Market Status: China - Notes of caution remain for offshore ambition

CHINA: China is taking its wind energy ambition offshore. Construction of 1GW of new wind capacity off Jiangsu Province is to begin this year with government backing promised.

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Meanwhile, the country's wind sector is eyeing new offshore territory in Hebei, Shandong, Zhejiang and Fujian.

The second phase of the Shanghai East Sea Bridge offshore project, Asia's first large-scale offshore wind farm, is also forging ahead. The project's 34 Sinovel 3MW units were linked to the grid in July 2010.

Spurring the offshore take-off was the publication in early 2010 of the government's regulations on offshore development. The China Renewable Energy Industries Association estimates that, over the next five years, China will invest more than CNY 25 billion ($3.8 billion) in offshore wind. The country is aiming to reach 10GW of offshore wind by 2015 and 30GW by 2020. But there is some concern about the speed of this growth.

Chinese Wind Energy Association (CWEA) vice president Shi Pengfei says: "We should not have too high expectations of offshore wind right now. We need to do everything well in every detail. First, we must improve the credibility of wind turbines." He added that China's only large-scale offshore wind farm has not reached its first anniversary or proven itself in powerful typhoons. "It is far from being mature," he says.

Others worry that offshore wind is being created on the cheap. In May 2010, China issued a call for proposals for 1GW of wind over four projects off Jiangsu. No sooner were the results announced in September than the industry complained that the tender-winning power-purchase prices were too low (see table). The prices, from CNY 0.6235-0.737/kWh ($0.09-0.11/kWh), are only slightly higher than China's benchmark prices for onshore wind farms of CNY 0.51-0.61/kWh.

Some officials pointed out that costs to build Chinese offshore wind are estimated to be two to three times that of onshore. Vestas China president Jens Tommerup says the prices do not leave enough to cover operations and maintenance, so winners will have to work much harder to ensure turbine reliability. A study by China Hydropower Engineering Consulting Group concluded that offshore power prices need to be 50-70% higher than onshore wind farms to be viable.

However, Qin Haiyan, CWEA secretary general, says: "These four offshore wind farms remain demonstrative projects in nature. Feed-in tariffs for offshore wind farms will be more reasonable after additional calls for proposals." He believes offshore costs will fall as turbine transport and installation are optimised.

Chinese manufacturers are also optimistic and are building factories to serve offshore wind - as big tax payers, they receive tax benefits from local governments. Goldwind has a 2.5MW turbine factory in Dafeng, in the Northeast. It is also developing 6MW turbines. Sinovel has a facility in nearby Yancheng to produce 5MW and develop 6MW turbines. Both the US firm GE, in a joint venture with Hadian, and Denmark's Vestas have established a research and development centre in China to develop large-scale offshore wind turbines for the Chinese market.

Good wind sources

China's state-owned power firms are under pressure to generate electricity from renewables, and wind is seen as the country's most promising form of clean energy. Last year, a meteorological study identified approximately 200GW of wind resources in waters five to 25 metres deep, at hub heights 50 metres above sea level.

Despite current wind activity off China's north-eastern coast, the greatest offshore wind resource exists off the eastern and south-eastern coast, conveniently home to the country's most economically developed areas equipped to consume the power. By contrast, much of the power from swathes of onshore wind capacity in the north and north-west goes to waste because the grid is too small to deliver it elsewhere.

Du Xiangwan, vice-president of the Chinese Academy of Engineering, frets about the annual cyclones on Asia's coastlines. "Considering the impacts of typhoons, China's offshore wind energy resources do not necessarily mean wind power resources," he says. In 2006, a typhoon hit east China's Zhejiang Province, damaging 20 out of 28 turbines at the onshore Cangnan wind farm. The coming years will prove whether wind farm developers can endure the storms certain to come.

Winning power prices in 1GW offshore calls for proposals
Developer Project Capacity CNY/kWh
Datang Renewables Binhai 300 0.7370
China Power Investment Sheyang 300 0.7047
Longyuan Dafeng 200 0.6396
Luneng Dongtai 200 0.6235

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