, but the current scale is very small, there are also analysts expressed concern about the future prospects. David said that wind power installation companies can develop wind farms to digest unsold equipment; however, the return rate of equipment industry is 15%, while the return rate of wind farms is only about 11% to 12%. Equipment manufacturers develop wind farms from The industry with high returns turned to industries with low returns; Goldwind entered the wind farm industry at the time when it was under the general situation of “advancement by the country”.

Product activation service

Judging from the experience of overseas power companies, after a certain degree of product development, expanding services is a natural choice. ABB and Alstom, the international power leaders, accounted for 15.6% and 26.4% of their respective revenues for services in 2009 (Figure 2). ABB, the power and automation technology group, has entered a period of high growth since 2001. With the increase in equipment, products, and solutions, the demand for their own equipment is also increasing. In addition to providing value-added services for self-produced equipment, ABB also provides independent service businesses in its own professional fields, such as energy-saving and emission reduction in the industrial sector.

CLSA's research report pointed out that the gross profit margins of products and services are similar, but China's labor costs are low, so the gross profit of services may be higher. In view of this, Goldwind plans to improve existing services and develop new value-added services, such as parts maintenance services and consulting services. In addition, it will further localize its services and ensure that customers' needs are met as quickly as possible. From 2007 to 2009, the revenue generated by the Goldwind Wind Power Services segment was 9.8 million yuan, 29.5 million yuan and 215.4 million yuan, respectively, which accounted for 0.3%, 0.4% and 2.0% of the total revenue. Although the income from services provided by domestic manufacturers is still minimal, it is on the rise.

In this regard, David believes that China's wind power equipment manufacturers have not yet reached the stage of competition services. After five years or more, the development of services will be the general trend. However, there are also analysts with different opinions. An industry analyst with a large-scale integrated brokerage firm in China pointed out that China's national conditions are different from those of foreign countries, and the market space for services is relatively small. Therefore, small downstream companies will outsource their services, and large-scale enterprises themselves will serve themselves. Does not outsource the service.