China more realistic on near term goals

In the next decade China could add more wind power to its electricity generating capacity than all but a few other countries, however, the investment framework for windpower in China remains disappointingly vague with government hopes pinned on foreigh financing, despite a declaration that wind has a high priority for development. Twenty-five grid connected turbines have been installed since May 1995.

Over the next decade it has been predicted that China will add more wind power to its electricity generating capacity than all but a few other countries. According to these optimistic prognostications, only the United States and India are expected to see more new installed capacity by the year 2005, while Germany is likely to add about the same amount as China. Indeed when grid connected wind was earmarked for special backing by the Chinese government two years ago, the country's Ministry of Electric Power set a highly-publicised goal of 1000 MW or 0.3% of total power generating capacity by the year 2000. That was on top of an existing base that at the time was less than 30 MW. It now appears, though, that China is scaling back its wind installation goal to a more attainable level. According to a closely watched presentation at the recent American Wind Energy Association conference in Denver, China's State Planning Commission has now set a goal of 400 MW by the year 2000 based on available domestic funding. Even so this would require a 25-fold increase in wind capacity within about four years.

The scaled back goal was revealed in an update on wind development in China presented at the conference -- and later at the US Department of Energy in Washington DC -- by Shi Pengfei of the new energy division in China's hydro planning general institute in Beijing. The institute has been designated as the co-ordinator of wind plant proposals by the Ministry of Electric Power. Shi reported that installed wind capacity in China was 36 MW as of the end of last year, indicating that 6.7 MW of grid connected wind plant had been added to the capacity base since May 1995 when, at the first Beijing International Conference on Wind Energy, a total of 29.3 MW was reported. Shi's tally could well be pessimistic, though. The Danish wind turbine industry reports it alone had sold close to 37 MW of turbines to China by the end of 1995 -- and Germany, the US, and Belgium account for at least another 5 MW, according to Shi.

Shi revealed, too, that China has been negotiating with Danish wind company Vestas and expects to start assembling Vestas turbines domestically next year. The country is already buying the Austrian designed Floda 600, added Shi. The licence for this design has also been sold to firms in Germany, Israel and Britain. Most inroads for grid connected wind power in China so far have been made by Denmark -- more than four-fifths of grid connected capacity was in the form of Danish machines by the end of 1995. Nordtank made up 52%, Bonus 17.6%, Nordex 11.1% and Husumer of Germany 8.3%.

Okay in theory

China's investment climate is notoriously tough, even though next century is often described as the one in which China will be the world's economic power house. The country, the world's third largest producer and consumer of electricity, has a theoretical wind development potential of 253 GW, according to government estimates. Most power is coal generated.

But even if the Chinese economy takes off, increasing its demand for power, the country remains relatively undeveloped and anything other than a modest rate of investment in wind power seems unlikely in the foreseeable future. Indeed, when the American Wind Energy Association predicted earlier this year that China might have an extra 1300 MW by 2005, it also noted that the investment climate would have to improve considerably before such growth could occur.

Still, some of China's internal predictions for wind development remain optimistic. Shi noted that the 12 provincial or regional power companies are more ambitious than the national government -- and have submitted goals that add up to 1300 MW by 2000 (Windpower Monthly, June 1995). Wind has been stressed by the central government for only a couple of years now. In 1994, environmental concerns and lack of electricity prompted China's Ministry of Electric Power to decide to accelerate wind development and it has only been during the 1990s that grid connected capacity has become at all significant, and mostly in the last three years. Previously the emphasis in wind had been on battery chargers in remote areas, still an important area of Chinese energy policy. An estimated 150,000 units serve about 600,000 people in remote areas. Last year alone, 8000 of these stand-alone units were sold, according to Shi.

The picture could be about to change though. In his presentation, Shi included projections from development plans issued by local electric power bureaux in January 1995. These suggest that as much as 140 MW in additional capacity might be installed this year. Further to the bureaux plans, the State Planning Commission is predicting that nationwide installation of wind power will reach 222 MW by 2000 and 400 MW by the end of 2000. Planned wind capacity additions by the local power bureaux are: 35 MW in Inner Mongolia; 9 MW in Lioaning in northeast China; 28.2 MW in Zhejiang and 4.8 MW in Fujian in eastern China; 8.1 MW in Guangdong and 11.4 MW in Hainan in southern China; and 44.4 MW in Xinjiang.

But it is far from clear if enough financing -- foreign and Chinese -- will be available to meet these goals. Whether the provincial development plans are fulfilled or not, Shi predicted that the country's current 13 wind farms will be upped to 20. He noted that several contracts have been signed and that -- more importantly -- Y800 million is available from the State Economy and Trade Commission. That should be enough for 70-80 MW in installed capacity, he said. An additional $40 million is apparently available for 40-50 MW.

