LARGEST WIND TURBINE PRODUCTION FACILITY IN CHINA

SHENYANG, China, Jan. 2 /PRNewswire-Asia-FirstCall/ — A-Power Energy Generation Systems, Ltd. (Nasdaq: APWR – News; “A-Power”), today announced it will celebrate the launch of its first wind turbine production facility, the largest in China, with a ribbon-cutting ceremony in Shenyang, China, on Sunday, January 11, 2009. All investors are invited to attend the ceremony, which begins at 8 a.m. Meals and transportation from and to the local Sheraton hotel will be provided.
The inauguration will unveil A-Power’s full-scale wind turbine production business, as well as German Furlander Wind Generation (Shenyang) Company (“German Fuhrlander”), from which A-Power licenses its wind power-generation technology for the current facility.

Mr. Jinxiang Lu, A-Power’s Chairman and CEO, said, “We look forward to having our investors join us at this extremely exciting, and historic, event, which marks the full launch of our wind turbine business in China. Our wind turbine facility, strategically located in the city of Shenyang, is the largest in China, with total annual production capacity of over 1,125MW of wind turbines, and we intend to sell to both domestic and foreign markets. In addition to investors, joining us at our opening ceremony will also be government officials, the management from German Fuhrlander, as well as our existing and potential customers of our wind turbine business.”

this is the reason behind why APWR is going to go north into the future, the SUPPLY/Demand equation is on the side of demand

Tanti’s rationale is about demand and supply. He says that by 2020, the US, Europe, China and India will want to have 20 per cent of their power supply from renewables. The issue is about making wind power “cost competitive” with carbon sources, especially coal, which fuels 65 per cent of India’s electricity and costs at least a quarter less.

“Today wind power is just one per cent of supply. It can grow to seven per cent by 2020. That is the maximum because industry has to find resources, material and execute projects. With greater volumes the price (of wind power) will drop … and (governments) will ask what is the cost for pollution from carbon fuels. You will need a carbon tax.”

Suzlon’s biggest acquisition has been a rollercoaster ride. The Indian company won a bidding war with French nuclear power group Areva with a $1.6bn offer for Repower, a maker of huge wind turbines.

However, the deal remains in limbo after Suzlon’s initial financing deal fell apart as markets crumbled. Repower is the key to Suzlon’s global strategy. Tanti says that by 2020, there will be only five to six global players and to survive Suzlon needed to be big in the US, Europe and Asia. Tanti’s logic was that unlike in the US and Asia, where land is plentiful, in Europe he would need giant offshore wind turbines to produce electricity. Repower’s 5MW generator – double the power output of Suzlon’s biggest turbine – is 100m tall and has a rotor diameter of 126m. It can only be serviced using a helicopter.

Coupled with this technology and a cost base which is 19 per cent lower than the European company, Tanti says he can grow Repower’s business five-fold in a short span.

“It will take three of four years to develop this technology and we need access to European offshore markets. We can reduce the company’s cost and increase their margins and unlock value here,” he says.

Few people would bet against Tanti. In 1994, he ran a textile business and bought two wind turbines to power his factories after becoming frustrated with India’s high-cost, erratic electricity supply. Tanti, a trained mechanical engineer, became fascinated by the economics and technology involved.

Gap in the market

In the 1990s, western firms had little interest in India and Tanti spotted a gap in the market. He decided to leave textiles and began installing and servicing wind turbines for fast-growing companies in India. By the late 1990s he had built up a large domestic business, partly through convincing state governments to adopt a friendly tax regime for green power.

Tanti aims to build Asia’s largest wind farm, exceeding his Indian one in size, in Inner Mongolia that will generate 1,650MW of wind power. The Chinese government has said it wants 100,000MW to come from wind.

The country has a large potential of 250,000MW. That is why we have our manufacturing there. We are a Chinese local company too.”

APWR produces Distributed Power and another $146 per Kilowatt makes DP more cost effective!

SHANGHAI government announced yesterday that it would improve incentives for local factories and businesses that install an energy-saving power generation system inside their buildings.

The system, named Distributed Generation, is based on a small gas-fueled power generation unit. Operators build these units on site, rather than take power from the national grid, which is powered by coal-fired power stations, usually located far away from power users.

