Huaneng Renewables takes Sinovel to court over turbine quality

Sep 29, 2014 - Chinese wind and solar power firm Huaneng Renewables Corp Ltd (HKG:0958) said today it is seeking CNY 90.6 million (USD 14.7m/EUR 11.6m) in damages from wind turbine supplier Sinovel Wind Group Ltd (SHA:601558) in a product quality case.

The claim was filed with the Beijing No 1 Intermediate People’s Court, which on September 25 agreed to hear the case. Huaneng's move is the result of Sinovel's failure to fulfill its obligation to complete product rectification under two separate agreements, which were struck after the plaintiff identified significant quality defects in equipment supplied by the defendant.

Huaneng Renewables is demanding that the supplier pay CNY 90.6 million for liquidated damages in relation to the rectification deals, and cover the litigation costs. Furthermore, it is refusing to pay to Sinovel quality assurance deposits amounting to some CNY 1.13 billion, which were part of the turbine supply agreements.

Sinovel has been supplying equipment for Huaneng Renewables' project since 2007.

Once a major player in the wind turbine sector, Sinovel has been struggling on several fronts for many months. It has been accused by US firm AMSC (NASDAQ:AMSC) of stealing trade secrets and is under investigation by the China Securities Regulatory Commission (CSRC) for suspected securities laws breaches. Also, its bonds were suspended from trading on the Shanghai bourse as it closed 2013 with a net deficit of CNY 3.45 billion, its second consecutive annual loss.

(CNY 1 = USD 0.163/EUR 0.128)

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