Wind turbine bearing manufacturing
Wind turbine bearing manufacturing
Business Model Description
Bearing is a core part of wind power devices and is technology-intensive. The value of bearings ranks third among all parts in a turbine, second to blades and gearboxes. Business model: selling bearings to complete turbine manufacturers.
Expected Impact
Bearing industry's intelligent manufacturing can drive green manufacturing transformation, improve power generation efficiency, reduce greenhouse gas emissions, create more jobs.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Guangdong
- China: Zhejiang
- China: Guizhou
- China: Shandong
- China: Jiangsu
Sector Classification
Renewable Resources and Alternative Energy
Development need
China's current energy structure dominated by fossil energy. Fossil energy resources are limited and can release large amounts of carbon dioxide when burnt, accelerating global climate change and extreme weather events. Thus, renewable energy is crucial to China's green transformation and energy security.
Policy priority
The proportion of non-fossil energy in total energy consumption should be increased to about 20%. State Council's action plan for carbon peaking stated that wind and solar power generation, biomass power generation and heating should be developed. By 2030, the total installed generation capacity of wind and solar power will reach above 1200 gigawatts. (1)
Gender inequalities and marginalization issues
Renewable energy employs about 32% women, compared to 22% in the energy sector. (2)
Investment opportunities introduction
The IOAs in the renewable energy sector center around the utilization of solar energy, wind energy, and biomass energy.
Key bottlenecks introduction
The energy endowment and demand don't match. Hydropower generation is centralized in southwest China, while wind and solar energy are centralized in northern China, which is far away from the centers of consumption in the eastern and coastal areas. The instability of renewable energy poses a challenge to the consumption and stable operation of the grid.
Alternative Energy
Development need
Wind power is the second most crucial renewable energy for China and plays crucial role in achieving China's carbon targets. However, its further development faces several challenges including: land-use limitation, wind curtailment. (3)
Policy priority
With increasing installed wind capacity, China's current policy focus has shift from giving subsidies to driving grid parity, promoting offshore wind power projects, as well as improving utilization rate and consumption. (4)
Gender inequalities and marginalization issues
Wind resources are unevenly distributed across China. Higher average wind speeds can be observed in the northeast, northwest, and southwest plateaus and coastal islands. (5)
Investment opportunities introduction
The IOAs in the wind power sector center around wind turbine manufacturing, and the operation of wind farms.
Key bottlenecks introduction
The intermittent nature of wind energy making it hard to be fully utilized. Most of China's rich wind resources are located in the north and west while the power demand is in economic centers in eastern and southern China, requiring long-distance transmission. (6)
Wind Technology and Project Developers
Pipeline Opportunity
Wind turbine bearing manufacturing
Bearing is a core part of wind power devices and is technology-intensive. The value of bearings ranks third among all parts in a turbine, second to blades and gearboxes. Business model: selling bearings to complete turbine manufacturers.
Business Case
Market Size and Environment
> USD 1 billion
5% - 10%
In 2021, the market capacity for China's domestic wind turbine bearing manufacturing is 20.3 billion RMB. In 2025, it is expected to reach 25.3 billion RMB, which corresponds to a CAGR of 6%. (7)
Indicative Return
> 25%
According to the average of the gross margins disclosed by Luoyang Xinqianglian Slewing Bearing Co., Ltd.’s Prospectus, SKF’s 2021 Semi-annual Report, and Wafangdian Bearing Co., Ltd.’s 2021 Semi-annual Report, the internal rate of return of similar projects is greater than 25%.
Luoyang Xinqianglian Slewing Bearing Co., Ltd.’s gross margin of wind power bearing is around 30%. SKF’s gross margin is 29.6%. The company's main business includes bearings and bearing units, seals, mechatronics, and service and lubrication systems.
Wafangdian Bearing Co., Ltd.’s 2021 Semi-annual Report, its gross margin is 23.10%. The company's main business includes the manufacturing and sales of bearings and bearing units.
