China

China

Shandong province: Golden opportunity on the Yellow River

CHINA: The Yellow River Delta in the province of Shandong is poised to become one of China's next major wind energy-producing areas. Before Christmas, the country's main economic management agency, the National Development and Reform Commission (NDRC), approved a blueprint for green economic growth in the delta. That has actively encouraged the construction of new wind farms across the region.

The Shenhua Guohua Zhonghian in Rongcheng City, Shandong province, will reach 99MW when completed
The Shenhua Guohua Zhonghian in Rongcheng City, Shandong province, will reach 99MW when completed

As things stand, the delta is still a long way behind China's two leading wind energy-producing regions: the Shandong province, in eastern China, in total has only 92MW of installed capacity compared to China's biggest producer, Inner Mongolia, which has a total installed capacity of 3GW, and Gansu province, which had 650MW of installed capacity by the end of 2008. But experts believe that with the delta's combination of favourable geographical conditions and, now, official sanction from the state, its time as a sizeable wind power producer has come.

"The Yellow River Delta area can compare with western developed countries (in terms of conditions for) developing wind farms," says Ding Feng, deputy chief of Zhanhua County, based in the delta. "It suffers from no sandstorms, because it sits near the sea. It is easier to construct wind farms and maintain facilities in the wind farms compared with western China."

One point in the delta's favour is that its coastal location brings the kind of strong, steady and clean winds necessary for generating wind energy. The annual effective wind for wind power generation in the delta reaches 2500 hours with annual wind power density above 375 watts per square metre. Wind power density measures how much energy is available at a plant for conversion by a wind turbine into electricity. Although other wind energy-producing parts of the country, such as western China, also enjoy steady winds, they frequently suffer from dust storms.

Another factor expected to assist the growth of the delta's wind energy industry is that, under the economic growth plans for the delta, any new farms in the area will be built on shoals or undeveloped state-owned land along the sea rather than farmland. Wind developers will therefore have greater flexibility over choosing sites, which should help reduce construction costs.

Furthermore, compared to parts of western China, areas where the transmission of wind power is logistically difficult due to poor electricity grid infrastructure, the Yellow River Delta by contrast has a well-developed grid. "This makes wind power development all the more important in the Yellow River Delta area," says Ding.

"Here, we don't need to send electricity to faraway areas; wind power electricity may be consumed locally."

Despite its potential, several factors have resulted in the delta's wind industry lagging behind other parts of the country. One is that Shandong has a plentiful supply of thermal energy. The nearby Shanxi province is particularly rich in coal resources, meaning power from this source has traditionally been cheaper than wind to produce. In western China, thermal power is more expensive and often runs short of demand, making the case for wind stronger.

Also, areas in China with a more advanced wind sector tend to be generally less economically developed than Shandong. These areas have attracted greater levels of investment in wind power, as it has been seen as having a more important part to play in local economic development. But there are signs that investors are now starting to show an interest in the Yellow River Delta. For example, in Dongying, the delta's main city, four wind farms are currently either planned, under construction or already in operation.

Early adaptors

The first of these is the Huanghenan wind farm, a 49.5MW project run by China's largest power company, Datang, and the first wind farm to be developed in the Yellow River Delta. Huanghenan was put into construction in June 2008, and the scheme's first five turbines began supplying electricity into the Dongying power grid last February. One in 20 local families now uses power from the wind farm. By early this year, Huanghenan is expected to be operating at its full capacity.

Besides Huanghenan, Dongying City also has on the table the 49.5MW Hekou wind farm planned by major power company Huaneng; the 99MW Lijing project by Guohua Energy Investment, one of the country's largest wind developers; and the 48MW Huanghekou wind plant planned by Luneng, one of China's first companies to get into wind power. All are due for completion soon. Overall, by the end of this year, Dongying is expected to have 250MW of installed capacity, rising to 1GW by 2020.

