a shot of the ceremony
on dec. 28, no. 37 wind turbine unit of longyuan(yunnan) longtan wind farm was put into production. since then the installed capacity of china longyuan power has stepped into the age of 10000mw.
the average altitude of longyuan project with 49.5mw installed capacity surpasses 2,500m. it winds in the east of the basin of luliang county, qujing city. it is a typical high-altitude wind farm. this project has installed 33 united power wind turbine units suitable for the climate conditions in the mountain areas of southwest china. in theory, 1.2 billion mw electricity could be connected to the grid and the annual utilized hour is nearly 2,500 hours which is far higher than the average value in china. its 35kv power distribution net and 110kv booster station can ensure that the farm won’t be bothered by power rationing.
carry out strategic transformation and “no power rationing” plays a major role.
it is by no accident that an epoch-making wind turbine unit was born in yunnan province. it fully shows the company’s idea of “no power rationing” wind power development. although the roads in longtan surrounded by hills are very rough and the wind resources there are not very excellent, it is not easily troubled by the loss resulted from power rationing. power rationing is called the fatal killer hindering development by the industry. in 2011, the loss resulted from power rationing in china surpassed 10 billion kwh and this risk has been gradually revealed since the second half of 2009.
china longyuan power is the earliest chinese wind power enterprise that realizes this risk. thanks to the strategic transformation proposed in advance, the power generation efficiency of the company is far higher than the average level of the industry. in the first half of 2012, its generation of wind power reached 8.434 billion kwh, an increase of 19.31% over the same previous period. its profitability steadily maintains the first in chinese wind power companies.
the strategic transformation started from 2007. in the same year, the big chinese power enterprises carried out fierce competitions in "three norths" regions rich in wind resources. however, xie changjun, president of china longyuan power decided to make deployment in the south of china. the target areas include high altitude places and offshore area. this decision is called by the staff of the company as “to climb mountains and run to the sea”. two years later, mr. xie further developed this strategic transformation into “to develop wind power in high altitude places, offshore areas and places of low wind speed”.
to him, the wind power development in "three norths" regions might meet with a difficult period although it has the best wind resources. as the excellent farm sites have been occupied by wind power companies, the problem of giving up wind resources and power rationing would become more serious and wind power project would be more and more difficult to be approved.
a good doctor gives priority to the prevention of diseases. therefore, mr. xie adjusted his idea resolutely. he decided to speed up strategic transformation. apart from ensuring the advantageous position in "three norths" regions, he cast his eyes to the inland area of high altitude and low wind speed as well as the area with good grid conditions, strong power rationing ability and high power tariff.
to develop wind power in mountainous and offshore areas as well as expand business in inland area and oversea market.
it is in yunnan that the company started its wind power in mountainous areas. in 2008, mr. xie drew a diagonal line on the map of china. he transferred the backbone staff of heilongjiang company to make pilot experiment in high altitude places. at that time, even the local governments of yunnan province doubted whether these areas were available for wind power development.
the confidence of the company lies in the first hand data precisely measured. longyuan team finds that the local places have typical small local climates because the climates there range from the subtropical zone to the frigid zone. meanwhile, wind resources changes significantly from the poor to the good. in addition, yunnan has its unique advantages, such as no worry about power rationing and high power tariff. therefore, this province will become the breakthrough point of the company in the strategic transformation of wind power deployment.
in the past four years, apart from more than 10000mw longtan wind farm, wind power projects, such as yangmei mountain and dali jianchuan xuebang mountain, have been set up and put into production by the company. in accordance with mr. xie’s requirement, yunnan team of the company has made a thorough survey of the local wind resources and grasped the first hand materials. as of sept. 30, 2012, the wind power reserves of the company in yunnan had surpassed 3000mw; 198mw wind farms had been put into production and 330mw wind farms were under construction. these wind farms are located in counties and cities including kunming, qujing, dali, lijiang and lincang.
the company has developed wind power not only in yunnan province, but also all the plateaus in china. wind farms in guizhou, mabaishan and xiliangshan have been put into production. during the “12th five-year plan” period, the company decides to construct wind power projects of 1000mw in bijie, southwest of guizhou and tongren. in tibet, it is actively promoting the wind power project in nagqu region which has been the highest altitude project in the world.