Investment Timeframe
Medium Term (5–10 years)
Luoyang Xinqianglian Slewing Bearing Co., Ltd.’s after-tax static payback period of the main engine supporting bearing construction projects of high-power (2.0MW and above) wind turbine is 6.54 years (2-year construction period included), and its after-tax internal rate of return is 20.14%.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
As wind turbine capacity increases, the size of wind power bearing becomes larger, which doubles the manufacturing difficulty and proposes new requirements for the manufacturers.
Gender & Marginalisation
Renewable energy employs about 32% women, compared to 22% in the energy sector. Yet women employers only account for 21% of the wind energy industry (based on survey responses). (21)
Expected Development Outcome
As a crucial part of wind turbine generator systems, wind power bearing is important to the entire system's service life, performance, and reliability. Investing in bearing manufacturing that can adapt to the trend towards larger wind turbines can drive the trend and reduce costs.
Gender & Marginalisation
Large-scale deployment of renewable energy can create more jobs. Women's performance in the wind industry can be enhanced by addressing gender inequality, including network building, mentoring, training, experience sharing, gender policies, internship opportunities, and discussion sessions. (21)
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
The share of non-fossil energy in China's primary energy consumption reached 15.9% in 2020. (20)
The "14th Five-year Plan" stated that the share of non-fossil fuel in China's total energy consumption should be increased to around 20%.
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Indirectly impacted stakeholders
People
Planet
Outcome Risks
Since wind power bearings are usually used in severe environments, the maintenance cost is high. Recycling abandoned bearings is under high pressure as well. (23)
Impact Risks
Insufficient electricity consumption can lead to idle capacity in wind and solar power.
Impact Classification
What
The outcome can be positive, long-term, and large-scale. Investment can promote bearing industry's intelligent manufacturing, thus driving industrial transformation and green manufacturing.
Who
Wind power users, people working in the wind power industry, complete turbine manufacturers, technicians
Risk
Training for people in other industries should be provided to empower their transfer into emerging industries. The training programs should care for gender and marginalized groups. (18)
Impact Thesis
Bearing industry's intelligent manufacturing can drive green manufacturing transformation, improve power generation efficiency, reduce greenhouse gas emissions, create more jobs.
Enabling Environment
Policy Environment
"Made in China (2025)" listed bearings and other components among the five "foundations of industry" projects; support will be provided for enterprises to promote technological improvements. (16)
Work to upgrade industrial foundations; aim for high-end digital development; support enterprises to build technological innovation platforms; solidify quality brand foundations, cultivate Industrial culture, implement talent projects, and construct modern industrial chain. (11)
"Technological Progress and Technological Transformation Investment Directions of Equipment Manufacturing (2010)" listed bearings as the top priority among the development of basic components, including speed-increasing gearbox bearings in wind turbines, etc. (25)
Financial Environment
For the financial institutions that offer carbon emission reduction loans to enterprises in critical areas, the PBOC would provide financial support for 60% of their loan principal at an interest rate of 1.75% through a direct mechanism of "lending before borrowing". (10)
Since Jan 1, 2008, the measure of tax being collected first and then refunded would be applied to the import tariff and VAT paid by domestic enterprises for the imported key components and raw materials used for the development and manufacturing of high-power wind turbines. (9)
The "Interim Procedures on the Management of Special Funds for the Industrialization of Wind Power Generation Equipment" clearly stated that the central government would allocate special funds to support the industrialization of wind power generation equipment. (26)
Regulatory Environment
The key components used in all new on-grid wind power projects should go through type certification following the "Wind turbines—Conformity testing and certification” (GB/Z25458-2010). The certification process should be carried out by authorized institutions.
Bearing production in China follows the laws and regulations on general industrial products, including the "Work Safety Law", "Product Quality Law", etc. There are no specialized laws and regulations for the bearing industry. (13)
NEA issued the "Rules on Wind Power Standard Establishment" and the "Wind Power Standard System Framework” which includes wind turbine design requirements, tests for wind turbine's power characteristics, certification rules and procedures, etc. (12)
Marketplace Participants
Private Sector
Chinese bearing manufacturers mainly include Wafangdian Bearing Co., Ltd., Luoyang LYC bearing Co., Ltd., Luoyang Xinqianglian Slewing Bearing Co., Ltd., etc.