Energy is saved because the distance between the power generator and the user is greatly shortened. In a traditional power grid, up to 70 percent of generated electricity is wasted during its transmission.

“Usually only 30 to 47 percent of electricity generated by large power plants is consumed by users,” said Pan Yahong, an engineer with the Shanghai Branch of China Huadian Corp. “The rest is wasted during transmission. But the Distributed Generation system ensures a low rate of wastage and could improve usage efficiency to up to 89 percent.” Huadian is a major promoter of the system to the Chinese market.

Distributed Generation also cuts power usage by collecting the heat given off during the power-generation process and using it to heat buildings.

Because it uses natural gas rather than coal, the system could lower greenhouse emissions by 34 to 61 percent, a United States survey found, according to a report on the China Energy Service Website (www.chinaesco.net).

The government yesterday announced it would raise the subsidy paid to those companies that install the system. Building owners will be paid 1,000 yuan (US$146) for each kilowatt of capacity their generator has.

The subsidy was 700 yuan when Shanghai first announced the subsidy policy in August 2005.

Local users, such as the Minhang District Central Hospital and Pudong International Airport, will also continue to enjoy discounted natural gas, said officials.

The allowance compensates the expense of buying and installing the gas generators.

The system could reduce operational cost of offices by 11 percent, and that of hospitals by 21 percent, according to the US survey.

Maybe the Michigan governor makes the right decision and goes small localized green renewable vs big , expensive, wasteful, polluting, DIRTY COAL with a horrific price tag down the road.  Dirty coal plant costs 1.2 BILLION for 600megawatts, what a waste given that only 300 megawatts is actually needed but due to the transmission costs of losing 1/2 of the 600 megawatts, you must overbuild and over spend.  The rest of the world is faced with the exact same dilema and 1.2 billion is a lot of money only to throw out the window 300 megawatts just to transmit the power to the end consumers.

This exact scenario is the reason APWR will be a power in China down the road building small, concise localized power stations which will use wind and solar and geothermal or natural gas small turbines.

quite interesting that I cannot find another wind blog site , can anyone out there help me out or am I the ”’Lone Ranger”’ on point with Wind Power???

As renewable money fund managers scour the landscape for bargains to find the gems of 2009, one must look at China’s largest wind manufacturer APWR , and begin a position to take advantage of the gains to come from producing wind power and distributed power stations.   The key for APWR will be to utilize their own internal wind turbine business to build and design smaller wind power distributed power stations for the needs of China and the rest of southeast Asia.   Vietnam, Thailand, Indonesia , and many other countries are all clamoring for more power as countries struggle to raise capital , the distributed smaller power station gains steam in moving forward.   A 20 megawatt station powering 20,000 homes would cost around 30-40 million dollars fully installed and designed and built by APWR.  Keeping the design,  installation, and building the wind turbines at their own internal facility in Shenyang, China will spur contracts down the road.

Backlog is around 800 million and the global credit crisis will take a chunk out of that backlog but newer contracts will minimize the loss of credit challenged contracts.  The Chinese government does not have any trouble raising money given the 586 billion stimulus package the government has already passed and implemented.  The upside to APWR future stock price is how fast China government can implement and sign contracts for wind and more electrical power stations.  Distributed power stations , which APWR has recognized 100% of revenues and profits in the past , will gain steam because around 50% of all electrical capacity built in the USA for the national grid is lost in distribution from the power station to the destination facilities receiving the power.  In China, these small localized power stations produce the power directly to the customer thus increasing the efficiency and lowering the cost and price to produce power.   Distributed power stations will become the norm for most under developed third world countries.

Future earnings from Roth Capital (which recently cut their estimates after a current on site tour) are for $1.38 per share end of 2009.  Current price to earnings is a solid 4 and no p/e factor is given to the current pricing of the equity.  Balance sheet of APWR is solid and financed with cash on the books of over $1.80 per share and zero debt.   APWR has a potential to become a grand slam if and when markets correct and the world gets back on track to building and installing much needed electrical power and using green , clean windpower instead of coal.   Some countries have plenty of wind power potential, ie Thailand and Vietnam and the inner Mongolia region of central China has the equivalent wind power of Montana and Wyoming combined.   APWR has 7 wind farms approved they will be building and running for future residual revenues in inner Mongolia.  This particular region has 118 wind farms proposed by the Chinese government and the Mongolia region is where the 2nd wind turbine production facility is planned and approved for future expansion by APWR.

