Only 70 Percent of The Wind Power in China is Connected to the Grid and New Policy Pushed Up Short Term Costs

The "Wind power system technical requirements" is to be implemented in June this year, besides, the National Energy Bureau published the "distributed access wind power project development and construction guidance". It is easy to find out that China has made great efforts in the management of wind power grid-connection, and the attitude is becoming more resolute.

However, it seems that the two measures by the authorities did not get the full support of the industry and investors.

In the opinion of the majority of industry insiders, "Wind power system technical requirements" clearly points out the grid-connection technical requirements of the newly-built and expansion of wind farm, and adds the requirements of low voltage ride through capability of wind farms. The wind farm operators will have to increase by a large investment to meet the requirements; the "distributed access wind power project development and construction guidance" also proposed new technical requirements to the turbine unit replacement under distributed access wind power at low wind speed wind scene, which will directly result in an increase in the cost for low speed wind farm to do business dramatically.
    
It is said that the rebuilding of a 50,000 KW wind farm unit grid-connection takes at least one million yuan, let alone the difficulty in the technology of the distributed wind field rebuilding. It is expected that wind farm operators will be faced with a even greater increase in the costs. 

The First High-Concentrating PV Generation System of the World Located in China Anhui Achieved Production Capacity

The ceremony of Sino-US joint venture Suncore Photovoltaic Technology Co., Ltd.'s high-concentrating photovoltaic industrialization project phase one put into production and phase two groundbreaking was held in Anhui Huainan, China's first hundred million ton coal base.

The first phase of the project put into operation marks that the world's first high-power concentrating photovoltaic power generation systems and automated production line of modules with an annual output of up to 200MW have achieved production capacity.

Suncore photovoltaic high-concentrating photovoltaic industrialization project has a total investment of RMB 8 billion yuan, covering an area of 1,600 mu, the total annual output of high-power concentrating photovoltaic power generation systems and modules is up to 1000MW. It will become the world's largest and most technologically advanced high power concentrator photovoltaic industry base.

It is reported that Concentrating Photovoltaic (CPV) system technology is the third generation of photovoltaic generation technology. Compared with other types of solar cells, it has the advantages of high photoelectric conversion efficiency, small footprint, short energy consumption recovery period, able to maximize the use of solar energy resources, so it is expected to. become the key technology for the sustainable development of future energy and environmental fields in a short term.

The high-concentrating photovoltaic power generation system and modules with the annual production capacity of 200MW are all operated by automatic robot assembly line.

Huainan is the largest "coal city" of East China with centuries of coal mining history, the first hundred million tons of coal base in China, with coal and other conventional energy sources dominating the city's economic structure. The aim of the construction of concentrating photovoltaic industry base is to create a three-dimensional energy city, and realize transformation and upgrading of the city.

During The"12th Five Year" Period Investment on Biogas Projects in China May Exceed 20 Billion Yuan

It is heard from Ministry of Agriculture that the during the "12th Five-Year" period, the state will invest 20 billion yuan for the development of biogas projects, including rural biogas projects, the construction of large and medium biogas and biogas power generation, etc. Along with the progress of the project, the total investment may also increase.

The 12th Five-Year Plan on the development of modern agriculture just announced also required to organize and implement a number of key projects based on the key tasks mainly on the most urgent and most critical, the weakest links and areas of focus. Among the listed 14 major projects in the plan, "rural biogas project" is included in item 12. The planning requires "to speed up the construction of household biogas the farming community and associated household biogas as well as large and medium biogas projects, and to improve Biogas services and technology support system." The planning also pointed out to increase the farmers methane penetration rate from 33% in 2010 to more than 50%, average annual growth rate higher than 17%.

Currently nearly 300 enterprises are engaged in biogas engineering design, construction, equipment manufacturing, operation and management, employing nearly 10,000 staff, with enterprises total turnover of nearly 10 billion. However, it is said that the performance differences of the key equipment such as generators, purification towers, control system are large, with inconsistent quality and short life and the lack of industry standards and specifications of constraints, some projects do not operate normally due to the poor key equipment performance, which increases the difficulty and costs of the operation and management of post-projects.

It is suggested that relevant departments should cultivate industry leaders as the key link in the promotion of biogas projects, establish incentives and give full support to policy, funding, taxation, personnel training, technology, etc., and as soon as possible select a number of advanced new technologies and new products, prepare new technologies and new products catalogue, and guide the promotion departments and owners to make correct selections. 

