Joint Memorandum on Realising the Opportunity and Potential of the Chinese wind market 2007
A joint memorandum on the situation of the wind energy market in China was coauthored by GWEC, CREIA and CWEA.
The memorandum was presented to the NDRC at this occasion, and was developed in close cooperation between GWEC’s member companies active in China and the Chinese associations. It identifies five priority areas for measures aiming at improving China’s role in wind energy generation and equipment manufacturing.
1. Setting an Ambitious National Target for Wind Energy
In 2005, the Chinese government set a target of 5 GW of wind energy capacity to be installed by 2010, and 30 GW by 2020. At first sight, these targets seem ambitious. However, when taking into account that the installed capacity at the end of 2006 in China stood at 2,600 MW and the current growth rate, it becomes obvious that the 2010 target could certainly be met much earlier. The industry believes that a much more ambitious target could be achieved. This will stimulate the industry, protect the economy and drive investment across the region. Moreover, it would make sense to base such a target on the electricity production rather that the installed capacity.
2. Designing a Robust Policy Framework
A robust policy framework is required to ensure that the target is delivered economically, efficiently and effectively. Experience in European markets suggests that a policy framework based on a feed-in tariff policy achieves very good results, as demonstrated in countries such as Germany, Spain and Denmark. Introducing a nationwide payment system would provide stability, and enable a more rapid development of wind energy, make use of all available sites and encourage sustained investment and technology development.
A feed-in tariff set at the right level would encourage projects of high quality and high reliability by granting appropriate returns for all stakeholders. Moreover, it would stimulate a large-scale localised manufacturing supply chain of international and domestic companies and secure a robust budget for research, development and innovation to help Chinese manufacturing achieve the highest international standards and become competitive in an international market place.
3. Granting Clean Development Mechanism (CDM) Certification
With current regulations in China, only projects that are majority (i.e. 51%) owned by Chinese companies can receive CDM certifications. CDM certification increases the returns for project investors, thus making projects in China more attractive to all investors and thereby significantly accelerating the development of wind energy across China at no additional cost to the Chinese economy. In addition, increased tax revenues would be assured by provincial and national governments, which would in turn stimulate rural economies.
4. Transmission Network Grid Planning and Access
China is embarking on one of the largest investments in grid capacity in the world with a new high voltage system the scale of which has not been seen before. The country is thus in a position to lead the world in the integration of wind energy into the net. To achieve this, it is important for upgrades in China’s transmission networks to be coordinated with approvals for new wind projects to ensure that infrastructure, grid access and substations are available where the projects are being built. This will avoid delays and complications in connecting new wind farms to the grid because of insufficient connection capacity.
5. Growing the Domestic Industry by Attracting Foreign Investment and Experience in Manufacture and Development
While the potential for wind energy in China is huge, the sustainable development of this industry will strongly depend on focus from all private and state-owned developers, manufacturers and stakeholders on delivering projects that are highly reliable (technically, operationally and financially) throughout the lifetime of the project. As in other sectors, the introduction and encouragement of international expertise, financing and involvement will accelerate and reinforce such foreign investment.
Currently, a number of foreign wind energy equipment manufacturers and developers are active in the Chinese market, either with stand-alone operations or through joint ventures with Chinese partners. This involvement has already brought substantial benefits in terms of knowledge transfer, job creation and education of the workforce. These benefits do not stop at the manufacturers themselves, but are spread throughout the entire turbine supply and operational chain, including the transfer of development and operational knowledge as well as management experience from foreign developers.