Xinjiang Goldwind Science & Technology Co Ltd
SZSE:002202
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Xinjiang Goldwind Science & Technology Co Ltd
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Distinguished investors, good afternoon. I would like to welcome you to join us for the Goldwind's 2021 Q1 Results Release. First of all, we are very honored to have our executives to join you for the discussion. They are our CEO, Mr. Cao Zhigang; and our Vice President; and Board Secretary, Madam Ma. Well, today, we also have Madam Ma to walk you through the Q1 performance, the market dynamics, our performance and our financials, and then we get into the QA.
I'd like to remind all the investors please pay attention to the instruction of raising questions. Madam Ma please?
Thank you. Distinguished investors, good afternoon, and I welcome you to join us for the Goldwind 2020 (sic) 2021 Q1 release. Last night, we published our Q1 performance and indicator in the report. And I also would like to share with you a PowerPoint slide, where today, I would like to give my presentation with 3 parts, financials, our operation. Please go to Page 3.
Let me just brief you on the 2020 global wind power market and in 2020, the new installation was 69.7 gigawatts, up by 53.3%. And the growth comes from China and the U.S., and it's being impacted by the tax season. So there's huge increase. And according to the data, in Q1 2020, China record 5.26 gigawatts of the new grid-connected wind power, an increase of 122.9% Y-o-Y. At the end of Q1 2021, China's cumulative grid-connected wind power capacity totaled 286.6 gigawatts, taking 12.9% of the power mix. Solar took 11.6%.
Thermal power declined to 56.5%. Let's also say that from -- in Q1 '20, the China's total power consumption was 1,921.9 billion kilowatts, up by 21.2% Y-o-Y. 173.7 billion kilowatt of the wind power production represent an increase of 15.6%, and the penetration ratio is 9%. Wind average utilization was 619 hours in Q1, increased by 69 hours.
Please go to Page 5. And I can say that in Q1 this year, domestic public tender market totaled 14.2 gigawatts, up by 182% Y-o-Y. By the end of March, average bidding price for 3S-series turbines was CNY 2,860 per kilowatt in March and 4S- series turbines was CNY 2,940 per kilowatt.
And this page shows you the state policies, including the comment on the subsidy factor as well as the proposals and the guiding principles for the energy work of 2020 in order to optimize the structure to promote the healthy and sustainable development of the wind power industry.
On the right side, it shows the NEA's responsibility quota of the 2020 for the suggested nonhydro renewable power consumption. And compared with 2020, the quota was lifted by 20% in Henan, Guizhou and Hunan. The quotas was exceeded 50%.
And let's also see business review. Please go to Page 8. And in Q1 of this year, company recorded 1,091 megawatts of the wind turbine sales, up by 28.8%. The 1.5 megawatts turbine totaled 4.7 megawatts, accounted for 0.4%. Sales of the 2S platform turbine totaled 582 megawatts, accounted for 53.3%, and the 3S/4S platform turbine totaled 318 megawatts, accounted for 29.1%, and 6S/8S platform turbine totaled 187 megawatts, accounted for 17.1%.
Let's talk about the order backlog. By the end of Q1, the company's order backlog is 15.9 gigawatts, and 14.5 gigawatts are external orders, 3.3 gigawatts are for successful bids. And also for the 3S/4S series turbine, booked 6.7 gigawatts external order and improved to 47% in the order mix. The 2S-series turbine took 41% of the external order and the 6/8S series turbine took 12%. By the end of Q1, overseas order totaled 1,986 megawatts, mainly in Vietnam, Chile, Kazakhstan, Pakistan and Philippines.
On Page 10, it shows us the power generation business. By the end of Q1, company's domestic and overseas attributable grid-connected wind power projects totaled 5,604 megawatts. 31% are in Northwestern part of China, 29% are in East China and the southern region. And in Q1 of this year, company added 116 megawatts of the attributable grid-connected wind power capacity in home and abroad, 14 megawatts was domestic here in China. By the end of Q1, company's attributable under-construction wind capacity at home and abroad is 2,714 megawatts. 28% are in North China and southern part; 25% in North China; 14% in Northeast; 7% in Northwest; and 25% for overseas market. In Q1, our self-run wind farms recorded 710 hours of utilization in the -- up by 29.8%, 91 hours higher than the industrial average.
