Special Report - Opportunity and Risk in China - Lack of grid capacity a growing barrier

The main obstacle slowing wind power development in China is lack of transmission line capacity and distribution wires, according to Shi Pengfei of the Chinese Wind Energy Association. In a country of 9.56 million square kilometres, with a coastline stretching 32,000 kilometres, huge investments in the electricity network are required. The government is willing to shoulder the bill for getting electricity generated in remote windy regions to centres of population, but getting wires into place is a logistical nightmare considering the potential to adversely affect countless communities along the way. It all takes time.

China's two best wind resource areas are the north-west and the south-east. The coastal areas of the south-east are densely populated, with load centres relatively close to the wind resource. But most wind investment has been in the less economically developed and poorly populated north-west wind resource areas, such as Inner Mongolia, Xinjiang, Gansu, Ningxia, Hebei and the Qinghai-Tibet Plateau. Here wind farms are often built at the weak end of power grids, far from where the power is needed, Shi says. "It creates a huge problem in grid connection and transmission for wind power."

The government has issued strict instructions to its grid companies that they must accommodate all approved wind development by improving and expanding the current electricity network. "China's government has recognised the problem, but policy wise, the measures it has put in place are not enough to address grid connection and availability," says Sebastian Meyer from Azure International, (main story).

The most significant problem, he adds, is lack of resources at county level. "Nowhere is there a firm county level means of reward for having wind in its backyard. The compensation level is at a national level." Levies are waged on end use electricity consumers to pay for wind development, but the money raised goes straight to national and provincial authorities, including the grid companies, which are then expected to feed some of it back to the local county authorities, but that rarely happens with any urgency, he says.

"China is reluctant to release funds directly to anyone other than national or provincial authorities. This is a big cultural administrative issue," explains Meyer. The compensation system needs to be transparent all along the chain, he says. It is not enough for counties to know they will eventually get some level of payment for increasing grid capacity. "This is incurring a real cost at the local level. In the long term it will lead to resistance," Meyer warns.

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