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China

China

A VISION OF WIND IN THE MAKING

In China there was far greater interest than expected in the Beijing International Conference on Wind Energy (BICWE '95), with extensive media coverage and high participation. The main theme of the conference was discussion of the ambitious plans for wind development of each province and how this was to be financed. China is the world's third greatest producer and consumer of electricity and has a goal for wind of 1000 MW by 2000. Installed wind capacity is now 29.3 MW and the article includes a detailed list of present wind projects and provincial goals. Concern for the environment is driving China's desire for more wind power, but the country expects technology suppliers to offer financing packages, too. Several proposed projects have fallen by the wayside recently because the Bank of China announced it would not guarantee any foreign trade and investment project involving wind power because there are too many of them in the pipeline. Financing remains a major hurdle.

One hundred more people than expected showed up at the opening session of the Beijing International Conference on Wind Energy (BICWE '95) on May 10. "We were prepared for the unexpected, but so many participants took us by surprise," said conference organiser Yin Lian, happy but somewhat bewildered.

"Neither had we expected that the media response would be so great," he added. The opening session, held at the five star New Century hotel in downtown Beijing, was aired by China Central Television, the state TV channel which reportedly has 800 million viewers. A dozen newspapers carried news about the conference.

Of the 300 researchers, engineers, equipment suppliers and investors attending the three day event, about one third were from 14 countries outside China. The 63 presentations received by the conference's scientific committee reflected the current status of world wind power, including development plans, resource assessment, turbine technology, wind farms and hybrid systems. At the exhibition, China, Denmark, Germany, the Netherlands and the US were represented by 14 companies. The Danish exhibitors formed the most powerful squad, consisting of the country's five leading firms -- Bonus Energy, Vestas Danish Wind Technology, Nordtank Energy Group, Micon Company and Nordex.

China is the world's third greatest producer and consumer of electricity and the conference was the first of its kind the country had hosted -- a fact which gave the event considerable national significance.

One thousand megawatt by 2000

In his welcoming speech, Shi Dazhen, China's minister of electric power, talked about China's near term objective. "By the year 2000, the total installed capacity of wind turbines in China should have reached 1000 MW," he said. "We are working very hard to attain that goal."

Vice minister of electric power, Wang Shucheng, a most energetic exponent of wind energy in China, delivered the keynote speech. "China has abundant wind energy potential," Wang declared. Over the past decade, meteorological and wind power experts have collected data at about 800 locations nationwide and concluded that the theoretical potential for wind energy is 253,000 MW. The regions rich with wind energy are mainly found in the north of China, along its south east coast and on the islands.

China began developing wind power in the late 1970s. The focus was then placed on battery chargers of no more than 1 kW for use in rural pastoral areas beyond the reach of state or local power grids. About 140,000 of these devices are now generating electricity for well over half a million people in northern China. "The country is now the greatest producer and user of wind chargers in the world," Wang said.

The first grid connected wind farm, with three Vestas 55 kW turbines, was constructed in 1986 in Rongcheng on the eastern coast of Shandong Province. By the end of 1994, 160 wind plants were in place at 14 locations with a combined installed capacity of 29.3 MW, producing 80 million kWh annually. The largest wind farm is the Xinjiang Wind Power General Plant in the Xinjiang Uygur Autonomous Region of China's far north west. It accounts for 40% of the total wind capacity and is made up of 45 turbines with capacities ranging from 100 kW to 500 kW. The nine year old plant produced 19 million kWh last year.

According to Wang, the Ministry of Electric Power (MEP) decided in 1994 to accelerate the development of wind power, spurred on by concerns about the environment. "From now on, we'll strive for more use of renewable energy such as wind, solar, tidal power, and biofuels to generate electricity," he said. "This is vital for environmental protection."

Later Wang explained that MEP's task was twofold: to develop electricity generating capacity and to protect the environment. China now has one of the world's greatest power industries with an installed generating capacity of 200,000 MW. Over 10,000 MW of new plants are added each year and this rate of growth will be maintained until the end of the century. But two-thirds of all generating capacity in China is based on coal and air pollution weighs heavily on the minister's mind. "We are faced with heavy pressure and urged to find a solution to the problem," confessed Wang. "Though the planned 1000 MW of wind capacity accounts for merely 0.3% of total capacity in China by the year 2000, it will be a significant step."

Industry blueprint

Answering the call of MEP, wind power companies in 12 Chinese provinces and autonomous regions handed in their blueprint for development in January. Their combined goal looks even more impressive: nearly 1300 MW of installed wind turbine capacity in 14 new or expanded installations by 2000 (see table left).

A problem remains, however. Financing for such ambitious plans is not immediately available. It is estimated that at least $1 billion will be needed to achieve this 30-fold increase in China's wind capacity. So far, the only possible financial support has been a low interest loan of 700 million yuan ($83 million) approved by the State Economic and Trade Commission.

