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China

China

Industry loses ally in corridors of power -- China restructures administration

Wind development in China has suffered a setback with the news that the State Economic & Trade Commission (SETC), a strong government supporter of wind energy, is to be dissolved and its responsibilities redistributed to other government departments or to newly created ones. Although the details of the restructuring are yet to be confirmed, it is expected that responsibility for new energy development, including wind, is to pass to the State Development Planning Commission (SDPC), already responsible for assessing development proposals and deciding if they can proceed.

The SDPC has traditionally taken a hostile view of wind, refusing to approve any projects in the last two years. This has forced developers to proceed without SDPC approval, often resulting in not being able to take advantage of tax breaks and other government incentives design to encourage wind development. SETC, on the other hand, has embraced wind. It provided subsidies for four wind power expansion projects with a combined capacity of 73 MW and is credited with introducing and persuading government to approve the 50% cut in VAT on wind power sales, which became effective in May 2002.

Split into five

The news of the SETC break-up comes hot on the heels of the restructuring of The State Power Corporation (SPC), which until a few months ago had been the most important player in China's power sector. SPC has been split into five power companies and two grid operators, with its own wind division. This has a total of 140 MW installed capacity in its portfolio, now under the control of the Long Yuan subsidiary. Wind projects that may have been planned by SPC are, the industry warns, likely to be put on hold as the company adjusts to its new status -- the transitional period could last anything from a few months to a year.

Government is expected to confirm the details of the SETC restructuring this month at its annual session of the National People's Congress. With the country struggling to meet even the lowest of proposed targets for wind power -- 1000 MW by 2005 -- the prospect of losing one of its major allies has left the industry worried. "Development won't stop," Zhu Junsheng of the Chinese Renewable Energy Industries Association says. "But don't expect it to run fast."

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