Let's take a look at financials. On Page 12, it shows in Q1, our revenue increased by 24.8% Y-o-Y and booked at CNY 6,822 million and you can see that our GP margin increased by 6.9% to 28.4%. And at same time, in Q1, the recurring net profit was up by 18.8% to CNY 917 million and the net profit attributable to the owner of the company increased to CNY 972 million.
And let's also take a look at the operational cash flow and the working capital. In Q1, the cash conversion cycle shortened by 25 days to 81 days, among which, and in the first quarter of 2020, the net operating cash flow totaled CNY 3,682 million. The inventory over days shortened by 70 -- 37 days to 71 days. Receivable turnover days been decreased 121 days. Payable turnover shortened to 111 days.
On Page 14, you can also see that in Q1 of this year, our financial index are pretty healthy, including the tax service index. And we also say that our net debt was decreasing. The net gearing ratio is 53% and that's our Q1 performance.
Okay. Thank you. Thanks, Madam Ma, for your introduction. And now let's leave the time for the investors for raising questions. [Operator Instructions]
And now let's welcome the operator to gather the first question in.
[Operator Instructions] Let's welcome [ Awhoop Omah ] from Yangtze River Securities.
I come from Yangtze River Securities. I have 2 questions. The first question is, as we can see, from December last year on to the Q1 of this year, the total bidding and tendering volume was up launched and even go back to a very high level as what we used to experience.
So what's your outlook of the total instruments of this year? Is there any change compared with the guidance? According to your release, I find out, actually, now, more opportunities in the wind power industry, and how you're going to comment on that, especially the need from the industry?
And my second question is that we can clearly say that in Q1 of this year, our net profit ratio has been greatly improved. So regarding the turbine and farm operation, what would be the GP margin? And we can also say that the raw material price was up a lot. So is it going to impact the GP margin? One for industry and one for your business.
Okay. Let me say a few words for the industry. In Q1, the bidding and tendering volume or the size is closely related to the mass innovation strategies made by the central government. So you can say that from the real estate -- from the developer perspective, they are very enthusiastic to do the bidding and the tendering. And that's why we say the bidding and the tendering volumes up in the industry.
Well, regarding the installation of this whole year, the installation capacity would be still around 35 to 40 gigawatts. There will be no major changes. But here, there are 2 reasons to back up these judgments. The first one is that the bidding, tendering volume and the execution pace would be different from what we've forecasted.
For the bidding and tendering volume, it clearly shows that for developers, they already wanted to further deep dive into the renewable energy and especially to make sure the project will be well executed, where at the same time, we can clearly notice that within the grid and the local penetration in the power mix, there's some so-called mismatch.
That's why for this year, in the tendering and the bidding projects, majority of them will be installed or executed in 2022, where some of them could be actually installed in 2021. And that's what I see for the pace of the installation or execution.
And another factor, I'd like to mention that recently, we joined many tendering, bidding projects. Even if some of those projects will need a national master plan, but there are still some projects that have not yet been fully approved by the government, and especially the grid connection approval has not been done. The land usage applications not yet being approved by the government.
As far as we can say from NEA and from NDRC and when those projects are in the master plan, but regarding the project execution, there are still some projects who failed to finish all the procedures for government approval. So that's the reason in 2021, I say this is going to be a big challenge because in 2020, we see a peak of the installation capacity. And that's why many of the clients, some of those projects being approved by the government has already been installed in 2020 because of the subsidy reason.
And especially last year is going to be so different from the past few years. So regarding the tender and bidding volume, I think for the whole year of 2020, it's going to be kept at a very high level. Well, for sure, there are some positive signals to us. You can see that in 2022, we're probably going to see early turning points to make sure the industry is going to be up again, but it will also be decided by multiple factors. Recently, the NEA and NDRC also issued the period notice, especially regarding the policy changes of the renewable energy industry.
As far as I see that from the government, they still want to keep an eye on the approval to speed up the approval procedure. The approval is on the approval of the projects being applied. I say that those policies is going to accelerate the development of the whole wind power industry.
Well, the second question is regarding the GP margin. In Q1, the GP margin of our product compared with Q4 of last year, and it was up. In Q1, the GP margin for turbine product is around 15%. Well, for the wind farm, the GP margin is around 70%. You can see that all being improved compared with 2020.
So Mr. Cao, a follow-up question. We find out the price was up in the whole industry. But from Q2 of last year, it seems that the bidding price was down a little bit. Can we -- but we still improved our GP margin. What's the reason?
