In its latest edition, “China Wind Power Outlook 2012”, this annual industry analysis highlights an encouraging trend in the development of the sector. In 2011, apart from the “old market” – namely the Northern, Northeastern and Northwestern areas of China (or the “Sanbei” region) that are rich in wind resources but weak on consumption power, wind power in China saw the emergence of a new market with huge potential. The overwhelming majority of accumulated and added installment is now still focused on these regions. However, due to the long distance between the power stations and major power user markets, they continue to be plagued by grid connectivity and curtailment problems. In the meantime, a new wind power market located closer to power consumers in the central and eastern provinces has steadily become a vigorous, if not prominent, market in 2011.
This market expansion will continue into 2012. The key issues for the wind power sector in 2012 will be how to break the intrinsic restrictions on the traditional market and how to take the next step in promoting the emerging markets in eastern and central China.
China Wind Power Outlook 2012 presents a joint assessment and analysis of the wind power sector in China in 2011, including a reading of most recent policy trends made by Greenpeace, the Chinese Renewable Energy Industries Association (CREIA), and the Global Wind Energy Council (GWEC), as well as an outlook for the sector’s future development. The aim of this report, as always, is to contribute to the healthy development of the wind power sector and the reduction of China’s greenhouse gas emissions.
In 2011, China added 17.63 GW of newly installed wind power capacity, slightly lower than 2010 (18.93 GW). Total installed wind capacity reached 62.36 GW. After years of rapid growth, China’s wind power market is now entering a period marked by stable growth, but it is still the global leader in terms of total installed capacity.
In 2011 China’s wind energy sector generated 71.5 billion kilowatt hours, or 1.5% of the national total electricity output. Looking at its environmental benefits, wind power has a clear advantage: every 1 kWh generated saves 320 g of standard coal being burned. That means in 2011 China’s wind power sector saved more than 22 million tons of coal from being burned, in total, reducing sulfur dioxide emissions by 360,000 tons, and carbon dioxide emissions by about 70 million tons. Assuming that the average Chinese household uses 1,500 kWh of electricity every year, China’s wind power sector met the electricity demands of over 47 million households in 2011.
2: Grid connectivity eases, curtailment worsens
China’s wind power resources are largely concentrated in China’s northern, northwestern and northeastern regions, but the main power demand comes from along the eastern coastal region. This mismatch between the geographic distribution of wind power resources and power consumption is at the heart of grid connectivity and curtailment problems, which have consistently been the biggest challenges to the development of the wind power sector. Stemming from this root are a slew of hurdles that have prevented numerous wind farms from realizing their full potential: the different paces of construction of wind farms and the construction of grid infrastructure, the relatively low local demand for power and lack of energy source flexibility.
- By the end of 2011, total installed capacity of wind power in China reached 62.36 GW; 47.84GW was connected to the grid, or 76.7%, which was an improvement on the 69.9% in 2010.
- According to statistics, 10 billion kWh of wind-generated power was curtailed in surveyed regions, or 12% of these regions’ total wind energy. The curtailed energy amounts to what could have been generated by burning 3.3 million tons of coal, which in turn equals to10 million tons of carbon dioxide emissions.
- Wind farm operators suffered huge losses of more than 5 billion yuan (not including revenues from CDM) from curtailment. In fact, curtailment cuts the wind sector’s profits by half.
- In 2011, the number of working hours of wind power equipment went through a sharp decline. Full-load hours for the year came to 1,903 hours (144 hours fewer than 2010, or registering a 5.7% fall). On the other hand, during the same period of time, full-load hours for China’s thermal power plants rose by 263 hours.
- Regionally, curtailment is most serious in northern, northwestern and northeastern China. A statistical analysis showed that curtailment was most serious in eastern Inner Mongolia and Jilin, which had a curtailment rate of over 20%. Curtailment was also serious in western Inner Mongolia, Gansu and Heilongjiang, each with a curtailment rate of more than 10%.
3: Distributed and small-scale wind power installations entered the picture
In 2011, due to their many resource advantages, large-scale wind power installations in China’s north remained the main focus of wind power development. But with increasing competition in the northwestern market and the problems of grid connectivity and curtailment, a reasonable next step for all the big developers was a switch to the central and eastern parts of the country, which have not traditionally been rich in wind resources.
