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Wind and renewable energy from Beijing to Houston

Steve Sawyer

GWEC's intrepid secretary general heads back to China for two high profile events, and peers into the muddy waters obscuring China's long term energy vision.

Springtime in Beijing. Usually, it's the nicest time of year, and this April/May didn’t disappoint. Alternating clear blue sunny skies with uncharacteristically heavy rain and even some thunder claps, with only a very few of those grey, oppressive, pollution-ridden days when the air feels so heavy with pollution and/or sand from the Gobi desert that you almost feel like you’re carrying an extra load on your chest whenever you dare to venture outside. Like everything else in China, the glass is either half full, or half empty, depending on your perspective.

China gears up for the Olympics

More than 600 participants from about 30 countries and 10 international organisations gathered for the Forum on Climate Change and Science & Technology Innovation, in Beijing from 24-25 April, organised by the Chinese Ministry of Science and Technology and a long list of supporting organisations. It was the first major international climate conference organised by the Chinese Government, which attracted all the main players in the climate debate, including senior negotiators from a number of countries, as well as IPCC Chairman Pachauri and UNFCCC executive secretary de Boer.

Participants were welcomed by Chinese Minister of Science and Technology Mr. Wan Gang, who voiced China's commitment to renewable energy. The country has set itself the target of achieving 10% of primary energy from renewables by 2010 – and 15% by 2020. It also aims to increase its commitment to energy efficiency, with the goal of decreasing the energy intensity of the economy per unit of GDP by 20% during the course of the 11th Five Year Plan −4% per year between 2006 and 2010.

This is indeed an aggressive goal, and reports suggest that although the performance was not very good during 2006, the increase in energy efficiency in 2007 was about 3.7%. Officials seemed quite confident that they will achieve the overall target by the end of 2010.

Driven partly by the omnipresent and overwhelming Olympic fever which has gripped officialdom, at least, there is indeed an impressive effort underway. During the conference, it was announced that during the first quarter of 2008, 4700 MW of old and inefficient coal fired power plants were shut down. This is in line with China's target of shutting down a total of 13,000 MW of old generating plants during 2008. And this is also a part of the 5 Year Plan's programme, which involves shutting down 50 GW of old and inefficient generating plant capacity from 2006 to 2010. Similar targets are set for other energy intensive sectors, such as iron and steel, although the power sector is the worst offender.

In addition, the minister reiterated two themes which have emerged over the past few months in speeches from top Chinese officials: an emphasis on public education – engaging the public is vitally important for fighting climate change – and the notion of a “circular economy” i.e. net conservation of energy and raw materials. This first emerged at last year's Party Conference. Both are welcome policy initiatives, and evidence abounds of Government programmes to move the economy in this direction.

But at the same time the increasing wealth and conspicuous consumption of some parts of the population; economic growth continuing at well over 10%; dramatically increased car ownership and air that is often unfit to breathe; make reports that China has passed the USA as the world's number one source of CO2 emissions plausible. This is not yet confirmed, but at the same time both China's GDP per capita as well as its emissions per capita are a small fraction of that in the US. Half full, or half empty?

As for the conference itself, while a welcome sign of China's willingness to engage and take more of a leadership role in the global debate on climate change, it was for the most part a lost opportunity. Speech after speech after speech, and very little time for discussion. It may have been educational for some, but consisted primarily of rehashing familiar themes in general terms; nothing in the way of concrete output that could aid in the ongoing negotiations over the future of the climate regime. While the talk was mostly focused on “new” technologies – which are not yet ready to play a role – there was very little discussion on the role of existing technologies, which need to be massively deployed in the short to medium term if we are to address the climate crisis.

Windpower in China continues its explosion

Key among these, of course, is windpower. The Chinese wind industry had yet another astonishing year in 2007. After growing at 85% in 2005, and 105% in 2006, it chalked up an astonishing 130% increase in 2007, reaching almost 6,000 MW of installed capacity and growing by more than 10 times in four years.

Two Chinese companies are now in the top 10 of global wind turbine manufactures – Goldwind at number 8 with a 4.2% market share, and Sinovel at number 10 with 3.4%. While most international manufacturers increased their volume of production in China in 2007, their market share shrunk to less than 50% for the first time, while about 55% of the market was held by Goldwind, Sinovel, Donfang, Windey, Shanghai Electric and a number of brand new market entrants, some of whom we’ll be hearing much more from in the future. The question now is not if – but when –Chinese manufacturers will become players in the global market.

