China’s wind power generation rose 95.2% to 5.6 billion kw hours in 2007, from a year ago, reported the Xinhua News Agency. A report released by the government said that China had wind power facilities with a combined installed capacity of 6.05 gigawatts at the end of 2007, up from 2.67 gigawatts in 2006. The country achieved the goal set for the 2010 three years ahead of schedule. Wind power projects under development will make up for a combined installed capacity of 4.2 gigawatts.

According to the Medium and Long-Term Development Plan for Renewable Energy in China published by the National Development and Reform Commission (”National Development Plan”), China will generate 15% of its energy from renewable sources such as wind by 2020. To achieve the goal, the government plans to increase its wind power equipment to a combined installed capacity of 10 gigawatts by 2015, and to 30 gigawatts by 2020. Shanghai Daily reported that the 2020 target is likely to be increased by the government to as much as 100 gigawatts, which, according to WSJ Environment Capital, would be greater than the total global current installed wind capacity.

The rapid increasing utilization of wind power for electricity generation has been driven by the following factors:

National Renewable Energy Law

On February 28, 2005, the Standing Committee of the National People’s Congress (NPC) of China passed a comprehensive renewable energy law which advances a number of policy measures to promote renewable energy development in China. The law went into effect on January 2006.

Green Electricity Purchasing in Shanghai

On June 7, 2005 the Shanghai Economic Commission announced that twelve enterprises in Shanghai have voluntarily purchased green electricity at a price 0.53 yuan higher than that of conventional power. This marks the establishment and actual operation of China’s first green pricing program. So far, Shanghai has established a 3.4 MW wind farm in Fengxian District. Another 20 MW wind power installation in Chongming and Nanhui will start operation the end of June. The first batch of green electricity purchased by the twelve enterprises will be equal to 50% of the power output from Fengxian, Chongming, and Nanhui wind farms.

Desire for Energy Security

As oil prices soar to record highs, China has been pushed to focus more on renewable energy including the development of wind power. The government wants anything that can substitute for energy imports and anything that can stretch out China’s coal reserves.

At the end of 2007, China had installed about 6.05 gigawatts of wind power capacity. Although still lag behind wind energy leaders like Germany, Spain, the US. and Denmark, China’s annual growth rates in new wind power capacity have been significant. China even plans to build its largest offshore wind farm in the southern province of Guangdong. According to Xinhua News Agency, the facility, covering a sea area of 240 square kilometres (93 square miles), includes a 1.25 gigawatt wind farm, an 8 gigawatt power plant, and a dock construction project.

The rapid growth in new wind farm development is creating a big market in China for wind-related equipment. It is expected that China will take the global top spot as number one manufacturer of wind turbines in 2009. Most big international wind companies have operations in China. However, foreign investors should be aware that the National Development Plan makes it clear that China intends to encourage and strengthen the domestic renewable energy sector manufacturing capacity. Foreign investment in the manufacture of parts or finished components for power generation in renewable energy fields is in some cases limited to Cooperative Joint Ventures and Equity Joint Ventures.

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