AMSC also has a prior delivery right to sell future electrical components under the same conditions as other suppliers to Sinovel for the wind energy systems covered under the contract, creating a substantial follow-on business opportunity for AMSC. The order significantly expands Windtecs business with Sinovel. Since 2005, Sinovel has ordered electrical components from Windtec for 785 wind energy systems rated at 1.5 megawatts (MW).
Under the terms of the new contract, Windtec and Sinovel will design and jointly develop 3 and 5 MW wind energy systems that Sinovel plans to market and sell worldwide. Sinovel will have the exclusive ownership and complete industrial and intellectual property rights for large-scale onshore and offshore wind turbines developed under this contract, enabling the company to compete effectively with established leaders in the market. Based in Beijing, Sinovel plans to begin series production of 3 MW systems during 2009 and 5 MW systems the following year.
AMSCs Windtec business enabled Sinovel to quickly establish itself in the wind power market, said Han Junliang, Chairman and President of Sinovel. We believe the 3 and 5 MW systems we will jointly develop with Windtec will allow Sinovel to grow its market share and position us as a technology leader in the industry. We look forward to benefiting from our expanded relationship with Windtec as we continue to implement our plan to manufacture 500 wind energy systems in 2007, 800 in 2008 and reach an annual capacity of 1,000 wind energy systems in 2010.
By December 2006, Sinovel had already signed more than $1 billion (US) in contracts to supply domestically made wind energy systems to help meet Chinas rising demand for clean energy. According to one of its customers and one of Chinas biggest power generation companies, China Huaneng, up to $36 billion (US) may be spent in China by 2020 to increase wind energy capacity to cut pollution. The Chinese government has mandated that at least 70 percent of equipment used in Chinese wind farms must be made in China.
AMSCs business in the Asia-Pacific region continues to grow rapidly, said Greg Yurek, founder and chief executive officer of AMSC. Sinovel has done a tremendous job of scaling its production capabilities and has emerged as a major wind system manufacturer. We are honored that it has chosen Windtec to aid in expanding its product offerings to 3 and 5 MW systems a step that will help considerably to meet the renewable energy needs of China.
According to a recent report from the Global Wind Energy Council, Chinas installed base of wind generated electricity grew by 107% in 2006 alone to 2,600 MW. Li Junfeng of the Chinese Renewable Energy Industry Association (CREIA) stated: Thanks to the Renewable Energy law, the Chinese market has grown substantially in 2006, and this growth is expected to continue and speed up. According to the list of approved projects and those under construction, more than 1,500 MW will be installed in 2007. The goal for wind power in China by the end of 2010 is 5,000 MW, which according to our estimations will already be reached well ahead of time.