China Turns Up the Wind Power, Investors Feel the Breeze

Everyone knows that China's enormous and unstoppable energy consumption is helping make the world hotter. But a cool breeze is blowing. The same week that the G-8 countries looked to nuclear amidst a global energy crisis and PetroChina announced a 6 percent increase in oil production, China not only announced it would spend US$175 billion to clean up its act but also focused on the source, beginning to build its largest wind power farm. Indeed, at an eventual output of 200 megawatts, it will be one of the world's largest.

It's another sign that China, which already calls itself the world's biggest investor in renewable energy is serious about harnessing its enormous wind potential (estimated at 632 gigawatts onshore and 750 gigawatts offshore), and reaching its goal of using renewables to fulfill at least 10 percent of its energy needs by 2010. By 2020, China now aims to have 30 gigawatts of installed wind power capacity, up from just 1 GW last year, providing power to between 13 and 30 million households; the cost of reaching this goal will be around US$188 billion, says the state. Now investors are racing to catch the wind.Since January, when the country's renewable energy law went into effect, guaranteeing a fixed grid price for renewables and offering incentives to developers, the market for wind-related technology (not to mention solar) has exploded. Foreign firms, like Danish company Vestas GE Wind (which recently opened a wind turbine plant there) are racing in to develop wind farms for both the Chinese and export markets. Meanwhile, domestic companies, which currently invest over USD 1.24 billion in wind, continue to improve their expertise, as demonstrated most recently by a breakthrough Chinese-developed maglev generator, which promises to cut in half the cost of operating a wind turbine. While Yingli Solar plans to raise $400 million in the Nasdaq's largest IPO by a Chinese firm, Goldwind, China's biggest maker of wind power generators, is exploring an IPO on the U.S. markets in the hopes of an eight-fold surge in sales to a target of $500 million by 2008. And CLP Holdings, Hong Kong's dominant power supplier, is planning Asia's largest offshore wind farm in the territory. As Reuters reports:

The lure of China's huge but underexploited market, Beijing's drive for renewable energy and low production costs for exports to fast-growing bigger markets in the United States and Europe have foreign and domestic firms rushing to set up wind farms or build production plants across the country.

"The cake is so big that I could afford an office made out of gold," said a senior official from one of the world's top turbine makers, based in China, who declined to be named. "There will be orders for everyone."

Another Reuters piece reports that

Credit Suisse estimates the compound annual growth rate of China's wind power capacity at 39 percent in 2004-10 and 20 percent in 2010-20. "This represents a remarkable growth potential for manufacturers of wind turbines," Credit Suisse's Angello Chan said.

In a government-sponsored report released this week that skeptically evaluates the country's coal-heavy energy portfolio, one Chinese researcher put it bluntly:

"To sustain China's economic growth along a rapid and sound track, the
country must optimize its consumption structure by rapidly developing
natural gas, hydropower and nuclear power and using more renewable energy,"
Cui [Minxuan, a researcher with the Chinese Academy of Social Sciences] said. The optimized structure would translate into improved energy use efficiency and reduced total energy demands, he said.

Let's remember that the world's most populous country—which now outstrips the U.S. in coal burning—isn't completely to blame for its massive energy consumption. After all it is you and I who benefit from its cheap labor and production, not just China. And it is you and I and everyone who will benefit from its (and our) growing attention to the answer that's blowing in the well, you know.

Check out EcoWorld's article on the subject for a handy list of Chinese and foreign companies involved in the market, along with assorted industry contacts.