in fact, the offshore wind power is the earliest sample of “no power rationing” strategic transformation as well as the one that has been a pleasant surprise of the world. the company has made quite a few breakthroughs in the worldwide problems. in addition, it has turned the noble offshore wind power into a common industry. in nov. 2012, the 182mw jiangsu rudong wind farm that had been completely put into production makes people believe for the first time that the offshore wind power can be developed in a large scale.
looking back into the history of offshore wind power, we find that as early as march 2007, china longyuan power had set up the preparation office of offshore wind power in nantong, jiangsu province. it is one year earlier than the mobilization meeting of offshore wind power held by the national energy administration (nea).
in practice, the company holds a down-to-earth attitude although it has a great ambition. in view of the construction difficulty of offshore wind power, mr. xie has defined the basic strategy of “experiment in small scale first, then demonstrate in medium scale and finally develop in large scale”. the company decides to start from the intertidal wind farm and develop offshore wind power from the near to the distant and finally coming to the offshore areas.
in the construction, it has grasped the core construction technology of offshore wind power ---single pile driving technology as well as several offshore construction patents, such as “construction equipment for wind power in offshore (intertidal) zones”, “steel-pipe pile driving equipment”, and “steel-pipe pile driving process”. in addition, it has integrated and customized professional construction equipment and ship for special work, which has greatly lowered the construction cost. the annual construction ability has reached 200-250mw so that it has created important conditions for the large-scale offshore wind power development. at present, relying on its own technological advantages, the company is actively deploying the offshore wind power projects in the coastal areas, including liaoning, tianjin, shandong, zhejiang and fujian. now after it has solved the construction problems of intertidal wind farms, the company is gradually marching to the offshore area and deep sea.
apart from that, the pioneering project of low wind speed has been carried out in anhui province. cost control is the key to the success of developing wind power project of low wind speed. the annual utilized hour in this province is only about 1,700. if the cost is slightly higher, there will be no profit at all. through the construction of lai'an wind farm, the company summarized its unique construction experience in the area of low wind speed as follows: site selection of wind turbine unit, renovation of wind turbine unit, cost control and change of operation.
in may 2011, lai’an wind farm, the first large domestic wind farm of low wind speed, was set up. by the end of 2011 its installed capacity had reached 250mw, a zero breakthrough in the wind power development in anhui province. more importantly, this place was considered to be not proper for wind power development. however, the company has succeeded in making a profit.
the success of lai’an wind farm provided a basis for the nea to firmly promote the construction of inland wind farms. department of new energy and renewable energy of the nea sent special congratulations to the company. it praised that lai’an wind farm’s being put into production was an active demonstration and guide to promote the wind resources development in the inland provinces (autonomous region and municipalities) of low wind speed. it required that the company shall carefully summarize its successful experience and speed up the wind resources development in inland areas.
till now, the company has made a breakthrough in the wind power construction in areas of high altitude, offshore areas, and areas of low wind speed. as a result, mr. xie’s strategic transformation of “no power rationing” has been realized.
since the early years after its foundation, the company has positioned itself as “the no.1 chinese wind power company as well as a world famous one”. it has not only made successful competition in domestic market, but also actively implemented its “going out” strategy so as to further expand its development space. on july 13, 2011, it successfully completed its acquisition of canada’s 100mw wind power project and became the first state-owned generation enterprises that invested in overseas new energy project.
the strategic transformation has last 10 years.
the strategic transformation of “no power rationing” wind power deployment is characterized by “to develop wind power in high altitude places, offshore areas and places of low wind speed”. the transformation enables the company to maintain the rapid increase of scale and the leading position of its profitability in the entire industry. yet this is only the most recent successful transformation of the company. to mr. xie, the situation can change frequently. however, transformation must be always carried out. actually, the company has made skillful use of the dialectic idea of “change” and “not change” in more than 10 past years.
its first strategic transformation can be dated back to 1999. at that time, it was only a company focusing on thermal power investment and renovation on clean thermal power technology. in the same year, it was reorganized into china longyuan electric power group coopration together with zhong neng power-tech development co., ltd. and china fulin wind power engineering co., ltd. since then it first entered into the field of wind power.
after the reorganization, the company defined its development strategy as “maintain a solid base and develop two wings together”, namely it is maintain the two thermal power plants in jiangsu province and promote wind power development by using the benefit and cash flow of thermal power. “develop two wings together” refers to two aspects. one is wind power and the other means science and technology. science and technology mainly refers to the scientific trades focusing on wind power, such as wind turbine manufacture and survey and planning of wind farms.
