Goldwind USA Case Study Notes

Goldwind USA: Challenges and Strategies

Founded in 1986 by Wu Gang and Guo Jian.
Xinjiang Autonomous Region: strong wind and ample space for turbines.
1989: Constructed Dabancheng, Asia’s largest wind farm.
2001: Headquarters moved to Beijing, restructured into a joint-stock limited liability company.

Late 1990s: Government focused on environment and sustainability.
Series of policies to boost clean-tech industries.
2006: Renewable Energy Law and 11th Five Year Plan set mandatory renewable energy targets.
Open bidding process for wind farm projects.
Requirement for sourcing 70% of parts locally.

2004: Won bid to deliver turbines to the 100 MW Yuedian wind farm.
By 2010: Manufactured over 8,200 turbines with over 9,000 MW capacity.
Revenue grew from $196 million to $2.6 billion between 2004 and 2010.
Established Beijing Tianrun New Energy Investment Co. Ltd. in 2007 to develop wind farms.
Listings in Shenzhen (2007) and Hong Kong (2010) raised over $1 billion.
China Three Gorges Corporation purchased a 12% stake.
IFC (World Bank subsidiary) also took an equity stake.

2009: Began to reassess sales strategy due to slowing installation rates in China.
Set target of selling 30% of turbines overseas by 2012.
Established first overseas sales arm in Australia, focused on the Americas.
The United States ranked second in installed wind capacity after China.
2009: Supplied three turbines to the 4.5 MW Uilk wind farm in Pipestone, Minnesota.
Spring 2010: Founded Goldwind USA.

Goldwind sought an American CEO to head U.S. operations.
Tim Rosenzweig hired: civil engineer, experience in wind farm development and energy finance.
Differences in management practice between Chinese and Western corporate cultures.
Aligning on strategic vision proved challenging.
Beijing focused on Chinese competitors; Tim viewed established non-Chinese firms as competition.

Hired David Halligan as CFO and Matt Olive as VP of Sales.
Recruited a second wave of staff, including Scott Rowland, Kate Dusett, and Nancy Cook.
Based the company in Chicago, situated in the American Midwest.
Established sales offices on the West coast of the U.S. and in Canada.

Scrutiny from local and national politicians.
Allegations of unfair government support.
Need to demonstrate commitment to the United States.
Western advertising campaign to project Goldwind’s human elements and product quality.

Over 25,000 equivalent turbine operating years.
U.S. customers required turbines installed in the United States to prove technology.
Promoting technological edge: Permanent Magnet Direct-Drive (PMDD) design.
PMDD replaced shaft-gear systems for efficiency and reliability.
About 60% of Goldwind’s installed turbines used PMDD technology by 2011.
Introducing new technology to the United States had challenges.

Working with wind farm developers, distributors, buyers, utilities, and regulators.
Addressing PPA (power purchase agreements) challenges.
Navigating the “development stage” of wind farms.

Sourcing parts and services locally to add value to the U.S. economy.
Over 60% of Shady Oaks turbine components were "made in the USA".
Creating/retaining up to 150 jobs among suppliers and 200 for site construction/operation.

Regulatory Uncertainty -- Lack of long term policy
U.S. President Barack Obama proposed that clean-energy sources provide 80% of the nation’s electricity by 2035, but current targets only existed among 29 states with RPS, and even among these there was great variation.
Temporary measures expired e.g cash grants expired in Dec 2011 and PTC was scheduled to disappear in 2012

As a hedge in 2011 Goldwind USA teamed up with Mainstream to supply 23 turbines to Negrete Cuel, a 34.5 MW wind farm in central Chile, Mainstream assumed 100% ownership while Goldwind helped to secure financing.