Government
Jiangsu: Intelligence and deep sea development should be targeted, focusing on breakthroughs in large wind turbine main bearings. Fujian: Performance and capacity of bearings, gears, and other transmission parts should be improved to meet the needs of the host machines. (24)
Target Locations
China: Guangdong
China: Zhejiang
China: Guizhou
China: Shandong
China: Jiangsu
References
- (1) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030
- (2) IRENA, 2019, Renewable energy: a gender perspective. https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective
- (3) Forward Intelligence, Market Foresight and Investment Strategy Report of China's Wind Power Industry, https://bg.qianzhan.com/report/detail/f7fa9c50850a4f16.html?v=footer2
- (4) Guiding Opinions of the State Council on Accelerating the Establishment of a Sound Economic System with Green, Low-carbon and Circular Development (No. 4 [2021] of the State Council), http://www.gov.cn/zhengce/content/2021-02/22/content_5588274.htm
- (5) XNY365, http://www.xny365.com/zhuanjia/article-53293.html
- (6) Zhu Linzhi, Chen Ning, Han Hualing. Keys Problems and Solutions of Wind Power Accommodation [J]. Automation of Electric Power Systems, 2011, 035(022):29-34.
- (7) Huaon.com, https://www.huaon.com/channel/trend/765881.html
- (8) Nationwide Energy Information Platform, https://baijiahao.baidu.com/s?id=1657778171081905724&wfr=spider&for=pc
- (9) The Central People's Government of the PRC, 2008, Notice by the Ministry of Finance on Adjusting High-power Wind Turbine Import Tax Policy, http://www.gov.cn/gzdt/2008-04/23/content_952511.htm
- (10) Relevant persons in charge of People's Bank of China Answering the Questions of Reporters on the Carbon-reduction Supporting Tool, http://www.gov.cn/zhengce/2021-11/08/content_5649851.htm
- (11) China Bearing Industry Association, 2021, 14th Five Year Plan for the National Bearing Industry, http://www.cbia.com.cn/html/Infoforum/info_detail/code=ATH1624859430JX5N.html
- (12) National Energy Administration, 2013, Notice of Issuing the Rules on Wind Power Standard Establishment, the Technical Committee Charter for Wind Power Standardization in the Energy Industry, and the Wind Power Standard System Framework, http://www.nea.gov.cn/2013-10/12/c_132792051.htm
- (13) BJX.com.cn, https://news.bjx.com.cn/html/20140620/520573.shtml
- (14) CBCIE, http://www.cbcie.com/news/1041239.html
- (15) Research on China's Slewing Bearings Industry, https://wenku.baidu.com/view/a9e95a0fac51f01dc281e53a580216fc710a5334.html
- (16) State Council, 2015, Made in China 2025, http://www.gov.cn/zhengce/content/2015-05/19/content_9784.htm
- (17) ESCN, https://windpower.ofweek.com/2019-10/ART-330001-11000-30413214.html
- (18) Wind Power as an Important Engine for Achieving Global Economic Recovery, https://new.qq.com/rain/a/20200526A0PTQ800
- (19) BJX.com.cn,,https://news.bjx.com.cn/html/20171011/854532-1.shtml
- (20) Meitanshijie, https://view.inews.qq.com/a/20220105A0BZ4000
- (21) IRENA, 2019, Renewable energy: a gender perspective, https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective
- (22) General introduction to the wind power blade production capacity and competition pattern, https://xueqiu.com/2552037283/195847276
- (23) China Wind Power Bearing Industry Outlook and Investment Prospect Assessment Report (2022-2028), http://news.sohu.com/a/522722679_120991686
- (24) Fujian Government, 2021, 14th Five-Year Plan for High-Quality Development of Manufacturing Industry, http://www.fujian.gov.cn/jdhy/zcjd/202107/t20210706_5641554.htm
- (25) Technological Progress and Technological Transformation Investment Directions of Equipment Manufacturing (2010), https://wenku.baidu.com/view/48649dfac2c708a1284ac850ad02de80d4d80661.html
- (26) Ministry of Finance, 2008, Interim Procedures on the Management of Special Funds for the Industrialization of Wind Power Generation Equipment, http://www.mof.gov.cn/zhengwuxinxi/caizhengxinwen/200808/t20080822_66448.htm