however, the company found within one year that “develop two wings together” didn’t work well. in 2000, in accordance with the overall deployment of the state power corporation, high-tech assets under china longyuan electric power group corporation were placed under guodian power, including longyuan power environment technology co., ltd., longyuan electric co., ltd., and yantai longyuan power technology co., ltd. facing to the difficulty, the company made a unique transformation of the industry --- greatly develop wind power.
in 2000, chinese wind power industry had no introduction of high technology and no supporting policy. it was almost a place attracting no attention. the leadership group of the company went to make explorations abroad collectively as well as carried out independent research and development. in 2001, the company acquired the wind power assets in gansu, inner mongolia and fujian. as a result, it realized 61.6mw installed capacity of wind power which was its first step into wind power development.
in 2002, the company found a significant historic opportunity to develop wind power. at the end of the year, system reform took place in chinese power industry. state power corporation was split. the company became a whole owned subsidiary of china guodian corporation. in addition, it adopted 144mw wind power assets previously owned by the state power corporation. this became the most valuable wealth of the company then as well as the important basis for the company’s development of new energy in the future. the company proposed that within 3-5 years, it would possess over 25% of the installed capacity of chinese wind power through investment, merger and acquisition. finally it would become the largest professional company of wind power development in china.
in 2004, the company proposed its idea of new energy development, namely “clarification of the objectives, central planning, gradual implementation, large-scale operation and rolling development”. it started to plan six major wind power bases and further clarify its development direction. six major bases include northeast china, inner mongolia, southeast coastal area, xinjiang, gansu and hebei. they cover the 11 provinces with the richest wind resources in china. in addition, they will become the “main battle field” where the company will make competitions in wind power development in the future.
entering into 2005, with the promulgation of law of the people’s republic of china on renewable energy, “the golden time” to develop wind power in china arrived. the company, a pioneer in wind power development, had accumulated many technologies and talents over the years and it had seized the advantage in the competition. its main business of wind power developed in large scale.
during “the 11th five-year plan” period, the company’s scale of the installed capacity of wind power maintained an annual increase of 76.2%. its profitability had been enhanced geometrically because of its rapid increase of installed capacity and excellent project quality. its assets had increased from 8.64 billion yuan as of the end of 2005 to 74.6 billion yuan as of the end 2010 and the assets had been increased by 8.6 times. the income before tax had increased from 495 million yuan of 2005 to 3.2 billion yuan of 2010, an increase of 6.5 times.
quality and integrity wins the capital market
when the self-owned funds of china longyuan power could not meet its booming growth, the company began to seek opportunities to use the international capital market.
on december 10, 2009, china longyuan power was successfully listed on hong kong stock exchange. on that day, although in the unfavorable situation where asian stock markets generally went downward, china longyuan power outperformed the market with a price 13.5% higher than its issue price, achieving 9.4% growth rate on the first day, and raising rmb 17.7 billion yuan. china longyuan power made several records such as the most funds raised and the highest pe ratio in ipo of chinese power enterprises on the overseas market, the largest ipo in the global energy industry in 2009, and the largest ipo of renewable energy companies in asia in the history. in addition, its ipo has the highest issue valuation on hong kong market since 2008, as well as among chinese state-owned enterprises on the overseas market.
when it comes to the reasons why china longyuan power can be successfully listed, sun wei, co-ceo of asia-pacific region of morgan stanley & ceo china told reporters that the key factor of success was not the size of china longyuan power, but its team, performance and management capability.
in the eyes of securities traders, china longyuan power is not a general-sense central enterprise. the installed capacity of wind power of china longyuan power goes up to a new higher level each year. in 2010, it was listed among top 3 in the world, and in 2011, it ranked second in the world. but more importantly, the growth of china longyuan power is in the quantity as well as in the quality.
earlier this year, morgan stanley made an analysis to horizontally compare china longyuan power and listed world-leading wind power enterprises such as portuguese power new energy and italian power new energy, in terms of management level, operational efficiency and economic benefits. analysis results show that china longyuan power has reached or exceeded the international advanced level in the above aspects. as seen from the valuation level of china longyuan power’s shares, the international capital market has also recognized its status as a world leading wind power enterprise. second, the distribution of assets of china longyuan power has been optimized and become more reasonable compared with that before it is listed, which is particularly important in the environment where the wind power industry is facing a series of challenges such as power rationing. the management of china longyuan power made an extremely strategic decision after listing that the proportion of installed capacity in the areas with power rationing should be reduced so as to deal with the unclear issue of “power rationing and windabandonment”. this decision enables china longyuan power to deal with the power rationing occurred in the industry since 2011 more easily.
