At the end of 2010, China overtook the US to become the world's largest wind power developer. China's onshore wind power market has experienced exponential growth since its Renewable Energy Law (REL) created a state-sponsored commitment towards renewable energy in 2006. However, the development of the country's onshore wind power industry has been beset by problems. The REL was amended in 2009 to address these issues, and now the focus is turning to offshore wind power.
This guide provides an overview of offshore wind power projects in China.
The main projects
The Donghai Bridge Wind Farm in Shanghai is currently the most high profile offshore wind project in China. It was completed in time for the World Expo being held in Shanghai in 2010. It is made up of 34 turbines with a combined installed capacity of 102MW.
The province of Tinajin is constructing the Bohai Bay wind farm which, once completed in 2020, will be the world's largest offshore wind farm with an installed capacity of 1,000MW. By way of comparison, Europe's largest existing offshore wind farm is 300MW.
The Chinese government has identified six locations which are suited to offshore wind power and is preparing offshore wind development plans. The most advanced is Jiangsu which is in the process of tendering four new offshore developments each with a capacity of 200MW.
The main players
Five state-owned power generators dominate the offshore wind power market:
- China Guodian;
- China Huaneng Group;
- China Datang Corporation;
- China Huadian Corporation;
- China Power Investment Corporation.
Some of these companies have recently listed on the Hong Kong Stock Exchange and are heavily involved in developing the larger 5MW wind turbines which are required in offshore developments.
A preferential policy which required that 70% of the equipment of any Chinese wind farm must be produced in China was lifted in 2010. The policy created many small Chinese wind turbine manufacturers, but the top three - Sinovel, Goldwind and Dongfang - now control most of the market.
The regulatory regime
The Medium to Long Term Development Plan for Renewable Energy contains a 1GW target for installed capacity of offshore wind power by 2020. It seems that China will easily exceed this target.
The issues already encountered by onshore wind farms could equally apply to the offshore industry. A combination of high electricity prices and poor planning meant that many offshore wind farms were constructed in remote areas with no incentive for companies to connect them to the wider electricity grid. The result was many wind farms left idle. The REL now includes the following provisions to try to address these issues:
- planning – the REL attempts to streamline planning on a nationwide basis to ensure more co-ordination between central and provincial governments;
- connection – companies must connect wind farms to the grid;
- purchasing – grid operators must purchase all renewable energy generated by licensed companies;
- price – the REL establishes a feed-in tariff for the price of electricity based on the region and type of energy. Offshore tariffs are yet to be announced;
- Renewable Energy Development Fund – this compensates grid companies for the increased costs of purchasing power from renewable sources.
The detail on how these measures will be implemented will be set out in related regulations. The amendments send a clear signal to the market that the Chinese Government is serious about creating market conditions which encourage further investment.