On one side, the components and the raw material price were up. And in Q1 of this year, it pressured our business to some extent. Where at the same time, you can see that in China, the economic growth rate is as far as, I believe, better than what we saw last year. So this year, we're going to see some pressure from the raw material and the component price up.
But to be frank, and we say that in 2020, there are some so-called price distortions and because many companies trying to install the capacity last year. So the upstream is the demand over supply. That's why the price was up aggressively last year. But this year, the price was down. And also the raw material price was up. This is somewhat performing hedging, and that is going to impact the GP margin of the whole industry.
But besides those factors I mentioned are also going to be closely related to the business structure changes. As Madam Ma has already mentioned in the presentation and currently, and the price per kilowatt of our turbine product is also going to further improve our GP margin of 2021.
Okay. One follow-up question. Regarding the first question, I asked just now, it seems that the price was decreased due to the tendering and bidding of this year. So it seems that no subsidies from the government for those projects. So some of the so-called projects for this year would be delivered earlier and well, some of those high-priced project from last year would delay the kind of delivery.
Well, from the fundamentals perspective, that won't happen. As far as I mentioned, in 2020, many of the approved projects has already -- have already been installed. In 2021 for all the developers, a big concern is to further improve the project connected through the grid.
They still need to execute the project in their hands in the backlog. Well, for some projects, probably because they have some problems for the grid connection, they will be delayed. But all in all, I say that there won't be too many projects being delayed for this year. And for the projects that go through the tender and the bidding this year, some of them will be executed this year or some will be installed in next year.
Next question comes from [ Changhua Oyan Securities ], Mr. Chimee Yee .
I have 2 questions to our executives. The first question is still regarding the domestic market. You can say that for this year, the bidding scale was up, especially the onshore wind farms, and they are actually adopting the platform about 4S turbines.
So in the near future, and whether the turbine product is going to march towards the large size order kind of development. According to the order backlog or the order in our hands, for this year, for the whole year, I mean, are we going to see that some high-power turbine business is going to be up this year?
And my second question is that, regarding our long-term market share target, as far as I can see that according to the report, our market share is relatively stable. So do you have any kind of target for the long-term market share?
Let me answer the first question. From the tendering and bidding process, you can say that the clients are adopting more high-power turbine products and this is not the new trend this year. Last year, we already saw the structural changes. And for the turbine, above 3 gigawatts, they are growing very fast.
Well, for this year, a clear signal, we can see from the marketing that among all the bidding and tendering projects in some low wind speed areas are going to use larger blade product and the low power turbine product. But in regard of the low turbines, its still going to be 3.6 gigawatts and the length of the blade would be 170 meters and the diameter, the same as the offshore wind farms around the 2 to 3 years ago.
So even the capacity of the turbine is quite limited, but they adopt large blades. Where in northern part of China or in those areas with abundant wind resources, the capacity would be around 4 gigawatts or even sometimes 5 gigawatts being adopted -- megawatts. And I also say that some of the projects are actually adopting those large capacity turbines above 4 megawatts. So that's the so-called high power or high capacity trend in the tendering and bidding process.
And if you follow the wind power industry for quite a long period of time, you may clearly notice during the twelfth 5-year plan and many of the turbine products are for those small blade, yet high capacity turbine. But during the 35-year plan in China, and because of the so-called red and orange alarms, there's no big development for the wind power industry. So at that time, we started to see larger blade, yet small capacity turbines being adopted because it actually provided a relatively low levelized cost of electricity for those areas with less wind resources.
In the 45-year plan, we have the market for the low wind speed aerial and also the market for the high wind speed aerial and they are going to adopt a different product after the 35-year plan. Now, at the first year of the 45-year plan, we're going to see some new developments. Different region, they may have a different need over the turbine product. So you see that high capacity turbine product will be adopted in northern part of China with abundant wind resources. That's one factor I'd like to mention.
Another factor or a good signal I'd like to mention is that during the tendering and the bidding process, in the past, we have brought small amount of the client. And they, in the past, only do the price quota, where now they also have the design certification to make sure the product can get into the tendering, bidding process. Well from this year on, they started to be more interested in getting into those new turbine products with the design certification.
