China gets $100 million World Bank loan for wind

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Up to a million people and businesses in China will get wind generated electricity within two years because of a $100 million loan approved by the World Bank on June 8. The loan-representing by far the largest amount of wind development ever taken on by the international lending agency in Washington DC-is to enable China to build a total of 190 MW of new wind capacity. The five wind plants, expected to cost a total of about $200 million, are a major component of China's recently announced Renewable Energy Development Project.

The wind farms, to be locally owned and operated, are to provide power to the fast-growing metropolitan areas of Beijing and Shanghai. International wind turbine manufacturers will be invited to respond to a tender for turbine supply, to be issued by the bank later this year. The bank will give Chinese content and labour extra weight in its bid evaluations.

Also announced the same day as the large wind loan was a grant of $35 million from the bank's Global Environment Facility (GEF), again for China's new renewables project. Earmarked for wind is $10 million, while the balance is for photovoltaics for remote off-grid rural communities in the poor northwest of the country. Of wind's allocation, $3 million is to help new wind companies-which will be spin-offs of regional governments and utilities-with project design, construction, management, and operation and maintenance. It is also to help China drum up interest in projects in the domestic and international private sector and to select winning bids. The remaining $7 million in wind money is for accelerating the development of Chinese wind technology. The GEF, part of the World Bank and the United Nations, was set up to respond to problems such as global warming.

Clear need

Nowhere is clean energy needed more than in China, the largest burner of coal for electricity and second only to the United States in energy consumption. Beijing and eight other of China's cities are ranked among the world's most polluted cities according to the World Resources Institute of Washington DC. In addition, China's rapid economic growth in the last four decades has highlighted bottlenecks in its ability to generate electricity for industrial growth and for its vast rural population, much of which is off-grid.

"To promote rural development, China has and will continue to rely upon renewable energy," says Noureddine Berrah, task manager of the China renewable energy project at the bank. "This project will help China sustain the effort through increased reliance on market mechanisms."

Studies by the World Bank and the United Nations Development Program (UNDP) suggest that about 6% of China's electricity could be supplied by renewables, excluding hydro, by 2020. In January China, under the gun to meet goals for reduced greenhouse gas emissions, announced it would prioritise the development of renewables and launched its national Renewable Energy Development Project. Since then, top Chinese officials have repeatedly stressed the value of renewables. And in April in Washington, then Chinese Premier Li Peng and US Vice President Al Gore, met at a high-profile forum to discuss co-operation on sustainable development and the fight against global warming.

The largest of the 100 MW of World Bank backed wind farms will be in Huiting Xile in Inner Mongolia, an area with strong wind resources and grid connected to Beijing. A second large plant, 50 MW in Zhangbei in Hubei province, is also in Inner Mongolia, an autonomous region in northern China. The Pingtan wind plant in Fujian province in southeast China will have a capacity of 20 MW. And in Shanghai municipality two projects are to be run by the same company, 14 MW on Chongming Island and 6 MW on Nanhui.

Because the wind industry is more mature and the wind projects are utility scale, bank officials decided to make a loan to the wind portion of China's renewables project and a grant for much of the PV portion. China's government did not want to borrow money for photovoltaics because PV companies are more likely to be in remote rural areas and small in size-and the expectations for a loan being repaid were less good.

International tender

The $135 million in loan and grant financing should be available by the year end. The international tender will be for turbine supply, but not for the towers, foundations or electrical equipment. Bids for supplying turbines that do not contain 30% domestic Chinese value, whether in terms of components or labour, will-for the purposes of the bidding-have their prices upped by 7.5%. Pre-qualification documents will probably be issued soon and contracts awarded in the spring of 2000.

The approval follows the unveiling of a large United Nations backed renewables project in China on March 6 (Windpower Monthly, April 1999). The five year $25.83 million project, the largest technological aid project backed by the UNDP, is in co-operation with China's State Economic and Trade Commission. This project is designed to help China attract domestic and international renewables investment through five wind farm and rural solar pilot projects and is in addition to the latest World Bank announcement. The UNDP has a $8.8 million stake in the $25.83 million project, through the GEF, while China is investing $11.5 million. Another $3 million will come from Australia and $2.53 million will be from the Netherlands government.

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