Siemens breaks ground in China’s wind market

Germany’s Siemens (NYSE: SI) broke ground last week on a new wind turbine production facility in Shanghai's Lingang New City, signifying the company's entry into China’s wind power market.

"China could soon become the largest wind energy market in the world and with our new production facility in Shanghai we are establishing an excellent starting position for meeting the growing demand of this exciting market,” said Wolfgang Dehen, CEO of the Siemens Energy Sector, in a news release.

The new facility is scheduled begin operating in the second half of 2010, initially with 400 employees. The wind turbines are expected to be for the Chinese market and for export. Siemens is investing more than RMB 573.45 million ($84 million) to set up this new location.

Siemens entered the wind turbine market through its acquisition of Denmark’s Bonus Energy in 2004. Wind turbine plants are a component of Siemens’ environmental portfolio, which brought in revenue of nearly $25.6 billion in fiscal year 2008, about a quarter of the company’s total revenue.

China's installed wind power capacity reached 12.2 GW at the end of 2008, and is expected to grow to 20 GW of installed capacity by the end of 2009, surpassing Germany by the year's end as the leading wind market (see China Wind starts production at new factory). 

Siemens can expect to face competition in China from Denmark's Vestas Wind Systems, which recently said it plans to invest $350 million in its Tianjin, China-based subsidiary, responding to growing demand in China for its turbine (see Vestas grows wind presence in China). 

In April, Vestas launched a new factory and a specialty wind turbine, which has blade designs and temperature control systems to adapt to the tough winters in Inner Mongolia. The turbine is most effective in low and medium winds, which make up 75 percent of China's unutilized onshore wind potential (see Vestas launches China-only wind turbine).

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