This can support a new technology and the new product that could be applied in the new project that can help to further reduce the LCOE. But a big risk, this trend also may generate that in [ raised markets ] for the home market, I think it is overheated or even from the emotion perspective, it's being overheated. And many investors, many companies, they are too excited over the cost as well as the business volume in the near future because every year, after the peak installation period, in 2010 and in 2015, we have already experienced 2 rounds of the peak installation. One year after the peak installation, a certain problem will happen because the market is being overheated. It will also lead to some so-called quality instabilities.
Recently in the media and also see some installed new projects last year, some of them encountered severe quality risks. So with such a backdrop on one side, we need to make sure that we do prototyping and to the mass delivery. It's not easy. You have to shorten the process, and it's readying the company to have a very robust capacity for testing and the commissioning, and that's our judgment over this market. And that's also for the past 8 months, we invested CNY 500 million to build the 16-megawatt project to make sure that how can we leverage the technology to make sure the new product could be commissioned as quickly as possible.
Right before the mass commission, we started to do the physical test, the physical certification, to help to reduce the quality risks, well-rated part in the market share. Actually, in our annual reports and in our roadshow, we have clearly passed on the information to the investors. Our forecast of the market share is still going to be 25% in 2021. It may take 2 to 3 years to see more fluctuations. And then the market will get into a new environment, and the market share would be stabilized.
Next questions come from state bank lucinda ].
My first question, last year, the 2.0 and the 2.5S platform or series turbines, including 0.0 and -- 2.0 and the 2.5S turbines would be down in this year. And in Q1 of this year, I would like to know the profit of the wind product?
Actually, with our existing product, we took the platform strategy. And therefore, to point platform, we have 2.50 and 2.5S series turbines. Where for this year, we don't have any decommission of the wind farms.
Next question comes from Goldman Sachs, Ji Chao, please.
I have one question. Regarding the H2 of this year and next year, what would be the bidding price for the turbine product in the market? Well, with the carbon neutrality for the wind electricities and the wind turbine product, what measures are we going to take in order to further reduce the cost?
Well, for H2 of this year, the bidding price, I think you may pay attention to the bidding price in the market. There are some sharp decrease. But you know that different producers or the company, they have a huge range for the product fluctuation. In the past, the gap of the price is only RMB 100 or 200, but now as far as I can see, some lowest price would be RMB 2,400 kilowatts.
And for some high price, it would be around RMB 2,800, RMB 2,900 per kilowatt. And we believe this may also tell the range for next -- for the second half of this year for the bidding price in this market and the price would kind of fluctuate in such a range. And that's my forecast of the bidding price for the wind electricity and they, well, to some extent, also impact our consideration on the cost side.
Regarding the cost reduction measures, in the past, I mentioned some technical ways of reducing the cost, but you can see that there are so many measures being taken. Many of the upstream component producers, they may have a more common language to share the numbers with the industry. While adopting the new material and new technology adoption, there are some new ways for us to further improve the work.
And for example, the bell ring production stage, in the past, for the upstream, ring- like component is a standard ring-like component. But with the new cost pressure, the suppliers, they started to develop the new solution, which means that this is going to follow the trajectory of the bell-ring and then to help to provide the corresponding solutions for the post processing of the raw material.
It can provide a similar shape of the finished product for methylene and for forging. In this way, it can help to reduce 10% of the raw material consumption or, in other words, it actually improved 10% of the raw material utilization rate. From the processing time perspective, it can also help to shorten around 60% of the processing time. That's just the 1 part -- or 1 segment of the processing.
From the technical perspective, I say that at a different stage of the history, we may see some breakthrough technologies, and it will help to contribute to the cost reduction and raw material utilization improvements. On the other side, I also mentioned in 2020 the price of the market, because the demand over-surpassed the supply a lot, so the price was up greatly. But for this year, we see that the price is recovering.
And this can actually help to hedging the pressure for the raw material cost improvement. And we're also working with the upstream suppliers to make sure that we can do more work for the raw material price forecast, especially when we taken care of the sourcing price for the commodities, we can leverage the scale effect. We're going to leverage a few enterprises together to form a centralized sourcing, so that we can help to reduce the cost to some extent. So that's the idea we have.
Regarding using technologies, the business helps to reduce the cost. And for sure, those are for the so-called direct cost. Well, for the indirect cost, we're starting to improve the electricity generation capacity of the turbine to reduce the RCOE and then to embrace the challenges in the market. Thank you.
[Operator Instructions] Next question coming from ICBC International, Nelson. And now you can raise your question.
