New Procedures To Harness Local Development Of Wind Power In China
At the end of 2007, China's installed wind power capacity reached 6 gigawatts (GW), and by the end of 2008 that is expected to reach 10 GW.
To further support the development of the local wind power industry, China's Ministry of Finance recently issued the 'Tentative Procedures for the Administration of Special Funds for the Industrialisation of Equipment for Wind-driven Power Generation' (Procedures).
The Procedures aim to support the research of key technologies for wind power equipment and to speed up the development of the wind power industry in China.
Under the Procedures, the government will offer a subsidy to domestic companies that develop new wind turbines. Chinese wind turbine manufacturers will receive 600 yuan (US$87.71) per kilowatt for the first 50 units they produce of any new turbine with a capacity of 1 megawatt or more. The subsidy is to be used for the research and development of new wind power equipment.
Manufacturers will need to meet certain criteria in order to qualify for the subsidy. Most importantly, they must be Chinese-funded or have a majority Chinese ownership. The subsidy must also be shared equally between the manufacturers of the key parts and the companies that assemble the finished product.
The initiative is likely to reduce the manufacturing cost of wind turbine equipment in China, and this in turn could result in greater affordability and the subsequent development of more wind farms across the country.
Foreign manufacturers of wind turbine equipment – who currently have the lion's share of the market in China – receive no benefit from the subsidy. Clearly aimed at supporting and stimulating long-term growth of the local industry, the government's initiative poses a potential threat for foreign manufacturers and is likely to close the gap between foreign and domestic manufacturers.
Notwithstanding this, it is important to acknowledge the government's focus on reducing greenhouse gas emissions and to view the introduction of the Procedures as yet another measure supporting the use of renewable energy sources as an alternative to coal.
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