Third round of government tenders -- Concessions for 500 MW

China's government-sponsored tendering for large scale wind farm concession projects, overseen by the National Development and Reform Commission (NDRC), has entered its third year, with 500 MW in capacity awarded to two companies. While plans for the 150 MW Jimo wind farm in Shandong province have been put on hold -- after just one company submitted a bid which the authorities considered to be too high -- three projects were confirmed, including one that had actually been pencilled in for a later round of bidding.

Guohua Energy Investment Company beat six other companies to secure development of the 200 MW Dongtai wind farm in east China's Jiangsu province, while China Electric Power Investment Group (CEPIG), which only just missed out on Dongtai, was the victor in a four horse race for the 100 MW Anxi wind farm in north China's Gansu province. It also won the concession for a 200 MW project in Dafeng, near Dongtai.

The go-ahead on Dafeng was given to the state owned energy company based on the same bid it submitted for the Anxi concession project: CNY 0.462/kWh ($0.057/kWh) for the electricity generated. While the number and size of turbines for Dafeng are as yet unconfirmed, Anxi will use 94, 750 kW and 25, 1.2 MW machines with the project's total investment expected to be around CNY 785 million ($97 million). The two projects will be CEPIG's first stab at wind development.

For Guohua, the 200 MW Dongtai project is just the latest in its wind ventures. The company is a subsidiary of China's biggest coal plant operator, Shenhua Group, and already has several wind projects underway in North China's Zhangjiakou province and west China's Xinjiang, as well as announcing plans for a 1000 MW wind farm in northeast China's Cangzhou province earlier this year. Guohua's bid of CNY 0.487/kWh (US$0.060/kWh) for Dongtai was the second lowest, with CEPIG's bid of CNY 0.499/kWh (0.062/kWh) coming third. The lowest bid was rejected because it was deemed "implausible" by the judges.

The project will see an investment of around CNY 1687 million ($208.8 million) and will comprise 100, 1.5 MW and 42, 1.2 MW wind turbines. Construction is to start early next year, says Guohua, for completion before 2009. It declines to reveal the likely wind turbine supplier. Dongtai is part of a bigger four-phase plan involving a total investment of CNY 8500 million ($1 billion). Three more wind farms will be built nearby within five years to bring Dongtai to a total capacity of 1000 MW. Guohua is also reported to want to boost Dongtai's wind capacity six-fold in another ten or 15 years.

Meanwhile, the tender for the 150 MW Jimo wind farm has been put on hold after just one bid was received, from Huadian International, an independent power developer based in Shandong. NDRC decided Huadian's bid of CNY 0.726/kWh ($0.089/kWh) was too high.

The two earlier rounds of government wind plant concessions, which kicked off in 2003, have resulted in 850 MW of wind capacity now under development. As in previous rounds, some commentators say the rates of this year's winning schemes are too low and could have a negative impact on the successful development of the industry. Yet again foreign firms stayed away, with most bids submitted by domestic state-owned companies. Past champions like Huarui and Huaneng were conspicuous in their absence.