I have 2 questions. My first question comes regarding the shipment. In Q1 of this year, the shipment was up by 29% to 1.1 gigawatts. And you also shared with us for the whole year and probably -- and the -- it would be around 35 to 40 gigawatts. And so the -- how are your development? So is there going to be any changes for our 10 gigawatts shipments of the whole year?
Second question is regarding the financials. So we can say that in Q1 of this year, the profit before tax was up by 90% but our income tax was almost being doubled. So I'd like to know the reason.
Well, regarding the shipment, we forecast it's going to be 12 gigawatts, and that has already been put into our annual report of last year, and the new grid connection would be 12 gigawatts, and that's from the size perspective.
Second question is regarding the tax revenue and the tax or regarding the income tax. And to a great extent is because our business capacity has been further improved, and we changed the business structure but we pay more tax, and that's the reason and the tax paid has been doubled.
[Operator Instructions] Next question comes from the Yangtze River Securities, [ Yang Chao ].
I have 2 questions regarding the Q1 release. The first question is that, along with the project [ speaker ] in 2021, our sales is around 1.1 gigawatts, where for the whole year, it could be around 12 gigawatts. So from Q2 to Q3, what would be the sales plan?
And my second question is that talking about our operational cash flow -- operating cash flow, you can say that in Q1 of this year, because the sales revenue, as well as the raw material cost improvements, we have less operating cash in Q1 of this year. So I'd like to know what would be the situation for the material sourcing and what would be the plan to confirm the payment?
Regarding the wind power industry, a feature is that we have very high seasonalities because the wind power farm construction raised in Q1 and Q2, and many work will be on the wind farm construction in Q3 and Q4, and we'll work on the delivery of the turbine products and confirm the payment. And these 2 issues are related to the seasonality of this industry.
In Q1, we have more -- we have less operating cash flow because we have some legacy projects that need to be installed in this year. Well, for the whole year, I think we can see the sales of 12 gigawatts. So compared with more than 14 gigawatts, this year, we're going to see a decrease the sales. Because from the total installation perspective this year, the whole industry is going to see a down trend. That's why our sales is going to be reduced by another 2 gigawatts. But in Q1, we also see a slight bounce back. So from Q2 to Q3, jointly speaking, we're going to deliver less gigawatts compared with last year.
But regarding the development, this year would be called a normal year because last year was peak installation year. In Q3 and Q4, you are going to see more installations being made, while in Q1, Q2 and jointly speaking, is going to be lower than Q3 and Q4.
Regarding the cash flow, you can see that regarding the operating cash flow, in Q1, would be a negative number, where for last year, due to the peak installation, we have a very good payables and the receivables and that's why last year, we have a positive operating cash flow, but last year is quite special. While, for other years, in Q1, the operating cash flow would be negative.
So it's normal for this year for the operating cash flow to be negative in Q1. While, in Q3 and Q4, it's the peak time for the receivables to be made. So I think this year is going to follow the normal trajectory of the development. Q3 and Q3 would be the peak season for payment to be confirmed. For the whole year, the -- we're going to see positive operating cash flow.
I would like to make one more point. The new grid connection wind power would be 12 gigawatts, where the sales would be around 10 gigawatts besides 2019 and then 2020 for the 2 peak installation years. In normal years, in H1 and H2. H1 can confirm 35% of the payment, where H2 can confirm 65% of the payment. That's the normal payment ratio we have in H1, H2. H1, 35% and H2 65%, and they still are going to stay at this ratio again.
Next question comes from Ping An Securities, please.
I come from Ping An Securities. I have 2 questions. The first question is regarding the GP margin of the turbine product in Q1. It's 15% compared. With Q4 last year, is it an increase or decrease? And also, we see some new orders in Q1. It will be around 1 gigawatt. And in the near future, are you going to change your strategies of having more orders?
And then the second question is that recently, we see the wind power price was down a lot. What's the reason? Is it because the fierce competition? Or is it because of the technology development leading to the cost reduction and then leading to the price reduction? Of course, in Q1, you have many bidding, tendering process and the projects will be installed next year. It may take 1 year, and there are so many uncertainties for the bidding and tendering process. So how do you consider the bidding price and especially the profitability when you deliver the installation to the client?
Okay. In Q1 of this year, the GP margin for turbine is around 15% and same as H2 of last year. While, from the order perspective, of course, for this year, generally speaking, and the tendering, bidding process in the market was up, especially in terms of the volume, but some of the projects are still weighted for the tendering and bidding. For the company, we still want to keep our product being competitive in the market and seek for certain profitabilities to stabilize the development. That's our strategy.