Meanwhile, Weifang, another city in the delta, also has four wind farms in the pipeline due for completion this year. The first stage of Huaneng's Shouguang project, a 49.5MW development, is already in operation, while a further three are under construction in the city. In Laizhou City, Datang, Huaneng and state power company Huadian are investing CNY 22 billion ($3.2 billion) to construct wind farms and to date have 300MW of capacity installed. The total installed capacity in Laizhou is expected to exceed 1GW within three years.

And now investors have received the additional fillip of the NDRC's approval of the so-called programme to develop highly efficient ecological economic zones in the Yellow River Delta. This was submitted by Shandong Province authorities last year and, in essence, sets out a vision for tapping the economic potential of the delta at the same time as preserving its environment. The plan divides the Yellow River Delta into three zones: one earmarked for intensive urbanisation and industry; another designated as a protected area containing nature reserves, water resources and other ecologically important sites; and a so-called controlled development quarter for rural development, comprising shallow sea areas, river channels and agricultural land.

High expectations

Within this later category, the plan says developers will be encouraged to build wind farms, capitalising on the relatively low cost of land in these areas and the prevalence of steady wind. The Shandong Provincial Development and Reform Committee now predicts rapid growth in the province's wind power capacity. It anticipates that installed capacity will rise to 920MW by the end of this year, to 1GW by 2015 and 3GW by 2020.

The growing level of activity in the delta's wind energy sector has also prompted a number of wind power equipment manufacturers to expand their investment in the area. In 2006, German wind turbine manufacturer Nordex invested $13 million to construct a turbine blade plant that has the capacity to produce 300 units a year. The factory, in Dongying, was put into operation in December 2006. Also in Dongying, Shandong Zhongkai Wind Power Equipment Manufacturers in 2008 put into operation the first stage of a factory to build towers for wind turbines of capacity 2.5MW, 2MW and 1.5MW, as well as smaller units.

In Binzhou, another major city in the Yellow River Delta area, the privately owned Changxing Group invested CNY 650 million ($95 million) in 2007 to construct wind turbines. It now has the capacity to develop 1-3MW turbines. In May 2008, it signed an agreement with Inner Mongolia Tongliao Wind Power to supply 200 machines. The first batch of 50 sets of 1MW turbines were sent to Inner Mongolia in December 2008.

There have even been suggestions that Shandong may start exporting its expertise in wind turbine manufacturing. Financiers have shown interest in investing in the province's burgeoning renewable energy sector. Last summer, a conference in Hong Kong showcasing the province's industries reportedly secured over $28 billion of investment in 72 separate deals, many of them in the wind and solar sectors. Hong Kong's financial secretary, John Tsang, was quoted as saying Shandong's enterprises, among them its wind power industries, could use this investment platform to go global.

Checklist

According to Wang Yan, an official with the China Wind Energy Association, to ensure the delta's nascent wind energy sector is developed effectively, state officials must consider a number of practicalities.

Wang says they will need to ensure the layout of new wind farms is properly co-ordinated with other industrial infrastructure. So, while the delta area may give priority to developing new wind farms, Wang says it will be crucial that these developments are well planned and located in areas with the best wind resources and sound power grids.

Also, adds Wang, the delta must develop its capacity for producing wind-generation equipment. To date, while the area has been able to offer a complete industrial supply chain for the wind power industry, its capacity to produce large turbines is less developed. Now that the delta has been officially identified for growth in wind power, it must seek to attract more turbine developers and research institutions into the area.

Finally, Wang adds, the delta area should avoid the gold-rush mentality that has undermined wind farm developments in other parts of China. In the course of developing wind farms in some parts of western China, Wang says some companies are running in the red or making only meagre profits because generated power is far lower than expected - the result of blind pursuit of development speed without the requisite scientific basis to justify the investment.

"Therefore," says Wang, "we must do a good job in early-stage evaluation of wind power resources, strictly follow rules in feasibility studies (regarding) enforcement of the projects in the delta area, and avoid unscientific approaches to construction during the planning phase."

If China can check all the right boxes, it will have a new model wind region to display to the world.

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