To tap into this emerging market, developers need to tackle a very real challenge: wind power resources are relatively low in these areas, which poses a technical challenge to both developers and equipment manufacturers. However, these areas also feature a dense population, heavy power demand and good grid connectivity, which give these areas unparalleled advantages for building large-scale power plants in remote west. In 2011, an outstanding trend in China’s wind power sector was an expansion into the densely populated area of eastern China. There were also the following highlights:
- By the end of 2011, Guangxi, Qinghai, Guizhou, Shaanxi, Henan, Ningxia, Tianjin, Yunnan and Anhui saw two-fold growth in installed wind power capacity as compared to 2010. Except for Qinghai and Ningxia, all the other provinces are non-traditional markets. Coastal regions such as Shandong, Jiangsu, Guangdong and Fujian all passed the 1 GW milestone, forming a group of tier-2 wind power development provinces following the “Sanbei” region.
- By the end of 2011, more than 20 provinces were conducting preparatory works for wind projects of combined installed capacities of at least 1 GW. Among them, preparatory projects located in Yunnan, Guizhou, Hunan, Henan and Guangxi are all up to 1.5GW of combined installed capacity.
- By the end of 2011, 32 provinces, municipalities and autonomous regions across China (including Hong Kong, Macau and Taiwan) had wind farms. Nine of which had combined installed capacities of over 2GW each.
- Inner Mongolia remained the national leader in installed wind power capacity in 2011. The region added 3.73GW of newly installed wind power capacity in the year, contributing to a total installed capacity of 17.59 GW, which allows it to remain the country’s leading region in wind power. Newly added installed capacity in Inner Mongolia made up 28% of the national total, while the region’s total installed capacity made up 21% of the national total. Hebei, Gansu and Liaoning followed, each with total installed capacities of over 5 GW.
- In terms of total capacity growth rate, Ningxia tops the top 10 provinces and regions with the biggest installed capacities in 2011. Total capacity grew at 144%, followed by Shandong at 72.96%, Xinjiang at 69.85%, and Hebei and Heilongjiang each at 45%.
4: Review and Outlook
In the previous version - China Wind Power Outlook 2010, we predicted that China’s installed wind power capacity would reach 230 GW by 2020. Even though the rate of growth has slowed over the past two years, our updated estimation, based on an analysis of future trends, is that China’s installed wind power capacity will still be between 200 and 300 GW by 2020 and over 400 GW by 2030. By that time, wind power will make up about 8.4% of China’s total electricity generation, and 15% of China’s installed capacity.
However, this kind of development won’t happen out of the blue. In order to reach this target, a series of development bottlenecks and some market and systemic restrictions need to be overcome. To that end, Greenpeace offers the following suggestions for the Chinese government:
- Clearly identify local governments’ responsibilities to develop renewable resources. For the centers of power consumption in central and eastern China, and areas where there is a big space for power consumption, localized power market systems should be built up with wind power as an organic part of their power supply.
- Implement a renewable energy quota for grid companies that clearly defines the percentage of renewable energy sources that the grid needs to guarantee in its energy portfolio.
- Continue expanding the sector into densely populated areas and make deployment and consumption of wind power throughout the whole country optimal and flexible. Encourage the construction of distributed and small-scale wind farms in those areas of lower wind speed but closer to load centers with better access to the grid.
- Establish a response mechanism to help grid operators balance cost and expenditure. The development of renewable energy requires additional system management and operational costs, for which corresponding calculation and compensation mechanisms must be created.
- Strengthen power grid infrastructure and management, particularly to ensure that the grid can improve its management of diversified energy sources. This must be achieved with improvements from both ends of the market: wind farms need to be more power grid friendly, and the power grid needs to be more wind power friendly.
Among all the renewable energies, wind power is at a mature stage in terms of the technology and possesses the best prospects for large-scale commercial development. It is growing more and more competitive against traditional energy sources as the industry continues to grow and production costs continue to fall. Given its unwavering role as one of China’s key strategic emerging industries, wind power will for sure see its share in China’s national energy mix gradually increase. With tailored policy, we will undoubtedly see industry optimization and integration, with the potential for wind power development in China remaining vast.