The Chinese government has snatched power to approve wind projects from local government in an effort to ensure that the growth of the sector is properly controlled and regulated. The move is likely to slow the country's booming market.
In August, China's National Energy Bureau (NEB) issued a quota to each province limiting the amount of wind that can be developed in the country to 26GW between now and 2015.
Local government can still approve projects outside this quota, but these will not be guaranteed access to the grid. Even if they are connected, State Grid will only pay the benchmark prices for thermal power at CNY 0.4-0.5 ($0.06-0.08) per kilowatt hour, compared with CNY 0.51-0.61 for wind power.
They will also be denied subsidies from the national renewable-energy development fund, so any wind farms approved by provincial government will not be economically viable.
The quotas account for 70% of the capacity planned by local governments; however, additional quotas may be granted under the current Five Year Plan.
Inner Mongolia has been granted the largest slice of the quota, at 5.63GW. But officials there are not happy because this significantly constrains the region's ambitions to have 50GW installed capacity by 2020, up from its current 12.6GW.
Local government currently has authority to approve wind farms under 50MW capacity. Around 93% of China's wind projects have been approved locally. Developers have designed projects to be 49.5MW so that they escape the scrutiny of central government. This has been largely blamed for the fact that one third of installed wind turbines in China are idle due to lack of capacity on the grid.
The government's move could slow down the development of wind projects, which would in turn affect the return on investment. This could force the exit of smaller investors in the sector and slow down the growth of orders for China's turbine manufacturers.
NEB has granted quotas to many provinces with poor wind-power resources but great demand for electric power. Shi Pengfei, vice-president of the China Wind Energy Association, said this shows China is shifting its focus from exclusively building large-scale wind power bases to paying equal attention to scattered development in low-wind speed areas.
As the performance of low wind-speed turbines has improved, many provinces originally believed unfit for developing wind power have been connected to the grid as they are nearer electricity users (see page 52).
In addition, the China Electricity Council plans to launch a nationwide inspection of wind farms integrated into the grid since mid-August. The aim will be to ensure the turbines come with a low-voltage ride-through (LVRT) capacity. The absence of this led to the disconnection of hundreds of turbines in three incidents this year.
Industry officials want more investment to ensure grid stability. Upgrading LVRT capacity on a 50MW wind farm costs more than CNY 5 million ($774,000).