REpower signs Joint Venture contract in China

Last weekend, REpower Systems AG (Prime Standard, WKN 617703) and the Chinese steel- and machinery building company North Heavy Industry Corporation (NHIC), as well as the British wind farm project developer Honiton Energy Ltd, signed a contract for the establishment of the joint venture “REpower North (China) Ltd“ in the city Baotou, which is located in the North of China. Thereby REpower Systems AG is the first foreign wind energy turbine manufacturer in China that received a controlling interest over a Chinese joint venture which produces wind energy turbines.
The registered capital of the joint venture, owned to 50.01% by REpower, is about EUR 10 million, and the total investment is approximately EUR 30 million. NHIC owns 33.34% and Honiton 16.65% of the shares.

The partner NHIC, a Chinese state-owned enterprise with 20,000 employees, manufactures e.g. construction machines, mining vehicles, mining equipment and belongs to the NORINCO group; the partner Honiton has a project pipeline with a total output of 1,200 megawatts until 2010.

The big city Baotou, which is about an hour flight distance from west Beijing, is a focus point for the fabrication and processing of steel in China. The position is strategically well located to enter the rapidly expanding market for wind energy in China; this year, new installations will exceed the 1,000 megawatts boundary for the first time (2005: 500 megawatts).

“The elevated plains of Inner Mongolia count to the best wind locations in the world, as wind power can be produced at three to four Eurocents per kilowatt hour. Due to the high-capacity grid, we estimate that 40% of all the turbines will be installed in Inner Mongolia in China”, stated REpower’s CEO Prof. Fritz Vahrenholt on the occasion of the signing ceremony in attendance of Mr. Yang Jing, Chairman of the government of the Inner Mongolia Autonomous Region. With 1.18 million square kilometers, Inner Mongolia is the third largest autonomous region in China.

For 2008, REpower North (China) aims to install 100 turbines of the REpower MM70 and MM82 series, which are certificated for even the strongest wind classes. These will mainly be manufactured from components produced in China. In the two following years, this capacity is planned to be doubled each year until 2010.

“The worldwide race between the turbine manufacturers regarding the lowest production costs per kilowatt hour will be won on the supply market in the future”, stated CFO Pieter Wasmuth, amongst others responsible for purchasing at REpower, in Baotou. REpower already purchases high quality, forged rotor shafts from NHIC. Mr. Wasmuth: “Soon the joint venture, together with NHIC, will be able to manufacture all the different steel and cast parts for the turbines itself at significantly lower costs. Thereby we raise the supply security in times of a massive component bottleneck.”