China's Wind Power IV

The Chinese government has expanded the capacity of wind farms to a 100 megawatt level, and has created new wind power tariffs based on the market mechanism and tendering process. This has attracted a number of Chinese companies into this program. Through successful implementation of the project, the Chinese government hopes to make wind power an economically-viable power choice, effectively competing with conventional power sources in China.

Incentive policies have finally begun to emerge within China. China encourages the development of wind power in its "National Middle and Large Term Development Plan." According to the plan, by 2010, China's installed capacity of wind power will reach 5 gigawatts. By 2020, it will achieve 30 gigawatts. In order to achieve this level of growth, China needs to build 800 megawatts of new wind power capacity each year from 2006 to 2010.

In Feb 2005, China's Renewable Energy Law was formulated and was put into effect on January 1, 2006. The law stipulates that the power grid company must sign a grid connection agreement with the wind power generating company and purchase the full amount of the wind power generated by it. The wind power tariff will be determined by the wind farm project tendering. The winner's quoted tariff will be the tariff of that wind farm project.

Wind power is a priority "National Clean Development Mechanism Project," i.e., wind farm developers can sell Certified Emission Reduction Certificates (CER's) to developed countries under the terms of the Kyoto Protocol. The Chinese government reduced the Value-added Tax (VAT) for wind power from 17% to 8.5% in 2001 and adjusted the import custom tariff of wind turbine generator sets to 8% and that of its components to 3% in 2004. The import duty of wind power equipment and accessories can be waived if it is for the wind farm developer's own use.

Some local governments in Guangdong, Jilin, Xinjiang and Inner Mongolia formulated their own incentive policies to develop wind power. By the end of 2005, China's wind power installed capacity was about 1,2 gigawatts. According to NDRC's planning, China's wind power installed capacity will reach 5gigawatts by 2010 and 30-40 gigawatts by 2020. According to statistics, the cost of wind power is 33%-60% higher than that of coal, which makes the wind power tariff 68%-94% higher than the coal tariff. Industry expert predicts that the wind power can be commercially viable and compete with clean coal-fired power economically by 2020.

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