Renewable Energy Riding High in China

If William Latta has his way, Beijing may soon have onlyclear blue skies. In his corner office on the 11th floor of a high-risebuilding near the capital's Sanlitun Village, Latta, the managingdirector of the US clean-coal company LP Amina LLC, said hiscompany is working with coal-fired plants in China to reducecarbon emissions.

"See the smog out there? We can help with that," he said.

Latta is just one of the many next-generation Western technocratsand entrepreneurs who are helping China with its efforts todevelop alternate energy resources and reduce carbon emissions. Over the past two years, China has alreadyleapfrogged competitors from Denmark, Germany, Spain and theUnited States to become the world's largest maker of windturbines and solar panels.

At the same time, the country is also taking steps to build morenuclear reactors and energy-efficient coal power plants.

The frantic pace at which China is expanding its push for renewable energy reflects itscommitment to the reduction of carbon emissions as it strives for a more balanced growthmodel that is not reliant on costly imports of fossil fuels. The government has alreadyannounced plans to increase the share of non-fossil energy in total energy consumption to11.4 percent by 2015 from 8.3 percent in 2010.

In December, the National Energy Administration, the top energy agency, said that powergenerated by clean-energy sources such as solar, wind, biomass and nuclear will account forenergy equivalent to that produced by 480 million tons of standard coal between 2011 and2015. That in itself would be a major achievement, considering that power generated by clean-energy sources was 300 million tons in the previous five years.

Despite hurdles such as overcapacity in China's wind- and solar-power equipment industry andthe difficulty in connecting the power generated by wind to the grid, experts and analysts saythat clean energy and clean technologies are strategic investments for China, not only for environmental reasons but also for energy security.

Frank Li, lead partner for the clean-tech industry at Deloitte Northern China, a member ofDeloitte Touche Tohmatsu Ltd, said that he anticipates growth not only in his company's clean-tech related business in China but also in confidence in the country's general business climatefor the clean-energy sector.

"People often ask me for advice, trying to see if wind and solar power are still worth investing in.It is true that there have been some problems in these sectors in China, such as overcapacity.But from a strategic point of view, none of these problems need be problems any more," Lisaid.

According to Li, China has the third-largest coal reserves in the world and is ranked 14 in termsof reserves of oil and natural gas. Coal contributes more than 70 percent of China's energyneeds while oil and natural gas account for 21.6 percent. But despite the statistics, the deepfuel reserves are nothing when equated with China's population of 1.34 billion, the robusteconomy and growing energy needs. The country accounted for 20.3 percent of global energyconsumption in 2010, and that figure is likely to rise dramatically.

"Statistics from BP's 2011 World Energy Review show, that based on China's reserves and itsconsumption in 2010, the coal reserves will be exhausted in 35 years, while oil will be used upin 9.9 years and natural gas in 29 years," he said.

Although improved exploration and exploitation techniques offer the prospect of finding morefossil fuels in China, there is no denying that they have a limited life span. For better energysecurity, it is not prudent for a country such as China to rely heavily on imported energyresources when its own reserves are declining.

In China's case, 55.8 percent of its oil requirement in 2010 came from imports, compared with51 percent in 2008. More importantly, China needs to develop alternative energy resources, ifit is to honor its global commitments on the reduction of carbon emissions, said experts.

Sean Gilbert, director of climate change and sustainability at global consultancy KPMG LLP,said that, in terms of reducing carbon emissions, one has to look into clean-energy sources,because improving energy efficiency alone is not good enough for the planet. Hence there is abig incentive for China to have ambitious installation goals for clean energy.

China has the globe's highest installed wind-power capacity and the highest number of nuclearpower stations under construction. The country also produces the majority of the world's solarPV cells and is the biggest hydropower market.

"China has nearly one-fifth of the world population, so the total size of green-energyinstallations in China over time should reflect this and be a very large absolute figure. Thecurrent investments are welcome, but it is just the start of things to come," Gilbert said.

One of the biggest concerns expressed about clean energy is that its application leads to joblosses. But experts say that not only does the sector hold the promise of more jobs, it will alsocreate a cleaner, healthier future.

In November 2011, the China Council of International Cooperation on Environment andDevelopment said that by 2015 China may spend an estimated 5.77 trillion yuan ($909 billion)to improve energy efficiency and protect the environment. At the same time, the phasing-out ofhigh-polluting and energy-intensive industries could cost the country as many as 952,100 jobsand more than 100 billion yuan in economic output by 2015. However, in return the countrycould save 1.43 trillion yuan in energy expenses, boost GDP growth by 8.08 trillion yuan andcreate 10.58 million jobs.