Shi attempted to clarify some of the measures taken by the government to facilitate wind development. These have been a source of great confusion for foreign firms attempting to invest. His overview seemed, however, vague. According to Shi, electric power administrative bureaux at various levels of government are meant to assist with the pre-construction part of projects, from assessing wind resources to co-ordinating a proposal's connection with the grid. The network management department should ensure the wind farm is connected with the nearest power network and should buy all the wind power generated and then transmit it to the grid. Pricing is to be set on the basis of the cost of generating, plus pay back of principle capital, interest from investment, plus "reasonable profit," continued Shi. If the selling price is higher than the average price of power bought by the network, the difference should be borne by the whole network, he said. The electric power companies are responsible for the purchases.

Barriers to development include the high cost of importing wind turbines, the high 12% rate of import duty, 17% value added taxation and costs of loans from domestic banks. He conceded that wind power might end up costing $0.12/kWh, but that the final decision maker for electricity prices is the provincial government.

New installations

Shi described China's new wind installations in detail. Twenty-five grid connected turbines have been installed since May 1995. One of the two areas most favourable for development are the hilly south-eastern coastal provinces, a rapidly developing region near many of China's centres of population, but without indigenous oil or coal resources. Shi noted that in part of the region -- Zhejiang and Fujian provinces -- hydro power is limited because of the dry autumn and winter. It could be supplemented with wind, he said. Many sites both onshore and offshore have speeds of greater than 7 m/s average throughout the year. Demand in the region, also including Guangdong province, is considered likely to grow more rapidly in the foreseeable future, simply because it is located closer to the outside world, he noted. Rates of electricity are already high, meaning that wind could be more competitive.

Installed wind capacity has almost doubled on the island of Nan'ao in Guangdong, where the World Bank funded a macro siting case study carried out by a team from the US National Renewable Energy Laboratory (NREL). What Shi characterised as "satisfactory" results were obtained from a computer based map of wind resources superimposed on a "real" relief map to get a comprehensive guide to viable siting. Some 8.7 MW or 43 units are now installed on the island, with an average capacity factor of 30.8%, up from just 4.7 MW or 27 units as of May 1995.

Shi recalled that grid connected machines were first erected on the island, rich in wind potential, as long ago as 1989 with the backing of the local island government after four years of planning. The successful demonstration project of two 150 kW turbines and one 90 kW unit led to the current 8.7 MW. Total electricity generated by the wind turbines on Nan'ao in 1995 was 12.3 million kWh, equivalent to 44% of the power consumption of the whole island. Wind is indeed important to the islanders -- power is sold to the utility at some $0.084 (CNY 0.70) per kWh, the same rate as power from the mainland oil thermal plant. Profits from the wind plant will go towards further wind development, he says.

At Cangnan in Zheijang, a coastal area farther north, there are now 1.3 MW consisting of four units in contrast with just one China 55 machine earlier in the year.

On the vast plains of northern inland China, the second area of great potential, are many sites with annual average speeds only slightly slower, at 6 m/s. Indeed Shi suggests these are suitable for larger turbines. Dabancheng in Xinjiang autonomous region, in inland Xinjiang, a region bordered on the north by Kazakhstan and Mongolia, has 1000 square kilometres available for wind farming and Huitengxile in Inner Mongolia has 300 square kilometres. Other sites can be pinpointed with more macro siting, he predicted.

Two turbines totalling 600 kW have been added to the Dabancheng wind farm. The wind plant -- by far the largest in China -- now has 12.7 MW and 47 turbines, up from a total of 12.1 MW in the spring. The site for some time boasted the largest turbines in the country -- four Bonus 500 units installed with Danish overseas aid. More "soft" aid is expected from Denmark, he said. The regional authority in Xinjiang pays CNY 0.87/kWh in order to repay the loan in eight to ten years. Some two dozen Nordtank turbines from Denmark have also been assembled locally at Dabancheng since 1992.

Inner Mongolia now has three wind farms that total 9 MW. The newest site is at Xilin, where four 1 MW units are now in the ground. Shi describes the potential of this area as 400 MW and notes that, although the area seems distant from population centres, it has now been connected to the North China Power network and power could in the future be sold to Beijing.

Over the next few years large and medium sized wind turbines will still have to be imported, he said, although assembly and ultimately manufacture should be done locally. China wants joint ventures or other forms of co-operation as well as private or public investment, whether in terms of soft loans from multilateral agencies or from the governments of first world countries. He called, too, for grants for demonstration projects, resource assessment, technology transfer, measurement instrumentation, personnel training or indigenous manufacture.

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