Chinese officials speaking at the conference all expressed a welcome for foreign support to help China fulfil its ambition. "We'll do our best to acquire foreign technology and equipment as well as investment," Wang said. Conference secretary Yin Lian heads MEP's New Energy Division. "The conference is meant to facilitate the exchanges between Chinese and foreign wind power developers in their efforts to seek opportunities for co-operation," he said.

A one and a half day special business session was held in another hotel within walking distance of the main venue. MEP officials provided details about China's wind power plan for the next five years. Delegates from various regional wind power companies talked about their investment projects and answered questions from foreign delegates. The session presented "detailed history and the present level of Chinese technology in this area," explained the conference's co-chairman, Andrew Garrad of British wind consultants Garrad Hassan. "Chinese authorities really mean to have foreign investment."

However, what seems to be of most interest to China is technology transfer from its would be foreign partners. "How about lowering your prices and supplying us with your technologies," asked Shi Dazhen at nearly every stand he visited when touring the exhibition. According to Wang, China cannot yet make some of the key components, such as rotor blades and automatic control devices. "We need to learn from foreign countries how to build advanced equipment and how to run wind farms," he said.

To reach its stated goal of 1000 MW this century, China needs 2000-3000 large wind turbines. "It won't be possible for China to buy so many," explains a Chinese wind energy researcher, based in Beijing. "The key factor is to learn and build wind turbines on one's own, a process which we call localisation of foreign technology."

The existing Xinjiang Wind Power General Plant is an example of this approach. Since 1992 it has assembled 23 Nordtank wind turbines in its workshop at Dabancheng by using technical know how supplied by the Danish company. According to Lu Feng, vice director of the plant, a letter of intent signed recently with Dutch-Belgian company WindMaster included the framework for purchase of turbines and transfer of manufacturing technology. "We set technology transfer as the basic condition in the negotiation," he said. The plant's goal is to add 100 MW of wind turbines to installed capacity before 2000 -- and at least half of the new turbines will use Chinese technology.

Understanding China

Industry interest in the Chinese market is considerable. "China is a big market. At least half of the goal, some 500 MW, will be realised if answers can be found to some of the unanswered questions," said Vagn Poulsen, president of Nordtank. Foreigners are right to be aware of the special nature of the Chinese market. The country is still striving to build a market oriented economy after decades of a planned economy.

On the final day of the conference, the MEP's Yin Lian answered questions from delegates at the business session. Even he seemed unable to resolve one of the foreign delegate's puzzles: who in China has the highest authority when it comes to approving a wind project backed by foreign investors? According to Yin, this requires joint approval by four powerful government organs -- the State Planning Commission, the State Economy and Trade Commission, the State Science and Technology Commission, and MEP.

"As more and more wind power projects are expected, the state is planning to set up a special department to co-ordinate their approval and construction," he said. "But I don't know when this department will be ready to work and under which commission or ministry." There are other problems, too. As Leon Richartz of US firm FloWind put it: "There are three big problems: first, the approval procedure for projects, it's lengthy and obscure; second, currency conversion; third, suitable bank guarantees for the projects."

Although in the possession of official promises, foreign investors have often found it difficult to convert their profits made in China into hard currencies. Also, MEP announced during the conference that the Bank of China would not guarantee any foreign trade and investment project involving wind power. The reason was that, "The bank will not be able to provide guarantees for so many projects." As a result, several fledgling plans for investment have fallen by the wayside, including two for wind plants in Inner Mongolia to have been constructed with support from US companies FloWind and Zond Systems Inc.

Nonetheless the conference did mark some signs of progress. Andrew Garrad hailed the signing of six agreements and letters of intent as "tangible evidence of success." The agreements were signed during the closing banquet held in the Great Hall of the People, China's house of parliament. Micon, Nordtank, Vestas and Tecwise Industries Ltd of Hong Kong had all found buyers or joint venture partners in Beijing, Inner Mongolia, Xinjiang and Guangdong Province. Business will include import of ten turbines, establishment of four wind plant and two wind turbine manufacturing facilities.

But not all comments after the ceremonial signing were favourable. "Most of the contracts will be useless, if project approval and some financial problems are not resolved," said a US participant. "They signed the papers in expectation that their existence might push officials into thinking about taking action to encourage investor enthusiasm." Yet in his closing toast, conference chairman Wang Shucheng once again stressed China's 1000 MW goal. "That's our greatest intention to be signed with you, friends and partners from abroad," he said. The last word went to co-chairman Garrad. He considers the goal to be too small in light of China's size and resource. "But it's ambitious," he said. "If the conditions are right, it will be met."

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