According to estimates by Tsinghua University, investment in China's new-and clean-energysectors will reach 5 trillion yuan in the coming 10 years. Such a huge market will provideseveral windows of opportunity for Western companies and multinationals.

Much of that optimism comes from the fact that Western companies still have the upper handwhen it comes to advanced core technologies for clean energy, said Zhu Junsheng, presidentof the China Renewable Energy Industries Association.

"The competition is more intense than five years ago, but the pie of China's clean-energysector is also getting bigger. There is still plenty of room for growth," said Zhu.

Shifting winds

The global trends for the wind power industry are not that encouraging considering theprecarious financial situation in Europe and the weak US economy. Wind and other high-costforms of energy production are virtually on the backburner, with some European nations evendeciding to end subsidies for the sector.

But the market for wind turbines has been growing steadily in China, and that's why largeEuropean conglomerates such Siemens AG have such strong confidence in the Chinesemarket.

Siemens, a leading supplier of wind-power solutions, has teamed up with Shanghai ElectricGroup Co Ltd to form two joint ventures for wind power with the aim of strengthening theGerman company's footprint in China.

"China has a very attractive wind-power market, but the disadvantage of being in such anattractive market is the tough competition from both international and local players," said KayWeber, CEO of Siemens Wind Power Asia-Pacific. "By forming joint ventures with a strong localpartner, we can combine our strengths to be successful in China," he said.

Foreign producers of wind turbines have seen their market share in China drop dramatically to30 percent from 70 percent over the past five years after an increasing number of Chinesecompanies entered the sector, according to a study by Roland Berger Strategy Consultants,one of the largest consultancies in Europe.

When Siemens entered the wind-power industry in 2004 by acquiring the Danish wind turbineproducer Bonus Energy A/S, China was not a top priority. "To be honest, at that time, wewanted to focus more on easier markets, such as Europe and America. But you cannot besuccessful in the world if you don't succeed in China," said Weber.

China has since overtaken the United States and is now the largest market for wind power.Although China's newly installed wind-power capacity has slowed from an annual growth rate of100 percent between 2006 and 2010, it is still the most promising market for global suppliers ofwind power equipment.

The China Wind Energy Development Roadmap 2050, released by the Energy ResearchInstitute of the National Development and Reform Commission in October 2011, shows thatChina's annual new-installed wind capacity will remain steady at 15 gigawatts per year until2020, 20 gW per year from 2020 to 2030, and 30 gW per year for the decade to 2050.

"Experience shows that government targets are often exceeded in China. Wind-power pricesare coming down and are cheaper than solar power. We believe that the newly installed wind-power capacity in China will reach at least 20 gW per year," said Watson Liu, vice-president forGreater China at Roland Berger.

But the tempting market also lures more competitors, and therefore overcapacity is inevitable.Liu said that China's demand for wind-power equipment was 20gW in 2010 whereas theproduction capacity by Chinese producers alone was 30 gW.

There has been high number of accidents caused by failures and malfunctions of turbines,including massive power outages and even some fatalities.

China's National Energy Administration undertook many initiatives in 2011, by moving toward amore mature industry with higher standards for safety and quality control, grid connectionrequirements and a centralized approval process for wind-farm projects, all of which areexpected to open up more investment opportunities for Western companies.

"We anticipate milestone developments in the Chinese wind sector over the next three to fiveyears. There's a greater focus on safety, quality control and mature industry standards. Suchtrends will help high-quality and sophisticated turbine manufacturers like us," said JensTommerup, president of Vestas China, part of Vestas Wind Systems A/S.

Banking on hydropower

Hydropower is the world's largest source of renewable energy. China has been busyharnessing its power, with 17 percent of its 2010 electricity requirement coming fromhydropower sources.

Though development of large hydropower projects in China has slowed considerably becauseof greater awareness of ecological and social factors, experts still say that it is the most matureand cheapest source of renewable energy.

Pichler Heinz, the China manager of Andritz Hydro, part of the Andritz Group, one of the world'slargest suppliers of equipment for hydropower plants, said that although business has not livedup to expectations, the company has no plans to move out of China as it believes there is stillhuge untapped potential. On the contrary, Heinz said, Andritz plans to invest more in itsmanufacturing partner in Sichuan province for an additional manufacturing joint venture.

"China's hydropower had an installed capacity of 216 gW in 2010. I believe the same amount isstill available to be developed. The potential is huge," Heinz said.

In 2010, China set the goal of reaching 300 gW of installed hydropower capacity by 2015,which will be raised to 330 gW by 2020.

