Troubled Sinovel Wind to put workers on leave

Sinovel Wind Group Co, a large maker of wind power equipment, plans to put 350 workers on leave starting on Monday.

The decision comes in response to a sales slump in the industry and a tightening of government policies related to wind power, according to a company announcement.

The 350 employees, who work at bases in Beijing, Yancheng, Jiangsu province, and other places, will receive one month's salary. For the remainder of the leave, they will see their pay cut to 80 percent of the monthly minimum wage set by the Beijing government, which is 1,260 yuan ($202).

Sinovel officials did not say when the company's operations will resume.

Earlier media reports said most of the workers are employed in the company's research and development department.

In the third quarter, Sinovel recorded a loss of 280 million yuan, down from the 242 million yuan in profit in the same period a year earlier. Its third-quarter operating income, meanwhile, decreased by 82 percent year-on-year, falling to 548 million yuan. The company warned it might report an annual loss for 2012.

Media reports said in May that Sinovel had abandoned plans to recruit about 350 graduates. The company had 2,873 employees at the end of 2011.

Sinovel is not the only wind power company to find itself in a tough situation.

Another listed company, the Guangdong province-based Ming Yang Wind Power Group Ltd, reported it had 787 million yuan in operating revenue from January to September, a drop of 58.6 percent year-on-year. And the Xinjiang-based Goldwind Science and Technology Co Ltd also reported its first single-quarter loss of 32.4 million yuan during the third quarter.

From January to September, listed Chinese wind power companies saw their income plummet by more than 30 percent year-on-year, according to company statements.

"The global economic slowdown has dented investment in wind power," Liu Yuanrui, a new-energy analyst with Changjiang Securities, wrote in a note.

"Competition between industry players is so fierce nowadays. Their biggest hope lies in a breakthrough in getting wind power connected to the grid. Otherwise, the situation will remain difficult."

According to a wind power plan released by the State Council, China is expected to have the installed capacity to generate 100 million kilowatts of wind power by 2015. Of that, 500 kW is to come from offshore wind farms.

The country already had more than 62 million kW of installed generating capacity by the end of 2011, an increase of 39.4 percent year-on-year. About 28 percent of that has sat unused, said the Chinese Wind Energy Association.

Wang Haisheng, a new-energy analyst with Huatai Securities Co Ltd, said the country is becoming stricter about granting approvals for wind farms. He noted that much of the industry's generating capacity now lies idle, which has weighed on companies' profits.

Meanwhile, the US and Europe, struggling with their stalled economies, have both reduced the budget subsidies offered to the wind power industry, a decision that has also affected Chinese companies' exports.

China, the world's largest market for wind power, will see its installed capacity expand at a slower rate up to and after 2015, according to a report by the Global Wind Energy Council, which provides a forum for the discussion of matters related to wind energy.

"The phenomenal growth in the Chinese wind energy market has outstripped the ability of the grid and system operators to manage it," the report said, adding that a large amount of wind power was lost last year because the grid could not absorb it.

China has established a subsidy equal to 600 yuan for every kilowatt of installed capacity that domestic makers of wind turbines add.

Chinese authorities have been committed to developing wind power as China tries to move away from using fossil fuels and reduce its emissions of carbon dioxide by 17 percent for each unit of its GDP by 2015.

China's on-grid wind power capacity is expected to reach 100 gigawatts by 2015 and 200 gigawatts by 2020, according to the State Grid Corp of China, the country's largest utility company.