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Silver lining for wind power industry

By Si Tingting (China Daily)
Updated: 2008-11-10 15:14

They all use the word "tsunami" to describe the severity of the ongoing financial crisis, but none of them are afraid of it. They are the leaders of China's wind energy industry who firmly believe they will be the first ones to survive the pending economic winter.

At an entrepreneur forum held a week ago during the Global Wind Power 2008 convention in Beijing, China's top performers and emerging powers in the wind energy sector gathered together to weigh the pros and cons that the financial crisis might cause to their business. They expressed unanimous confidence at the forum saying the financial crisis was likely to be a golden opportunity.

"The wind farm operators that I'm in touch with all believe the government will invest more in the energy and transportation sectors to sustain the national economy. This means the credit crisis is actually a good opportunity for our wind power industry, despite of the more complex procedures to get bank loans," says Wu Gang, chairman of China's largest maker of wind-powered generators, Goldwind Science and Technology Co Ltd.

Han Junliang, president of another leading wind turbine producer, Sinovel Wind, believes only the biggest and most credible companies will be first ones to benefit from the country's recent flexible monetary policy.

"This would help consolidate the entire wind power industry by making the stronger much more stronger and by encouraging the weaker companies to unite," he says.

In addition, as China's wind power industry is largely due to the government's strong push for sustainable development, industry experts are pretty sure the government will not take back its helping hands in this difficult time.

"The Chinese government's subsidy for the industry in 2006 was 1 billion yuan, and last year it was 2 billion yuan. So I don't think the government will cut the subsidy for us," says Li Junfeng, secretary general of the Chinese Renewable Energy Industry Association.

Goldwind's Wu also predicted the government will soon issue more incentive policies to shorten the procedures needed for the approval of new wind power projects.

However, they are not blind optimists.

Despite the industry's robust development with newly added capacity growing 100 percent year-on-year since 2005, China's wind power leaders are still quite concerned about some long-standing obstacles.

According to the China Wind Power Report 2008 issued last week, the goal that China set to expand its wind power generation capacity to 10 GW by 2010 will likely to be reached by the end of this year.

Behind this "great leap forward", problems are looming.

Like in most other countries, China's wind resources are located largely in remote areas, but in China, those places are usually not connected to the power grid. Liang Zhipeng, official at National Development and Reform Commission (NDRC), the country's top economic policy-maker, said it usually took two years for China to build a wind farm, but it would take much longer to build transmission lines.

Wind power industry executives at the forum also complained about the country's current concession bidding system which gives awards based on low price but not merits. Statistics show that, about 2 percent of the wind-powered generators installed in 2005 could not produce electricity because the profit-seeking operators were installing poor quality generators.

Competition is heating up in China's wind power industry, with a dozen or so foreign players vying for a slice of the booming market, including global leader Vestas Wind Systems, Spain's Gamesa, India's Suzlon Energy Ltd and Germany's REpower Systems Group.

But Chinese firms are also piling into technically complex wind turbine manufacturing with an obvious disadvantage in talent supply and core technology. This creates a supply glut and causes quality problems that temporarily complicate China's push towards cleaner energy, industry executives said at the forum.

NDRC's Liang believes that China's wind industry could not live without foreign technology, but it cannot become wholly dependent on them too.

"China's wind turbine producers should develop their own turbines fit especially for the dry and cold conditions in North China. We should make it our core competence," he says.