China Could Be World's Biggest Wind Power By 2020

It almost goes without saying that China is on track to become the biggest [fill in the blank], at least according to its statistics-crazed government. Most recently, the superlatives have included the car market (the 2nd biggest in the world) and gambling (Macao trumps Las Vegas). A more attractive stat of late comes from the Global Wind Energy Council (GWEC): China is set to become the world's largest producer of wind power by 2020, when it could draw 150 million kilowatts (kw) from the gusts along its enormous coasts and vast deserts and plains, generating 10 percent or more of its needs. Currently, the country ranks seventh in the world for wind power production, leaping 30 percent on an annual average, since 2000 (350,000 kw) to 1.26 million kw in 2005. And in 2007, says one analyst, the country's wind power capacity is set to rise by 65 percent. All in all, China boasts a total capacity of 3.2 billion kw, of which one billion kw can be developed, according to the GWEC report. But coming anywhere near that capacity--and attracting more crucial foreign investment--will require reforms of the country's wind pricing mechanism.One major impetus for developing wind (see the strong foreign interest and the country's innovative mag-lev turbine) is the central government's 2005 mandate that major power firms must generate at least 5 percent of their electricity from renewable sources by 2010 and 10 percent by 2020; standing in the way is the cheap coal, so common in the developing world, that makes up 75 percent of the country's energy mix--and an unhealthy percentage of its air. Indeed, the country's energy reduction goals set out by China's EPA at the start of 2006--cutting energy intensity by 4 percent and emissions of pollutants by 2 percent—"have absolutely not been achieved," according to environmental minister Pan Yue. In the first half of the year, energy consumption per unit of gross domestic product actually rose 0.8 percent. It was, Pan said, "the most grim year for China's environmental situation."

Also blocking wind's path is the country's bid-based pricing system, which the GWEC says is seriously hindering the market. Under the current regime, big state-owned power companies can bid well below realistic market prices, offsetting their losses with profits from coal-fired plants (a new one is registered every week). According to Worldwatch, for a series of projects in recent years, the winning bids ranged from 4.6 to 6.5 cents per kWh. According to one expert, the current average cost of wind power in China is between 6.3 and 8 cents per kWh; thus, all the projects authorized suffered a net loss.

"The price volatility and uncertainty caused by the current regulation harms foreign and domestic private manufacturers and developers, who are discouraged by a pricing pressure they cannot sustain," Arthouros Zervos, chairman of the Global Wind Energy Council (GWEC), said at a renewables conference in Beijing in early December.

In an October report, GWEC, the Chinese Renewable Energy Industries Association (CREIA) and Greenpeace called on the government to change the mechanism for wind power pricing to a fixed tariff system like that of Germany, which would mean the price is regulated directly by the government. The report also calls for more incentives for domestic and foreign investors.

Already, China's small scale hydro and solar systems (its water heaters make up 60% of the world's) make it the world leader in renewable investment. And, according to Xinhua news agency,

During the 11th Five-Year Plan period (2006-2010), China will set up about 30 large wind power projects of 100 MW at regions with abundant wind power resources, such as eastern coastal areas, Hebei Province and Inner Mongolia Autonomous Region in north China.
In terms of small wind power projects, China has already developed the largest market in the world. By the end of 2005, China has installed 320,000 small wind turbine generators with a total capacity of 65,000 kw, supplying power to residents in remote areas...

Given the rising costs of oil and coal and the ever-increasing cost of global warming and pollution, China's attempt to beat western countries (not to mention India) at catching the wind faces stiff competition: but as long as the right reforms are made, China's wind investors and its citizens are facing a wind-wind situation no matter what.

Take note: The 2007 China International Wind Energy Exhibition And Symposium is this April in Shanghai

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