Wind energy can improve city life in China
As the global leader in wind energy, Vestas wants to create better lives in the cities by supplying clean, renewable energy to China’s fast-growing cities – and this without putting any additional strain on the water systems. Wind energy is the only form of green and renewable energy that uses very small amounts of water which is extremely important, taking into consideration that water is in short supply in many areas of the world.
At a hotel in central Copenhagen, the EXPO Newsletter reporter meets with Vestas President & CEO Ditlev Engel in order to get his views on next year’s EXPO in Shanghai and Vestas’ motives for joining the Danish EXPO participation. Ditlev Engel is at the head of one of the world’s fastest growing energy companies, Vestas, and also a member of the National Committee for Denmark’s participation in EXPO 2010 Shanghai.
What will Vestas gain from participating in EXPO 2010 Shanghai?
To begin with, China is becoming more and more concerned about sustainability, climate changes, clean air and new ways of harnessing the wind, which makes it a highly interesting market to us. At EXPO 2010, it is easier for Denmark as a nation to attract attention than it is for a single Danish company, and the plans for the Danish pavilion and exhibition are so exciting that I am sure there will be a rub-off effect on our activities, too. EXPO will also provide an ideal platform for us to meet our customers, suppliers and potential employees.
I read somewhere that young Chinese are willing to pay up to 22 per cent more for “green” electricity, and I am not really surprised. I have been living several years in Hong Kong, and my experience is that the Chinese were always concerned about the environment and about sustainability. The ideas of sustainability are near to the heart of each Chinese, and we want the 1.3 billion population of China to see that wind energy is certainly an option. In Denmark, 20 per cent of the electricity is produced by wind and worldwide it is less than 1 per cent. In China, they plan to gain 15 per cent of their energy production by 2020 from sustainable sources, first of all wind. Today, China, together with the US, is the most important country to Vestas.
What can Vestas offer China in order to ensure an environmentally correct development of the cities?
The theme for EXPO is Better City, Better Life, and I think that wind energy is clearly something that can improve the quality of life in China’s cities and other cities around the world. The future of China lies in her cities where hundreds of millions of people are moving in to start their new lives. Wind energy is the perfect solution to power China’s growing and energy-hungry cities.
In China, most people live near the eastern coast. The massive eastern coastline is a huge potential energy source, which is close to some of the country’s biggest cities where coastal winds can provide clean, renewable electricity to drive sustainable urban living. Vestas has years of experience in offshore wind energy and is committed to helping develop China’s offshore wind energy sector. We are also helping China with grid integration so we can ensure that the energy generated by wind in the north of China can be delivered to the areas with heavy demand.
With the COP 15 summit in Copenhagen rapidly moving closer, the world is focusing on climate changes and especially on the emissions of CO2. But as earlier implied, another great challenge is H2O and the future shortage of water in the cities. Most people are not aware of the fact that conventional electricity production requires great quantities of water, whether it is produced on the basis of coal, oil, gas, etc. A typical Vestas wind turbine not only provides affordable clean energy; it uses virtually no water during production.
Have the worldwide financial crisis and the decrease of oil prices had any impact on Vestas and the wind industry?
Our industry certainly feels the crisis, but it is worth underlining that it is a crisis of financing not demand. The demand is still there. In 2008, China was Vestas’ second largest market and we expect continuing growth in China in 2009.
In the wind industry, we have a rule of thumb that says that with oil prices exceeding USD 55 a barrel we can make ends meet. The oil prices have been highly volatile lately, varying between USD 140 one year ago and 70 dollars today, but that is all a minor worry to our customers. They have an investment horizon of 20 years, and as everybody predicts increasing long-term prices on fossil fuels, today’s oil prices have little influence on wind energy investments.
What are your expectations of the Chinese market within the next few years?
There is no doubt that the Chinese market will keep on growing tremendously. Within the last three years, Vestas has seen more than 40 new competitors in China, so the wind industry is actually booming. At present, the three largest wind energy companies in China are Chinese, while we hold the position as number four. We have an interest in local companies pushing the market forward, and in China everything must happen fast. This means that we have to move fast as well if we want to keep up with the Chinese. China is enormous and demands are not the same in the north and in the south of the country.
We want to see the Chinese wind energy industry develop in a sustainable way. Vestas is solidly committed to developing China’s growing wind energy industry by helping, advising and sharing. Because we know that we will all benefit when we work together to move the industry forward.
Vestas has an ambition of building the wind turbines in the region where they are put up. Which advantages and disadvantages are related to such an objective?
We are focusing our attention on the Autonomous Region of Inner Mongolia where 40 per cent of the Chinese wind resources are located. We have recently built a plant in the capital city of Hohhot in order to build a made-for-China turbine – the V60-850kW – designed specifically for wind and weather conditions in that region. Now, Vestas is delivering a Chinese solution, and the turbine contains over 90 per cent locally supplied components.
It requires a strong organisation and superb logistic skills to have the wind turbines built where they are put up. Our supply chain development office in Shanghai with 130 employees is right now busy finding and developing local components suppliers all over China. These new suppliers - once production is initiated – will supply components for our turbine factories in both China and other countries.
We opened the plant in Hohhot, Inner Mongolia on 16 April 2009, and we have transferred quite a lot of employees from Tianjin to Hohhot where the number of staff is now 650.
The amount of wind resources is endless. How big a share of the energy consumption will it be realistic to produce from wind turbines by 2020 in a country like China?
With an official ambition of gaining 15 per cent of China’s energy production from sustainable sources by 2020, I have no reason to doubt that this goal will be achieved. The major part of the sustainable energy will be wind-powered, so I think that close to 15 per cent of the Chinese energy consumption will be produced by wind in 2020. In China, growth rates will continue to rise, and in some areas you could say that the growth curves are so steep that they are almost tipping backwards!
To maintain these growth rates in China means partnerships. Vestas is one of these partners – sharing our 30 years of experience and knowledge on issues critical to the future of China’s wind energy sector.
What is your personal opinion about Denmark’s EXPO 2010 pavilion and exhibition?
I am neither an architect nor an artist, but I think that the concept of the Danish pavilion in Shanghai is exciting. I did not know BIG architects and the other creative people behind the pavilion beforehand, but I am certain that Denmark’s pavilion and exhibition will be a success. At Vestas, we are happy and proud that HRH The Crown Prince is patron of the project, and his presence will certainly attract attention in China. We look forward to participating in Denmark’s Day and inviting our business partners to enjoy the facilities of the pavilion.
