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In 2006, installed wind-power capacity in Asia grew by 53%, accounting for 24% of new installations worldwide. This is the strongest increase in installed capacity outside of Europe. The additional 3,679 MW bring the continent’s capacity to more than 10,600 MW.
(Published on July-August 2007 - JEC Magazine #34)
India is still Asia’s strongest market, with 1,840 MW of new installed capacity. This takes its total figure up to 6,270 MW. The Indian government has envisaged a capacity addition of around 10,000 MW by 2010, and an average of 1,500-1,800 MW of new windpower installations is expected every year for the next three years.
Thanks to China’s new Renewable Energy Law, the Chinese market grew substantially in 2006: China more than doubled its total installed capacity by installing 1,347 MW of wind energy that year, a 70% increase over the previous year’s figure. This brings China’s capacity up to 2,604 MW and makes China the sixth largest market worldwide. This growth is expected to continue and even speed up. According to the list of approved projects and those under construction, more than 1,500 MW will be installed in 2007. The goal for wind power in China by the end of 2010 is 5,000 MW, which should be reached well ahead of time, according to experts’ estimations.
With its large land mass and long coastline, China is rich in wind-energy potential. Estimates by the Chinese Meteorology Research Institute show that the land-based exploitable wind resource has a potential power generation capacity of 253 GW. Areas with rich wind resources are located mainly along the south-east coast and nearby islands, and in Inner Mongolia, Xinjiang, Gansu Province’s Hexi Corridor, and in some parts of Northeast China, Northwest China, North China and the Qinghai- Tibetan Plateau. The ocean-based wind resource is capable of supporting a further 750 GW of capacity.
The first Chinese wind farm went on line in 1986 as a demonstration project. With financing from foreign grants or soft loans, more grid-connected turbines were installed. Then, in 1994, the former Ministry of Electric Power decided to develop wind farms as a new source of clean power. Regulations were issued to cover grid connection and payment for the electricity generated, making wind power commercially viable. By the end of 2006, total output for the installations on mainland China had reached 2,604 MW, with an annual growth of more than 1,300 MW. Although satisfying electricity demand and reducing air pollution are the usual driving forces behind wind power, this has been made more difficult in China, where coal-fired generation is much cheaper than wind. Wind-power development must therefore focus on cost reduction through large-scale projects and the local manufacture of wind turbines.
The Chinese government estimates that the localisation of wind-turbine manufacturing brings benefits to the local economy and helps to keep costs down. Since most good wind sites are located in remote and poor rural areas, wind-farm construction will benefit the local economy through the annual income tax paid to county governments, which represents a significant proportion of their budget. Other benefits include power grid extension for rural electrification and employment in windfarm construction and maintenance.
To create a stable market, it is crucial to establish a wind-turbine manufacturing industry. The National Development and Reform Commission (NRDC) has been promoting “Wind Power Concessions” for large-scale commercial development to encourage local authorities to invite both international and domestic investors for the development of 100 MW wind farms at potential sites. The tendering procedure is designed to bring down generating costs and increase the proportion of locally made components.
The major criteria for a wind-power concession project are as follows:
By the end of 2006, four phases of the wind concession programme had already been launched with the central government’s approval. These covered 15 projects and a total capacity of 2,550 MW. A further 3,000 MW have since been approved through local bidding procedures based on the same principles as the wind concession programme.
By the end of 2005, the total installed capacity for wind-power concession projects had reached 1,260 MW. A further 1,347 MW were installed in 2006. In spite of the scheme’s objective of encouraging lower wind-energy prices within China’s reformed electricity industry, where power-generation and power-grid operations are now separated, there has been a negative aspect: the tariffs offered by winning concessions have been extremely low, providing little incentive for further investment. On the manufacturing side, imported turbines have dominated the Chinese market so far. To increase the domestic capability, several government agencies have sponsored national initiatives. By the end of 2006, the market share of domesticmade turbines had already reached 25%, although only one Chinese wind-turbine manufacturer has achieved volume production capability so far.
Renewable energy laws and regulations
In order to promote the development of renewable energy technologies, a renewable-energy law was published in February 2005, and it entered into force on January 1, 2006. The law specifies a national target for renewable development, adopting a feed-in tariff system for renewable energy power, setting up a nation-wide cost-sharing system, and setting up a national fund and other incentives for promoting renewable energy development.
According to the list of approved projects and those under construction, 3,500 MW of wind capacity could be installed by the end of 2007. Based on the “learning curve” theory of cost reduction, this volume could bring the cost of wind power down closer to that of coal. The goal for wind power in China by the end of 2010 is 5,000 MW, requiring an annual increase from 2006 onwards of only 800 MW.
However, based on the approval of projects both at the central and local level, the national target in 2010 would be much higher than 5,000 MW. Looking further ahead, the Chinese government proposed 30 GW of wind power in its long-term planning for 2020. This would mean installing 2,500 MW per year from 2011 to 2020.
It is estimated that total power capacity in China will reach 1,000 GW by the end of 2020 in order to satisfy the growing demand. In this scenario, wind-generated electricity would represent less than 1.5% of total power production by that time.
CDM contributions for wind
The Chinese government has already approved about 52 wind projects (with a total capacity of 3,700 MW). Of these, about 17 projects (with a total capacity of 700 MW) have registered successfully with the CDM (Clean Development Mechanism) Executive Board of the UNFCCC (United Nations Framework Convention on Climate Change). Prices range from six to nine euros per ton of CO2, and the expected income for CER (Certified Emission Reduction) sales would be about 37 million euro per annum.
JEC Composites Magazine: What is the wind energy market today in China?
Joe Summers: The wind market in China is extremely dynamic. There is great competition between the established "foreign" manufacturers and the newer domestic turbine manufacturers. While the domestic manufacturers are currently being favoured there is a question whether this is sustainable. On a macro level, the demand for wind energy in China is huge which will continue to provide significant opportu-nities for all manufacturers alike.
JCM: What is driving your strategy in this market?
J. S.: China is a key market for composites in general and the wind market in particular. Gurit has a strong record of supporting our existing customers in whatever geographies they expand into and China is no different. Gurit (Tianjin) Composite Materials Co. Ltd was formed on 30th September 2006. Along with providing materials for our existing customers we are additionally developing relationships with the developing domestic manufacturers. We are looking to use our ability to deliver blade solutions to all blade manufacturers in China using our unique perspective: as manufacturers of coatings, infusion resins, prepregs and foam core and as structural engineers, we have the widest knowledge of the full blade manufacture and design, of all suppliers to this industry.
JCM: Do you plan investment in this region?
J. S.: Gurit decided in August 2006 to invest approximately €15 million in manufacturing facilities in China. The factory is almost completed and in its first phase covers 10,000 Sqm. We have already started manufacturing of our Corecell structural foam and production of prepreg is imminent. We have purchased over 30,000 Sqm of land to allow for further phases of expansion and have great interest from customers for the development of Gurit Tianjin into a wider range of production capabilities.
More information: www.gurit.com