Debate over excess capacity blows up in China's wind power sector

www.chinaview.cn

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BEIJING, Nov. 23 (Xinhua) -- A split has emerged in China's wind power industry over its future development and government policies intended to avoid "excess capacity."

Some of China's leading large-scale wind power businesses have been lobbying the government to slow the growth of the industry because of alleged over-capacity

They appeared to have won the debate in September when the State Council, China's Cabinet, approved a document from the National Development and Reform Commission (NDRC) and nine other ministries, stipulating the NDRC would hold back funding or approval for projects in industries with production overcapacity.

Wind energy was among the industries listed.

But the "over-capacity of production" charge is untrue, argued Qin Haiyan, secretary-general of China Wind Energy Association (CWEA).

"The production overcapacity, as widely reported in the media or calculated by some government agencies, is based on the development programs of many enterprises. It is open to question whether these capacities will be realized," said Qin.

"I strongly oppose the policy of restricting businesses from other manufacturing sectors from entering the wind power sector. And I strongly oppose leading enterprises lobbying the government to restrict the development of the industry on the excuse of excess capacity."

PROMISING INDUSTRY

Before 2004, China's wind power industry was almost non-existent. Its total installed capacity of wind power has grown about 20-fold from 764,000 kilowatts in 2004 to 15.85 million kilowatts by September 2009.

China is expected to have 120 million to 150 million kilowatts of installed wind power capacity, totaling 7 to 9 percent of the national total installed electricity capacity, in 2020, according to the China Energy and Environment Technology Association (CEETA).

PROGRESS

According to CWEA, in 2004, Chinese enterprises accounted for only 18 percent of the total wind power installed capacity on the Chinese mainland, while foreign enterprises -- mainly from Denmark, Germany and Spain -- provided 82 percent. By the end of 2005, China had 1,864 wind turbines, producing 1.266 million kilowatts of power. Foreign businesses occupied 77.3 percent of the wind turbine market as well as exclusive control of high-end technological equipment.

The proportion was reversed by the end of 2008, when Chinese producers and joint ventures had 61.8 percent of the country's wind power equipment market.

Although the technologies for the most commonly used 1.5MW turbines are largely made with technologies introduced from Europe, some Chinese plants have begun to jointly design such turbines with foreign counterparts, in a bid to eventually develop them independently.

Much of this progress in forming a complete industrial chain was attributed to the 70-percent localization requirement policy, promulgated by NDRC in 2005.

This required that at least 70 percent of wind power equipment to be produced in China. Wind farms failing to adhere became ineligible for construction approval.

The aim was to reduce costs of wind power generation, speed up wind power industrialization, and most importantly to encourage multinationals to invest in and transfer technologies to China.

Qin Haiyan, secretary-general of China Wind Energy Association (CWEA). "We cannot restrict competition simply because of excess capacity. Latecomers often become superior in emerging industries.

"We will promote technological progress and lower costs through market competition. We do not have to worry there are so many competitors at a specific stage."