From just under 1.5 GW in 2006, wind manufacturing capacity in China tripled to about 4.5 GW in 2007, and is expected to double again this year. This means that by the end of 2008 China will be host to the largest wind turbine manufacturing industry in the world, attracting massive investment by sub-suppliers, both domestic and international. By the end of 2010, existing plans for plant construction expansion mean that there will be more than 13,000 MW of annual wind manufacturing capacity in the country. The question is – how much of this will go to feed the (apparently) insatiable domestic market, and how much will be destined for overseas markets?

At the 3rd Renewable Energy Finance Forum China in mid-May, however, it emerged that all is not rosy in this booming market. There continue to be serious difficulties in some areas with getting new plants connected to the grid. And the Government's freeze on electricity prices, imposed earlier this year, is causing serious problems for the ‘Big Five’ major Chinese utilities. Profits are down, and some of them even lost money in the first quarter, primarily because of significantly increased domestic coal prices.

While this price freeze does not yet seem to have had a direct effect on the wind industry, the Government's efforts to combat rapidly rising inflation rates has – a newly imposed regulation increasing the loan reserve that banks must keep, means that what was a straightforward financing transaction a few months ago, now faces all kinds of new hurdles. Some manufacturers have nacelles piling up in their lots waiting for their customers to scramble to make new arrangements for finance.

There has been some improvement in the price situation for windpower, with the central Government approving what amount to fixed tariffs on a province-by-province basis, but the pricing system is still far from transparent. The Government has also recently revised its 2010 target from 5GW to 10GW, since the former was reached this year, and the latter number is likely to be reached in 2008 or 2009. Some Government officials are now putting the likely installed total at 20GW by 2010. But the 2020 target still remains at 30GW, which most observers believe will be reached well before 2015.

The clear implication of the Government's new rules from last autumn regarding installed capacity and output requirements for major utilities, suggests that in the vicinity of 100GW would be required by 2020 to meet these targets. To say that the long term vision is unclear is something of an understatement.

Despite the obstacles, most are bullish about China's renewable energy future. One of these is Gary C. Evans, chairman and ceo of GreenHunter Energy, who presented his company on the wind panel that I chaired at the REFF in Beijing. Texas-based GreenHunter made headlines last December when it closed a deal with Guangdong based Mingyang Electric, to import 900 MW of Mingyang turbines for deployment in Montana, California and New Mexico – between now and 2012. Furthermore, GreenHunter bought a 6.3% stake in the Chinese company, and is now beginning development of a project near Shanghai.

Mr. Evan's Texas drawl made a sharp contrast with most of the accents in the room in Beijing, but he made a powerful impression with his conviction that wind (and solar, and biomass) are the future in the energy sector. The first machines are due to be delivered this summer. Quite likely a harbinger of things to come.

Another Texan, Mr. T. Boone Pickens, made quite a stir when he dropped by the GE booth at Windpower 2008, the American Wind Energy Association (AWEA)'s record-breaking conference and exhibition in Houston – the “Energy Capital of America”.

The event attracted more than 13,000 visitors and 750 companies, the largest combined conference and exhibition ever, as far as I know. Mr. Pickens was no doubt checking up on the US$1 billion-plus worth of turbines he ordered from GE the previous week, the first 1,000 MW destined for a 4,000 MW project in west Texas.

Pickens, like Gary Hunter and other veterans of the Texas oil business have seen the future, and it is renewable.

About the author

Steve Sawyer joined GWEC as the first secretary general on 2 April 2007. He has worked in the energy and environment field since 1978, with a particular focus on climate change and RE since 1988.

He spent 30 years working for Greenpeace, primarily on a wide range of energy issues. He was the ceo of both Greenpeace USA (1986 – 1988) and Greenpeace International (1988 –1993), and he served as Head of Delegation to many Kyoto Protocol negotiations on climate change. He also lead delegations to the Johannesburg Earth Summit in 2002 and numerous sessions of the Commission on Sustainable Development. He is also a founding member of the REN21 Renewable Energy Policy Network and was a member of the Steering Committee of the Renewables 2004 ministerial conference in Bonn. He has also been an expert reviewer for the IPCC's Working Group III.


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