Rocketing growth outpaces America -- China doubles and doubles again

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It has long been a foregone conclusion that China would reach its wind power target for 2010 three years early, but that it would more than double its cumulative capacity in 2007 has kicked even the most optimistic forecasts out of play. Around 3450 MW was installed last year, according to industry sources, pushing the cumulative total to about 6040 MW. Only the United States and Spain installed more. Official wind megawatt totals for China have yet to be released, but it seems a fairly safe bet that the 5000 MW target for 2010 has been shattered and that China has more than doubled its wind capacity for the second year running, up from 2600 MW at the end of 2006.

It was an Olympic performance by any definition, putting China into fifth place among wind power nations, so far. With more than 4200 MW under construction, the pace of development shows no sign of slowing down. Shi Pengfei of the Chinese Wind Energy Association (CWEA) predicts 5000-6000 MW of new wind plant will go online this year, driving China's total to 10,000-12,000 MW. China's wind target for 30,000 MW by 2020 is already in sight. "Actual installations could be much more," says Xie Changjun of China's biggest wind developer, Longyuan, which is now one of two companies owning more than 1000 MW of operational wind plant in China, the other being China Datang Corporation.

The Chinese Renewable Energy Industry Association (CREIA) believes cumulative wind capacity will hit 50,000 MW by 2015, but even this forecast may be timid. "The wind potentials have been underestimated and the market is very big," says Wu Yundong of Zhejiang Hewind, a turbine manufacturer and developer. He predicts China's wind capacity could reach 100,000 MW by 2020.

That China has woken up to wind in a big way was demonstrated by the huge rush to buy shares in Goldwind, the country's leading wind turbine supplier, when it went public in January. The political will driving the sector's growth is coming right from the top. Premier Wen Jiabao and vice premier Zeng Peiyan's visited wind power technology suppliers in September and December -- a firm display of the Chinese leaders' attention to and support for the industry.

The Chinese market is operating at two levels. The central government's program of concession contracts for construction of large wind farms, run by the National Development and Reform Commission (NDRC), operates alongside a series of regional markets in which utilities are required to buy wind power at prices set by provincial governments. Overlaying that market is an umbrella plan calling for six 1000 MW "wind bases" which the government wants to see built by 2020. The chosen areas are in Dabancheng in Xinjiang; Yumen in Gansu; the coastal areas in Jiangsu and Shanghai; Huitengxile in Inner Mongolia; Zhangbei in Hebei; and Baicheng in Jilin.

These plans, however, are apparently just the beginning of a far more grandiose policy. The country's de facto wind tsar, NDRC's Zhang Guobao, recently trumpeted the promotion of three 10,000 MW scale wind bases: in the Hexi Corridor in Gansu, the coastal areas of northern Jiangsu, and in Inner Mongolia, the most popular region for wind development and the first to have 1000 MW of wind plant online.

These were announced as part of the State Renewable Energy Medium and Long Term Development Planning agenda published in August which sets a target for 1% renewables supply by 2010, excluding hydro and based on plausible development of available resources. Commentators say the biofuel sector will not fulfil its share in time, which leaves wind making up the deficit. Failure to meet the target so not an option, stresses the government. It is mandatory. To get there, wind's contribution needs to be 20,000 MW, so "slow movement won't do," says Shi.

The industry is doing its best, with around two score of China's engineering companies moving into wind turbine production. For the first time, Chinese companies supplied slightly more megawatt to the market last year than the combined output of the foreign interlopers (chart), reports CREIA. Domestic manufacturing capacity is around 5000 MW a year, but is expected to rise to 10-12 GW by 2010, according to the Global Wind Energy Council.

Foreign wind companies, which have set up shop in China to meet the legal requirement for 70% of wind turbine content to be made locally, claim not to be concerned by the competitive pressure from domestic rivals. They say product quality will win through. The Chinese, clearly irked by the suggestion that their products are of inferior quality, have risen to the challenge. Not only are they making European machines under licence but also developing their own turbines, though with European help. Aerodyn, a Germany consultancy, has proved particularly successful as a partner along with British Garrad Hassan. Chinese turbine makers are also looking to export their products. Mingyang (Windpower Monthly, January 2008), Huide and Hewind (page 8) among them, while Goldwind is considering a factory in Germany (page 33).

Wind power purchase prices in China, which tend to be established in competitive bidding processes at central or regional government level, have long been considered too low by the industry for healthy market development. That is now changing. For the most part, government officials have acknowledged the concerns and have moved beyond accepting the lowest bid price and taken into consideration the basis on which it is made. Prices paid in the provinces have risen to CNY 0.50-0.60/kWh ($0.07-0.084/kW), which coupled with revenues from sale of a project's carbon credits under the UN's Clean Development Mechanism means wind power in China is profitable, according to Longyuan at least (page 8).

The provincial rates have met with NDRC approval. Last month it confirmed its endorsement of rates in the CNY 0.51-0.61/kWh range for the first 30,000 hours of "full load" operation, which would take 12-15 years to achieve dependent on wind strengths, for 72 wind farms across the country. Projects in the windiest regions such as Inner Mongolia get the lower rate, while those in provinces with less wind, like Shanxi or Liaoning, are eligible for the higher prices.

Edicts have also been issued on provision of transmission capacity and granting wind power priority access to the network. Grid companies are now compensated for investment in power lines for wind farms and there is recognition that far more investment in transmission will be needed.

CWEA's Shi wants more emphasis on improving wind farm performance, with cost-efficient generation made a priority over getting capacity into the ground. "It is undoubtedly an issue," he says. The permitting system also needs reconsideration, says the industry. Projects under 50 MW only need provincial government approval, which is much easier to attain than from NDRC. As a result, the economic advantages of large scale development are lost. NDRC's Zhang says the government may relinquish its control over bigger projects, though that may not be any time soon.

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