Envision - Energy Industry in China

ENERGY (ENVISION) – INDUSTRY ANALYSIS REPORT

Eric Bergstrom | Nicole Dettmering | Jason Espinosa | William Ham | Jacqueline Littlefield

Envision

Envision Energy is a wind turbine service provider and manufacturer that specializes in low speed mechanical power designs. This segmentation aligns with the nominal wind conditions within China. The firm was founded in 2007 by Lei Zhang in Jiangyin, Jiangsu province and is currently headquartered within Shanghai. Their initial vision was centered around controller software but has evolved to include manufacturing and innovative trends of the energy industry. Envision has been able to develop a wide-reaching business model by focusing both manufacturing and cutting edge software technology designed to manage the output and maintenance of operating wind projects. Power plant controller software management and manufacturing expansion in the European market are critical aspects of Envision’s global plans for growth.

Since the firm’s inception, they have experienced consistent operational growth as well as exponential growth in their manufacturing division. They have discreetly developed into the world’s fastest growing wind turbine manufacturer. Their operational division has expanded through foreign direct investments to combat market barriers and foster a global presence. The founder’s growth mindset is the catalyst for continuous development and improvement of the firm within the industry.

Envision is investing in the United States and is further investing in blade research (the literal cutting edge of technology in wind turbines) by installing a large facility in Boulder, Colorado. Envision is also currently investing $1.1 billion in the European market for acquisitions and joint ventures to expand their manufacturing and controller software business lines. This investment will facilitate Envision’s desire to compete with the controller software that Silicon Valley is investing in heavily. Envision recently announced significant partnerships with industry leaders like “Duke Energy, Pattern Energy, Shell, China General Nuclear Power Group and Trina Solar,” to accelerate this business effort.

Industry Background, Size, Maturity, and Growth Trends

The Chinese energy industry generates more power than any other country in the entire world; approximately 1,649 Gigawatts (“GW”) compared to approximately 1,079 GW generated in the United States.  A very large portion of China’s energy production (~57%) is generated by dependable coal burning sources, but coal comes with significant hazards to the environment. The remaining power generation is derived from hydro (~20%), renewables (wind/solar, ~13%), natural gas (~7%), and nuclear (~2%).

The pollution levels associated with China’s predominate coal source are in direct conflict with the current political and environmental trends. This has led the country to invest ¥2.5 trillion ($367 billion) in the country’s renewable energy industry to diversify their generation portfolio. Further, their participation in the Paris Climate Agreement provides a public commitment to cleaner energy resources.

Unfortunately, China suffers from a weak transmission system infrastructure; and as a result, the country suffers from power outages. Their power grid is currently made up of six synchronous sub grids; however, these grids do not operate as a single unified grid. Each sub grid essentially operates in with a silo mentality.  This operational strategy further exacerbates their system stability and power outage problems.  They have recently developed an ultra-high voltage transmission grid to reduce voltage drops for long distance power transmission and to combat system instability during contingency events.