Green and renewable energy funds must include APWR into their mixture of investments as wind power and China and distributed power stations using geothermal, solar, and especially wind are going to contribute to the bottom and top lines for APWR going forward.  The ability to start a position in APWR is paramount in the short term as the ribbon cutting ceremony is going to bring a lot of publicity and interest in the small float APWR as the title of “”"China’s Largest Wind Producer”” sinks in with investors as APWR will produce around 1100 megawatts of wind by end of 2010 from this first facility.  Norwin and Furhlandher are helping/partnering with the design and installation/building of the turbines using existing Dutch and German proven engineering.   As the world recovers from this credit slow down, APWR p/e factor is going to approach 10 with demonstrated earnings around $1.30 per share end of 2009 gives you an equity priced around $13 per share conservatively.   APWR is a must own for any green , clean fund on investing for our cleaner, greener future!

Beginning Jan 11th, 2009, A Power Energy (APWR=Naz) becomes the largest wind producer in China with over 1125 Megawatts of capacity per year with more coming down the road.  Now, results will be dramatic over time as APWR actually delivers the promised ramp of wind turbines and the actual numbers of wind turbines grows given the aggressive growth plan by APWR management.  In the meantime (between now and end of 2009), a lot of opinions and research papers will be written and circulated about APWR and the future and potential of this very profitable company producing small, distributed electrical power producing plants.  My research is my own and I will acknowledge right up front, I cannot nor anyone else see the future but economics and real numbers and a past history to go on, one can make a model and base predictions about the future up front.  Variables could be earthquakes, world war, global drought, alien invasions, etc etc etc (you get the point, one cannot PROMISE RESULTS, only hypothetically model results given time and history).

The secret about producing small electrical power stations (Distributed Power Generation) is to build small an concise thus not wasting any megawatts in transmission to the national grid.  Here in the USA, we lose about 50% of our power to transmission pushing electrons along the vast , broad grid.  In China and the rest of the world, most underdeveloped countries do not even have a national 24/7/365 grid .  China power needs are great and will develop over time using the cleanest green power available,  wind power.  Most economies of wind power are simple, a 3MW wind turbine costs about 4.5 million and you can cluster a small group around a city or manufacturing complex without spending hundreds of millions to create power.

APWR is in the sweet spot going forward and the global crisis will impact future earnings (SEE previous posts about downgrades and reduced backlogs and future contracts being postponed), but the reality is that APWR has never realized a single penny in revenues and profits from their up and coming future wind business model.  APWR could easily be the sixth largest wind producer in the world by the end of 2010 given size and amount of megawatts APWR is promising to deliver.  China government has committed to spending 70% of its 586 billion stimulus package on inside China companies,  APWR will be the largest in china wind producer starting Jan 11th with the grand opening state of the art wind production facility.   APWR is using existing German and Dutch companies (Furhlandher and Norwin) to advance their wind strategy partnering with Norwin and Furhlandher for turbine design and outsourcing components and technology assistance to further advance APWR aggressive growth model. 

My basis for future results are using Roth Capital forward looking guidance just issued for $1.38 in EARNINGS end of 2009, and a lot for end of 2010 given the global crisis on credit getting better (NO control there for end of 2010 guidance).

APWR is a growth story of future earnings off of newly opened facilities backed by an engineering company who builds small electrical power producing plants.  APWR has completed 13 existing power stations and has 10 more under construction and on backlog of over 800 million going forward.  My guess/analysis is that some of this backlog will be postponed given the credit crisis in global world markets.  However, the cancelled/postponed contracts will be supplemented by future in the distance wind contracts so the 800 million backlog will be solid going forward plus or minus.  

Future earnings predictions of $1.38 given a P/E Factor of 10 makes APWR a $13 stock end of 2009.  My advice is to buy with both hands at the current pricing given the backlog and the story stock of 2010 into green energy and china growth going forward. 

FULL DISCLOSURE::: Author of this blog is LONG APWR !