China

China

Wind will be China's third largest power source by end of the year

CHINA: Chinese officials are confident that a switch in emphasis from permitting new wind farms to ensuring grid connections for all existing projects will make wind China's third largest power source.

Liu Qi: Wind to be China's third largest energy source
Liu Qi: Wind to be China's third largest energy source

Speaking at last month's China Wind Power 2012 conference, National Energy Bureau deputy director Liu Qi said China's grid-connected wind installations would exceed 60GW by the end of this year. This will bring wind power in behind thermal and hydropower as the third largest power source in China, generating 100 billion kWh. By the end of June, China had 52.58GW of wind turbines connected to the grid.

Beautiful China

Liu made his announcement just days after China revealed the new leadership of a seven-man politburo led by incoming president Xi Jinping. The new leadership promised to create a "beautiful China" over the next decade, with wind in a major role.

According to the national plan, China will have 100GW of wind turbines connected to the grid by 2015, generating 190 billion kWh annually and making up 3% of China's power supply mix. Wind power comprised 1.2% of China's power supply in 2010.

Liu promised conference delegates that China would strive to promote sustainable development of the industry, listing a number of measures including the promise to strengthen and expand the grid to enable it to admit more wind onto the system.

Liu's remarks received an enthusiastic response from industry officials, as poor grid access has led to the curtailment of many operational wind farms' output and lengthy delays in connecting new projects. In 2011, the curtailment rate was 16% nationwide and over 20% in northeastern Jilin province.

Li Junfeng, director of the China Renewable Energy Industries Association (CREIA), said at the conference that China curtailed wind turbine operations last year that could have generated 10 billion to 15 billion more kWh electricity. The situation would deteriorate this year, he said, with wind farms losing the opportunity to generate 20 billion to 25 billion kWh.

Liu said this problem reflected that the traditional energy system, management system and policy measures have not been able to accommodate wind development.

Li said that connecting wind turbines to the grid, previously a headache for wind farm developers, is no longer the biggest problem, and that grid connection is faster than turbine installation in growth rate.

The bulk of China's wind installations are concentrated in the north of the country. The problem with consumption, said Li, mainly rests with delays in constructing transmission lines to deliver this wind power over long distances to economic powerhouses in central and eastern areas.

Network

Zhang Zhengling, spokesman of utility State Grid, said the firm has planned to build three east-west and three north-south ultra high voltage (UHV) transmission lines to constitute an UHV grid network in the 12th Five-Year Plan period (2011-2015). Three north-south UHV transmission lines send wind power from north China's Inner Mongolia and Hebei province to the eastern Jiangsu and central Henan provinces.

In May this year, State Grid started to construct 800kv UHV direct current transmission lines, capable of sending wind power from northwest China's Xinjiang to central Zhengzhou in Henan province.

But Li said: "A UHV transmission line is not the only solution. We can build more 500,000kv transmission lines to send over wind power instead."

Building smaller-scaled decentralised wind farms, to be connected to 110kv grid for local consumption in eastern and southern areas has also been favoured by wind power developers. Li expects China will take two to three years to solve the wind power consumption problem.

Struggling

China's wind companies have all been struggling this year as installations were slowed by the government as it sought to stem the grid-access issues by limiting new projects. The recession was apparent at the China Wind Power 2012 conference, where in sharp contrast to bustling scenes in previous years, few companies exhibited new products and technologies or promoted expansion plans.

This slowdown is hitting turbine manufacturers particularly hard. Sinovel, for example, had CNY 3.634 billion ($577 million) operating revenues in the first nine months of the 2012 financial year, down 57% from the same period last year. In the third quarter, its operating revenue was only CNY 548 million ($88 million), down 82.12%. It lost CNY 280 million in the third quarter, compared to CNY 242 million in profits in the same period of last year.

Sinovel last month put 351 staff workers - 12% of its staff - on a so-called "paid vacation". The chosen staff, mainly from the firm's Beijing headquarters, will earn a CNY 1,080 ($173) wage each month, 80% of the minimum wage in Beijing. They previously earned CNY 6,000-10,000 ($964-1606) per month.

Industry insiders said Sinovel did not specify when the staff would return to work, and that it was a move to sack the staff in a disguised form. In May, Sinovel unilaterally broke contracts with 350 enrolled college graduates.

Delegates at the China Wind Power 2012 conference believe the incident was a landmark, showing China's wind turbine manufacturing sector is in hot water. Insiders said the move indicated that Sinovel is operating under capacity, has insufficient cash flow, fewer market demands and a dropped rate of margin.

Speaking at the conference, CREIA's Li said: "Wind turbine makers should understand the situation clearly. They should not blindly expand production capacity. Instead, they should put in time and energy to improve the quality of turbines, and elevate turbine stability and power generation capacity."

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