JEC COMPOSITES MAGAZINE - Issue #54 - January 2010 - 22

FEATURE “Wind Energy” China: no slow-down in global wind developments as country continues expansion The Chinese wind energy market has the look of an eldorado, according to the Global Wind Energy Council’s annual report. Installed capacities are increasing at an impressive rate, and government plans up through 2020 show the promise of substantial margins, at least for the major players. 008 was another year of breathtaking wind-energy development in China (excluding Taiwan), as the country’s total installed capacity doubled for the fourth year in a row. New installed capacity totalled 6.3 GW in 2008, a 91% increase over the 2007 market. The country’s cumulative wind-power capacity now stands at 12.2 GW, making China the fourth largest wind market in the world. The 10 GW-Size Wind Base Program In 2008, the newly established National Energy Administration highlighted wind energy as a priority for diversifying China’s energy mix, which is currently heavily reliant on coal. The bureau selected six locations from the provinces with the best wind resources: Xinjiang, Inner Mongolia, Gansu, Hebei and Jiangsu. Each site will have more than 10 GW of installed capacity by 2020. This largescale deployment of wind energy is called the “10 GW Size Wind Base Programme”, or just Wind Base. The Wind Base projects will ensure more than 100 GW of installed capacity, producing 200 TWh per year by 2020. funding support for the commercialization of wind-power generation equipment. According to this regulation, for all the domestic brands (with over 51% Chinese investment) the first 50 wind turbines over 1 MW will be rewarded with RMB 600/kW (EUR 60) from the government. The rule specifies that the wind turbines must be tested and certified by China General Certification (CGC), and must have entered the market, been put into operation and connected to the grid. The regulation further requires that the rewarded turbines must use domestic manufactured components and share the awards proportionately with component manufacturers. This new policy has two ground-breaking implications. It is the first time that the government is giving subsidies to renewable energy manufacturers, and the first time that there is a link between a stimulus policy and a testing and certification system. Increasingly intensive competition for turbine manufacturers More than 20 new turbine manufacturers entered the Chinese market in 2008, bringing the total number of manufacturers in China to 70. Of these, 30 companies already have turbines in operation. The increasing number of turbine manufacturers could help ease the supply deficit in the market. However, there is sure to be intensive competition in the market, resulting in consolidation. In the coming years, demand will gradually slow, even with the conservative estimate of 20 GW cumulative installation by 2010 and 100 GW by 2020. Demand in the decade between 2011-2020 is forecasted to be 80 GW, or about 8 GW per year. The top three manufacturers in China – Goldwind, Sinovel and DEC (Dongfeng Electric) – have an annual manufacturing capacity of 4 GW, and the international brands that manufacture in China (Vestas, Suzlon, GE, Gamesa, Nordex and Repower) have a similar capacity. This means there will be little market share left for the rest of the more than 60 manufacturers, unless the market expands further or they begin to export turbines in large numbers. More information: www.gwec.net Source: Global Wind 2008 report China: With input from the Chinese Wind Energy Association (CWEA) Policies to stimulate domestic manufacturing In April 2008, the Chinese Ministry of Finance issued a new regulation on tax refunds for importing large wind turbines (2.5 MW and above) and key components. In this new regulation, the tax revenue for the key components and raw materials for large turbines (2.5 MW and above) will be used for technology innovation and capacity building. The tax rebate is not returned directly to the company but to the state, which will establish special programmes to channel the money back into the wind industry. The effects of this policy are hard to predict at this point, as state-owned enterprises are the only beneficiaries of this investment. In August 2008, the Ministry of Finance issued another incentive policy on Focus Price rationalization and grid constraints While clear objectives have been set, China still faces two challenges: 1) establishing a price control system that is sustainable over the long term (many other countries also face this challenge); 2) connecting both existing wind farms and the many new ones up to the electric grid. jec composites magazine / No54 January 2010

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JEC COMPOSITES MAGAZINE - Issue #54 - January 2010

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