Timken Enhances Wind Energy Market with Investment and Expertise

Few times in history has an economy risen as rapidly as China’s has over the past several years. The Chinese economy is more than twice as large as it was only ten years ago and has contributed hundreds of billions of dollars to the growth of global wealth.

Economic expansion at this pace and scope, however, is not without implications for the environment. As China’s economy continues to consume increased levels of natural resources, new measures and technologies must be adopted to help protect the global ecosystem and address the burgeoning demand for limited energy supplies.

China is working with domestic and international engineering companies to help ensure it can meet the challenges of sustainability while continuing to encourage rapid economic growth. In 2006, the Chinese government mandated that China use 20 percent less energy in 2020 to reach the same level of economic activity achieved in 2005. Alternative forms of energy will ease the nation off its dependence on fossil fuels.

Wind energy will play an essential role in China’s environmental goals, and The Timken Company is well positioned to contribute to China’s ongoing development of its wind energy market.

In early December 2007, Timken announced an agreement with Chinese heavy equipment manufacturer Xiangtan Electric Manufacturing Co., Ltd. (XEMC). The two companies will establish a joint venture in China to manufacture ultra-large-bore bearings for main rotor shafts of multi-megawatt wind turbines for the Chinese wind energy industry. The joint venture is expected to contribute to China's goal of generating 30 million kilowatts of power from wind energy systems by 2020.

The challenges Timken is tackling in China aren’t unique to that market. As the world seeks alternatives that can provide cost-effective sources of power while minimizing risk to the global ecosystem, Timken’s core knowledge in improving the efficiency of power generation is in high demand in the wind energy industry.

The joint venture in China is just the first step in Timken’s strategy to play an increasing role in the wind energy industry.

Currently, a very small percentage of Timken’s revenues come from supplying bearings and power-transmission products to wind-energy producers. However, Michael J. Connors, president of Timken’s Process Industries business unit, expects that revenue stream to grow significantly within the next five years.

Demand for durable turbines and reliable components is growing dramatically as wind energy becomes a proven source of alternative energy. In 1997, installed wind energy capacity was only 7,475 megawatts worldwide. (One megawatt of wind energy can generate enough electricity to meet the needs of roughly 240 to 300 average U.S. homes.) By 2006, that number had soared to 59,004 megawatts, generating more than 1 percent of the world’s electricity consumption. Predictions call for more than 160,000 megawatts of installed power by the year 2010.

A sizeable portion of that future growth will occur in China, which became the world’s sixth-largest consumer of energy produced by wind turbines in 2006. China had a total of 3,136 megawatts of installed wind energy, compared with 20,622 installed megawatts for Germany, which is the world leader. In China, more than 40 local turbine manufacturers have entered this segment in response to the government’s mandate to reduce dependence on fossil fuels.

“Timken intends to grow to support the most technologically demanding customers in this industry,” Connors said. “We will focus our investments on discerning customers who want the best.”

Leading the wind-energy business for Timken is Ajay Das, general manager for wind energy.

“Timken will collaborate with various manufacturers of wind power turbines and gear boxes,” Das said. “We will be seeking long-term technical and commercial arrangements with a selected few companies and will invest appropriately to serve the needs of main shaft and gear drive bearings for those customers.”

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