Wednesday, January 20, 2010

China Drops ‘70% Home-Made’ Rule for Wind Turbines

by Bloomberg news

Jan. 11 (Bloomberg) -- China, the world’s third-biggest producer of wind power, has dropped a rule stipulating that more than 70 percent of the wind turbines used in the country must be made domestically, whether by foreign or local companies.

The policy has been scrapped recently and there is no longer a quota, Shi Lishan, deputy director of renewable energy at the Beijing-based National Development and Reform Commission, said by telephone today. The change will spur foreign investment in the industry, according to a China Business News report.

Overseas companies have lost out on wind-energy projects as bidding criteria make it impossible for them to compete with domestic developers, the European Union Chamber of Commerce in China said last year. Still, China relies on foreign expertise for wind-turbine design and development and locally made components haven’t met global standards yet, Shi said last month.

“If China has to wait for the quality of their wind turbines to catch up with foreign countries, it’ll have to wait for a while,” Gordon Kwan, the head of energy research at Mirae Asset Securities, said by telephone in Hong Kong. “Countries like Spain and Denmark are already very successful in wind-power generation. If China can immediately apply the technology, that could speed up its plan to increase wind in their energy mix.”

The world’s second-biggest energy-consuming nation aims to increase its capacity to produce power from wind fivefold by 2020 to help combat climate change. China’s wind-power capacity will rise to 100,000 megawatts by then from at least 20,000 megawatts in 2010, National Energy Administration chief Zhang Guobao said on May 26.

Foreign Investment

Tempe, Arizona-based First Solar Inc. and Copenhagen-based Vestas Wind Systems A/S, the world’s largest maker of wind turbines, are among companies expanding in China.

“The ruling will make no difference to our operations, as 70 percent to 80 percent of our turbines are already made in China,” Andrew Hilton, a spokesman for Vestas, said by telephone in Beijing.

China has 70 wind-turbine makers with a capacity of about 15,000 megawatts a year, Dave Dai, a Hong Kong-based analyst at CLSA Research, said in a note on Sept. 2.

The policy change is a way of deregulating the industry, Mirae’s Kwan said. “This way, China can choose more easily between domestic or foreign investments,” he said.

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