You also about -- asked about the second question. There are some fluctuations over the price for the wind power. We have a few kind of judgments. First of all, we saw it's probably due to the sense of anxieties. This year, China reduced the peak carbon emission, the carbon neutrality goals. So each developer, they have some aggressive plans for the new installation.
But all in all, they need to make sure those plans could be delivered and for the new installation and the grid-connected project, because for this year, many projects start from the scratch from approval and to commissioning. So this may let people feel pressured for market competition because we have some legacy projects need to be executed for this year.
Well, regarding the total delivery of last year because last year, in H1, the market is being impacted by COVID-19. So many of the installation has been done in H2. And if we double the installation for the second half of this year, the whole industry, we have a potential of 70 gigawatts, but that's a pure mathematic program.
While, regarding the 70 gigawatts, a series number from a production management perspective, and we can already hope to hit 70 gigawatts for the whole industry, but still some production lines need to be adjusted. The 2S turbine production lines being switched to high capacity turbine products. We need to build new capacities and the new production lines. But in the near future, we foresee that the production capacity won't be a big constraint factors.
At the same time, the government can also feel that if there's any kind of technology that is preventing the industry for further development, for example, in the automotive industry, they have the chip shortage and also the localization of the bell ring . This will help to improve the market size and volume because we have new market entrants that can help to break down the traditional technical threshold.
So recently, I find out the wind price being reduced on one side, is because of the industrial competition and another reason is because the technical advancement has been clearly foreseen. And based upon such a forecast, the market was down to some extent or the price was down to some extent.
Next question comes from Merchants Bank.
I have a few questions. We heard about, for this year, you have some forecasted installations. Are you going to change your guidance for this year for the new installation? And I also heard that during the bidding and tendering process, some of the projects they haven't been approved yet, but they started bidding tendering process. Is it mean that the owner of the project, they are worried about the price may go up in the near future?
And I also would like to say we switch from 2S to 3S and 4S turbines. And for the wind farms, is it possible for them to further reduce the cost? And how much of the cost would be reduced by switching to the high-capacity turbines?
For the owners -- I'm sorry, I didn't hear the second question better well. Can you repeat the question again?
The second question is that some of the project owner, the project has not been 100% approved. So it means that they started early in bidding process before the project being approved, is because they are worried about where the price is going to be up in H2 of this year or not?
Okay. 3 questions. I'd like to answer them one by one. For the new installation, there are going to be 33 to 40 gigawatts and that's the general situation in China. No big changes compared with our private guidance.
While, it's hard for us to see why some owners, they started bidding and tendering process before the projects improved, I think there are many reasons in the market. For some of the projects, some of them has already been approved, and some of them are in the queuing phase this for NDRC to be approved.
While, so some projects, they are not 100% being approved by NDRC yet, we see that for the project owner, they'd probably be more positive for the future market development. It's probably not because the price is going to be up again in the near future. While, that's just my judgment and my assumption.
And you also mentioned about switching to the high-capacity turbine, how it's going to help to reduce the cost. Well, you can see some latest product or the cutting-edge product, and they were being built into 1 platform. And the platform can actually be extended further, which means it can accommodate larger blades. And the power capacity of the turbine would be further improved. And also, they can also accommodate some small blades with higher capacity. And from a 4-megawatt turbine, it can actually be extended to 5-gigawatt turbine -- megawatt turbine because the platform can accommodate the capacity extension, and that base can help to reduce R&D cost for the wind farm owner and also provide us a good cost advantage.
You see that for the past, many of those platforms, they won't be able to improve the capacity that much. For example, 2 gigawatts a turbine. At that time, we also did 2 plus turbine, and the capacity can only be improved by 50% from 2 megawatts to 2.2 or 2.3 megawatts and they won't be able to increase to 2.5 megawatts. So the capacity extension is not that good compared with the existing 3S or 4S platform or turbine.
So when we have a high-capacity turbine and we can leverage such a trend to help to provide the owners with a very scalable capacity. While, when the blade is large enough, it's going to see some of these problems to make sure that the electricities may not be suspend , but we're going to take care of this technical issue.
Next comes from Markee Lee from CSCB ].
