Germany - Nordex establishing joint venture in China

The Nordex Group has today signed a joint venture contract for the local production of megawatt-class wind turbines in China. The company’s partners are the regional utility Ningxia Electric Power Group (40%) and the Ningxia Tianjing Electric Energy Development Group (10%), which operates power stations and is engaged in the construction sector. Both companies are owners of the “Helanshan” wind farm, which with an installed capacity of 110 MW is the largest Chinese project of this type and is to undergo massive extensions over the next few years.

Under the turbine producer’s operative management, Nordex Wind Power Equipment Manufacturing Co. Ltd. will be assembling wind turbines with a capacity of 1.5 megawatts in the province of Ningxia. The joint venture has already received its first major order of 200 MW to be constructed until 2009. The partners will be completing the first 26 turbines for China in the coming year. A number of these turbines will still be produced in Germany to provide the engineers from China with a training opportunity at main factory.

After the necessary production quality is secured local manufacturing content will be raised step by step. Since the end of 2005, suppliers responding to invitations for tenders in China must guarantee local manufacturing content of at least 70 percent. “We want to achieve this level swiftly,” explains Thomas Richterich, CEO at Nordex AG. This will be facilitated by further wind farm projects being planned by the partners with a volume of up to 600 MW. If this business volume is achieved in the medium term, the joint venture will be able to extend the production facility to accommodate an annual output of 200 turbines.

Nordex can already look back on years of extensive experience in operating a turbine production facility in China. In 1998 it established a joint venture with Xi’an Aero Engine for the assembly of 600 kW turbines. In response to greater demand in China for large-scale turbines, Nordex has realigned its local production activities. As a result, it started up a new rotor blade production facility in Baoding in spring 2005, where it is producing components for the N60/1,300 kW series.

Nordex Wind Power Equipment Manufacturing has plans going beyond the project development activities with its partners. The Chinese market potentially offers high general growth rates for producers of wind turbines. Thus, the Chinese government has invited tenders for projects entailing a total of some 3,000 MW since 2003. Contracts for roughly one third of these projects have already been awarded. As well as this, at the end of February 2005 the Chinese People’s Congress passed a law to support the use of renewable energies, which will be taking force on January 1, 2006. Although the tariff for electricity produced from wind power have not been fixed, the remuneration period is expected to come to a sufficient 30,000 full-load hours (approx. 15 years). In this way, Peking wants to increase installed capacity in China from a current about 1,000 MW to 30,000 MW by 2020.