The nation can lead the world in Wind Energy — but its policies need to be more coherent.
A quick glance at China's wind-energy statistics suggests that all the right things are happening. The country has doubled its capacity every year for the past three years; in 2007, it had surpassed a 5-gigawatt target three years ahead of schedule and, in 2008, it hit a revised 10-gigawatt target two years early. Domestic manufacturers are positioned to produce more Wind Turbines than any other country over the next three years.
But the reality is much more complicated. Many wind projects do not even get off the ground because power companies cannot make enough money from them. Those that do go forward often produce turbines that simply sit, waiting for four months or more — a big delay in financial terms — to be hooked up to the electricity grid. And even when they are connected, they break down more often and are much less efficient at producing energy than those in many other countries
In May 2007, the Global Wind Energy Council, the Chinese Renewable Energy Industries Association, and the China Wind Energy Association released a joint memorandum proposing improvements in the industry. More than a year and a half later, the concerns expressed in the memorandum have been borne out and the recommendations remain just as pertinent.China needs to significantly improve its grid, and to coordinate it with renewable-energy developments.
For example, the bidding system used by the government to appoint developers favours companies that agree to supply electricity at cheaper prices — even if that price will render them unprofitable. As a result, many projects haven't even got started. International development companies with more experience and foreign turbine-makers with more efficient machines don't even bother to bid. The memorandum recommends setting 'feed-in tariffs', which offer a guaranteed rate for power supplied and offer developers more consistency and planning. China has moved in this direction, but the process of allocating the projects is still opaque and, from the perspective of developers and turbine-makers, frustrating.
The country also needs to significantly improve its grid, and to coordinate it with renewable-energy developments. Grid companies are understandably not keen to embrace energy produced by wind — an erratic and relatively expensive source — so it will take incentives to make the grid companies want to play ball.
Another way that China has discouraged foreign developers from entering the fray is by preventing companies with less than 51% Chinese ownership from taking advantage of the Clean Development Mechanism, which allows developed countries to offset their carbon-reduction commitments under the Kyoto Protocol by investing in sustainable-energy projects in developing countries. If one has to be protectionist, surely it is better to do so in a way that bolsters domestic companies rather than simply penalizing foreign on