UPDATE 2-AMSC, HHI to jointly develop 5 MW wind turbines

* Wind turbines target growing offshore wind industry

* HHI expects to begin volume production in 2011 (Adds details, background)

BANGALORE, June 9 (Reuters) - American Superconductor Corp (AMSC.O), a maker of electrical systems for wind turbines, and South Korea-based Hyundai Heavy Industries (009540.KS) will jointly develop 5 megawatt wind turbines, the companies said.

Hyundai Heavy Industries (HHI) expects to begin volume production of these turbines by the end of 2011 and buy power electronic components from AMSC, the companies said in a joint statement.

The designs will primarily target the growing offshore wind industry, which has been gaining momentum with initiatives from U.K. and China driving the market.

Global offshore wind capacity grew by 690 MW in 2009 to 2,100 MW, with the U.K. leading the pack with an installed capacity of 894 MW. [ID:nTOE656048]

General Electric Co (GE.N) Chief Executive Jeff Immelt had said in May that the growth of offshore wind industry could help to offset what GE expects to be a softening in demand for land-based turbines. [ID:nLDE64O0DU]

Under the terms of the AMSC contract, HHI can manufacture and sell 5 MW wind turbines globally.

In October 2008, AMSC licensed 1.65 and 2 megawatt wind turbine designs to HHI. HHI has already begun volume production of the 1.65 MW wind turbines, the statement said.

China's Sinovel Wind Group accounts for about 75 percent of AMSC's total revenue. AMSC, which has been focusing on diversifying its customer base, announced a slew of contracts with smaller customers in the recent past.

AMSC shares closed at $27.91 Tuesday on the Nasdaq. (Reporting by Bijoy Koyitty in Bangalore; Editing by Don Sebastian and Vyas Mohan)