Eager to capture China's growing wind-energy market, Danish wind-turbine maker Vestas Wind Systems A/S (VWDRY) is ramping up production and has just opened a new facility in Inner Mongolia to build a turbine with bigger blades tailored for local conditions.
The facility will produce 800 turbines a year when it reaches full capacity by year-end, Lars Andersen, president of Vestas' China operations, said in an interview.
Swept forward by government mandates for clean energy, China's wind power sector is on track to reach a generating capacity of 100 gigawatts by 2020, more than triple the original target, Fang Junshi, an official with the National Energy Administration, said Monday.
Confronting worsening pollution as a byproduct of soaring economic growth that has been mostly fueled by coal, Beijing has been pushing to increase energy output from alternative sources. While coal will long remain the dominant source in the energy mix, the pace of growth in the wind sector has taken even industry insiders by surprise.
China currently 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 10 gigawatts by 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, of which coal-fired plants will account for around 900 to 1,000 gigawatts.
Chinese manufacturers currently have a grip on roughly three-quarters of the domestic wind turbine market, but foreign players such as Vestas are trying to break in, capitalizing on promises of higher returns in the long run based on claims of greater efficiency and reliability from better technology. Vestas had a market share of about 10% last year in China, the company's second-largest market.
Vestas, which entered China in 2005 with 45 employees, expects to have more than 3,000 employees by year-end. The company has invested $550 million since 2005 in factories and related facilities.
"We are very aggressive in our expansion in China," Mr. Andersen said.
Still, despite the government's commitment to expanding wind power at a rate that outpaces planned growth in nuclear power, there are still problems with management of the wind farms and connecting them to the national electricity grid.
China's best wind conditions are located in remote parts of Inner Mongolia in China's arid north, not far from some of its richest coal mines, but thousands of miles away from power-hungry coastal centers such as Shanghai and Shenzhen.
That has left some wind farms essentially stranded, but the country's giant stimulus package includes upgrades to the national 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. However, Mr. Andersen said the system can work if developers know the long-term cost of their energy output.
The new Vestas turbine, the V60, is the first one developed especially for a particular market, Inner Mongolia, and was designed to be easily packed into trucks to be hauled over rough roads, and to operate in low-wind conditions, Mr. Andersen said.
In 2007, Vestas produced turbines with a total capacity of 5,000 megawatts. It plans to double its capacity by 2010. Vestas sold 600 megawatts worth of turbines in China last year.