in the opinion of sun wei, china longyuan power is an enterprise of integrity with its actions keeping with its words. today, three years after it was listed, china longyuan power has fulfilled all promises made to investors at that time. sun wei, as an investment banker, has great confidence in the future development of china longyuan power. she told reporters that “we believe china longyuan power will become the world's largest wind power enterprise in the near future. the leading position of china longyuan power will be reflected in all aspects such as strategic vision, business management, investor returns, corporate governance and social responsibility. we believe china longyuan power will continue to innovate, and will make great contribution to the development of the new energy industry of china and the world in new business areas.”
technology is king- china longyuan power makes wind power myths.
in china’s wind power industry, there are many real "myths" spreading: wind power experts from germany and the united kingdom gives lessons in the suzhou longyuan bailu wind power vocational training centre each year; cdm contracts of foreign-funded enterprises follow the sample of china longyuan power ; fans selected by china longyuan power often have much higher electric energy production; no personal injury or death has ever happened in china longyuan power ... these myths are not groundless, behind which is china longyuan power ’s “support system of technical services in 10 major aspects for wind power".
after years of accumulating technology, china longyuan power has developed unique advantages in many fields covering pre-wind measurement, design consulting, equipment procurement, operation monitoring, repair and maintenance, technology research and development, professional training and cdm operation.
in 2005, the international cdm market began to open to the chinese market. while the domestic industry generally was dubious about it, china longyuan power was keen enough to find a potential market opportunity, and established longyuan carbon asset management technology co., ltd, which centrally manages cdm projects, operates professionally and is oriented toward high-quality customers. up to now, china longyuan power has a total of over 160 cdm projects registered in the united nation, ranking first in the asian market.
by taking advantage of the sino-german wind power training and research projectbetween chinese and germany governments, china longyuan power established suzhou longyuan bailu wind power vocational training centre, which uses the wind power training system of germany, highlights interaction, interestingness, operability, and knowledge conversion efficiency of training courses. china longyuan power is the first to conduct overseas certification high-altitude rescue training among chinese wind power enterprises.
in order to improve the efficiency of wind power generation, china longyuan power sets up the technical service system for pre-phase development of wind power, which uses the world's most advanced means to measure wind, such as the technology of numerical simulation, virtual wind measurement tower, mobile wind measurement, unmanned aircraft.
during the process of wind power construction, china longyuan power has changed the currently prevailing practice of “survey, design and construction are executed in the same time”, and established china fulin wind power engineering co., ltdand xinjiang wind power engineering consultant co., ltd, specializing in the design of wind power projects. the wind turbine foundation, booster station, and road works must be subject to joint review of drawings organized by china longyuan power. only projects which have passed design review can proceed to the bidding procedures. the system of “joint review of drawings” is firmly adhered. so far, no personal injury and death has ever happened in china longyuan power.
to reduce procurement costs and ensure the quality of procurement, china longyuan power uses its bidding center to achieve a scale advantage. it uses binding bids and centralized purchasing. as a result, its average purchase price of wind turbines was rmb 4,275 yuan per kilowatt (including tax) in 2011, significantly lower than that of peer enterprises.
in order to implement intensive management of production and operations, china longyuan power established a safe production and operation monitoring center to monitor the operation of all wind farms of the company on a real-time basis.
in order to increase power generation production and reduce unnecessary loss caused by failures, china longyuan power provides spare parts and maintenance management, fully carries out operation optimization of wind turbines and benchmarking management of power generation production, and improves the level of healthy power generation of equipment. in 2011, the average utilization hours of wind turbines of china longyuan power were 2,026, and the availability of equipment was 98.44%, both higher than the national average. the utilization hours of equipment in fujian fuqing gaoshanwind farm reached 4,250, which is extremely rare in china and even in the world.
today, china longyuan power is still not content with the achievement that the installed capacity of wind power had exceeded 10 million kilowatts. china longyuan power will continue to consider development as its top priority, accelerate the pace of enterprise transformation, optimize the development structure of new energy, and fully build itself into a new energy enterprise ranking first in terms of size, quality, technology, and innovation in the world.