Hyundai Heavy Industries Co., the world’s largest shipyard, expects annual sales of as much as $300 million from a wind-turbine factory in China as it bolsters clean-energy units to pare a reliance on making vessels.
The plant in Weihai in the eastern province of Shandong will open in October and may post at least $50 million of sales next year, Kim Kweon Tae, head of the company’s low-carbon energy business, said in an Aug. 31 interview in Ulsan, South Korea. The sales may jump sixfold by 2015, he said.
“China is a market you can’t ignore,” Kim said. “There will be a lot of competition but we plan to offer better quality and services.”
The shipyard may also make acquisitions to boost its solar- power business, he said, as it invests in low-carbon energy amid rising competition from cheaper shipbuilders in China. The company aims to raise clean-energy sales to 4 trillion won ($3.8 billion) in 2016 from about 600 billion won last year, he said.
“There is a limit to how much shipyards can grow by relying heavily on one product,” said Cho In Karp, head of research at Heungkuk Securities Co. in Seoul. “In the long term, this is the way to go because fossil fuels will eventually run out.”
Shanghai wind farm
Hyundai Heavy will next year use the new factory to bid for work on an offshore wind farm planned off Shanghai, Kim said without elaboration. The China plant, which will be able to make 300 2-megawatt turbines annually, will also eventually be used to tender for projects in Southeast Asia, he said.
The company may also finish developing a 5.5-megawatt turbine, suitable for offshore wind farms, next year, Kim said. It is studying a plan to develop a 10-megawatt unit.
Hyundai Heavy, which also builds power stations and makes excavators, dropped 4.5 percent to 329,000 won at 11:56 a.m. in Seoul trading. It has fallen 26 percent this year, compared with a 9.5 percent decline in South Korea’s benchmark Kospi index.
China, the world’s largest wind-power producer, plans to increase offshore wind power capacity to 5 gigawatts by 2015 and to 30 gigawatts by 2020, according to China’s National Development and Reform Commission.
The country has about 340 megawatts of offshore capacity now and may only reach 4.5 gigawatts by 2015, according to Bloomberg New Energy Finance. That compares with plans to install 20 gigawatts onshore this year, it said.
China aims to generate 20 percent of its energy from non- fossil sources in 2020 from about 9.6 percent last year amid efforts to reduce carbon emissions.
Solar-power takeovers?
Hyundai Heavy, which also makes polysilicons used in solar cells and solar-panels, may consider buying other clean-energy companies as there are too many suppliers, which is causing prices to fall, Kim said.
“We are open to opportunities for takeovers in the solar- energy business,” he said. “We have been approached, but we aren’t in a rush.”
The company will also begin work on a wind-farm project in Pakistan after winning certification for its 1.65-megawatt and 2-megawatt wind turbines, Kim said. Det Norske Veritas is due to approve the equipment this year, he said. The turbines will be made in South Korea and in the China plant, he said.
The shipyard, Korea Southern Power Co., Hyundai Engineering Co., Hyundai Corp. (011760) and Yunus Brothers of Pakistan in January last year agreed to set up a wind farm in Sindh, which will have a capacity of 50 megawatts sufficient to power about 60,000 homes a year.