2 questions from me. First question, this year is also the peak season for the offshore wind farms. So what would be the volume for the grid connection? I also would like to confirm with you because for the new 6S turbines, we have 1.7 gigawatt of the orders. Are those orders being delivered within this year?
My second question is that for our whole year GP margin for the turbine?
Well, for the offshore wind farms, the grid connection volume would be around 8 to 10 gigawatts and for Goldwind, we're going to take care of 2 gigawatts of that. That's our forecast.
Well, regarding the offshore wind farms, the order backlog we have need to be delivered within this year. I think other competitors may say the same situation, but for 8 to 10 gigawatts, and I think the tendering, bidding of the offshore wind farms installation would be higher because it seems that market believes this year, we're going to have more peak installations for the offshore wind farms.
But first, what we can say that from 2020 for the offshore wind farm bidding and tendering and for the production capacity forecast, we believe in the market, the backlog would be delivered within this year. We'll talk about the GP margin for turbine products, the same as the previous years, around 80%.
Thanks for the question, and thanks, everyone. And due to the time reasons, we would like to have the final question, please.
Next question would be the final question for the release. Now let's welcome Jong Guyoo ] from Guosen Securities.
I have 2 questions. The first question, we do the wind farm development. I'd like to know the cost for the wind farm development. And there are going to be any difference for north and south part of China? Well, for the great parity, what about the IRR?
And secondly, the wind farm bidding price was down a lot. And how about the turbine product in the grid parity market?
Let me share with you my comment on the first question. You can see that we have to leverage the so called LCOE. For some regions, it can be reduced to RMB 0.1 per unit, where in northern part of China, it can make the ROCE as around RMB 0.2 per unit. But still, there are some difference.
And, you see that in China, we also have some difference. Some plateau areas and mountain areas for the LCOE, the price can be reduced to RMB 0.3 per unit, or even just around that price. The mid and southern part of China, we have lateral resources. So ROCE is relatively higher than the northern part of China. That's the number I have.
Well, regarding the revenue, compared with the subsidy page, you see that the price was down for the offshore wind farm bidding price and also the existing policy will also impact, what it's going to be in the near future. There are 2 reasons. And first of all, was on the reasonable hours. Well, within reasonable hours, and generally speaking, we're going to take a leverage price to do the settlement if it's more than the reasonable hours. Then we have to adopt the market-oriented electricity price. But for each province, they are quite different. This will also impact the ROI.
And during the 45-year plan, there's also going to be a big change for some high energy consumption enterprise system, to some extent. They are also going to work with some aerials with abundant wind resources. In the past, we talked about the long-term electricity transportation from north to east or from south to north.
But in the near future, we're going to do more work and to make sure we will have some long range transportation of the electricity to take care of the unevenly distributed wind resources. Where at the same time, there are also going to be some high energy consumption areas to go to some -- to relocate our business in the wind abundant area. In this way, it also help to reduce the energy cost during the transportation stage. The company may benefit from lower LCOEs.
From the revenue perspective, as I mentioned, in different regions, that might vary. It would be as low as 6% for the ROI, where some higher ones would be more than 8% or even 9% and that's the IRR for the investment. While, for the financing cost, it will be different for different companies. So it actually varies.
Regarding the future trend, on one side, we pay attention to the project owner to see the price change they have because LCOE changes or LCOE reduction would be a certain trend, but with the new industrial infrastructure, we're going to see different pricing model at a different time of the year, of the day, we may have different power generation capacity. And the better it works, and for those ones with less accurate forecast, that may lead to the electricity price to be up.
So gradually speaking, in the past, 100% for the leverage electricity price. And then other parts are coming from the market-oriented price. I'm not sure whether the market-oriented price would be the mainstream in the near future. But in the near future, we're going to just say more market-oriented pricing trends. With such a backdrop, we can also say that RCOE is also impacting the CapEx and the maintenance cost of the wind farms, combined with 2020 full year, we're going to see a downward trend. Recently, I see the price level was down because of this reason.
And another parity that -- I think many of the project owners, they used to see a high price in 2020 and in 2021, the price was down. This will kind of makes the price fluctuates. But in the longer day -- time, stabilization of the LCOE is a direction we're surely going to see. So regarding the product bidding or reducing the RCOE, we just follow the market-oriented approach to do so.
Thanks for the questions. And thanks for the answers. Here comes to the end of the release. And for other materials, we will upload them to our official website. And thank you again. Thanks.