In a hydropower report released by Deutsche Bank Group in late October 2011, China'sinstalled hydropower capacity is expected to exceed the governmental goal of 330 gW to 348gW by 2020.

Martin Andrae, president and CEO of Voith Hydro Shanghai, a joint venture between theworld's leading hydropower equipment provider Voith Group and Shanghai Electronic Corp,said that there is a tremendous demand for electricity in China to support growth and eliminatepower shortages. But the country needs to generate energy in a green manner.

"Hydropower is one of the most effective approaches for China to achieve its goal of cuttingcarbon emissions. Last summer, China faced shortages of around 30 gW in the State Grid andof about 10 gW in China Southern Power Grid," Andrae said, adding that hydro plants havegreat durability. "If maintained well, they can be operational for 60 to 90 years, whereas wind-power installations average 20 to 25 years and thermal plants 35 to 40 years," he said.

"Our research shows that in the first half of 2011, China's investment in hydropower plants wasnearly the same as that of Switzerland, a tiny country," Heinz said.

Statistics from the China Electricity Council show that the country's installed hydropowercapacity was around 12.25 gW in 2011, significant growth from previous years but still laggingbehind the schedule of an average new installation of 15.4 gW per year between 2011 and2015.

Nuclear future

Like hydropower, nuclear energy is a prominent source of clean energy and accounts fornearly 13.8 percent of global electricity requirements. In China, the government is likely to set atarget of generating 70-80 gW of its electricity needs from nuclear power by 2020.

Like many nuclear-equipment manufacturers, Jiangsu-based Shentong Valve Co Ltd isanticipating a huge increase in orders this year, boosted by expectations that China will resumeapprovals for new nuclear projects soon.

The valve maker has been the only supplier of butterfly and ball valves - key components innuclear reactors - for new reactors since 2008.

"We expect to receive new orders worth 150 million yuan if at least four reactors are built eachyear," said Zhang Qiqiang, secretary to the chairman of Shentong Valve.

China recently upgraded its safety standards on nuclear power projects according to thefinalized Nuclear Safety Plan currently awaiting approval from the State Council, the Chinesecabinet. It is widely believed that China will adopt third-generation technology in all plants,including the AP 1000 developed by the US company Westinghouse Electric Co and EPRdeveloped by Areva SA of France.

Industry analysts estimate that the new nuclear project approvals will create a market worth 300billion yuan in the next five years.

Despite a freeze in the industry after the nuclear accident in Japan last year, investment in thesector grew by 26 percent during the first 10 months of 2011, according to estimates from theChina Electricity Council.

Clean coal on fire

Although China is taking steps to "decarbonize" itself, this does not mean the end of the roadfor companies in the conventional energy sector, such as coal. In fact, companies such as LPAmina are expanding their operations in China in a big way to ride the clean-energy wave.

"One of the major challenges we have in China is to cope with fast market growth," says Latta,adding he is expecting a boom in business in China. LP Amina, which was established in the USin 2007, started its Chinese operations in 2008 after witnessing strong demand for pollution-reduction techniques at coal-fired power stations.

Latta said that using LP Amina's clean-coal technology, coal-fired power plants can not onlyreduce up to 95 percent of nitrogen oxide from the baseline but also improve energy efficiency. "We are one of the few companies in the world that can combine emissions reduction withimproved energy efficiency simultaneously," he said.

For its first few projects in China, LP Amina took the initiative of finding coal-fired plantsinterested in the technology. "Things have changed now as more people are coming to us. Ourname is invariably mentioned for new projects," Latta said. The company finished its firstproject in 2009, has so far completed 11, and is currently working on 100 projects acrossChina.

Apart from the advanced technologies, Latta attributes his company's success in China to thecountry's booming market for clean coal. According to Latta, his company's business in the USis fairly stable, because the desire to deploy cutting-edge technology among his homecountry's coal-fired power plants, all built about 40 years ago, is not that strong.

"But in China, nitrogen-oxide control is the main target in the government's 12th Five-Year Plan(2011-15). The market is booming and that is why we are expanding," he said.

According to the plan, China is aiming to reduce emissions of nitrogen oxide and ammonianitrogen by 10 percent below 2010 levels, and to cut demand for sulfur dioxide and chemicaloxygen by 8 percent between 2011 and 2015, all of which is expected to create a market worth$30 billion.

Latta said he doesn't think the market can be as big as $30 billion. "But it can be $20 billion atleast. Even if we capture 3 percent of it, it will be huge," he said.