China’s wind industry is forecast to reach 150 gigawatts (GW) of installed capacity by 2015 — shattering the central government’s goal of 100 GW by 2015.
These findings come from the first installment of GTM Research’s China Wind Market Quarterly, released with market analysts Azure International. The report predicts steady government support and rising demand will keep the country far ahead of the renewable energy economies of America, Europe, and India.
While China was not immune to the financial slowdown that has gripped the world in recent years, its clean energy output has boomed in recent years, led by the wind industry. Already the international leader in installed nameplate capacity, China installed 18 GW of new wind capacity – a 40% growth rate from 2011 – to pass 50 GW of grid-connected and more than 70 GW total wind capacity at the end of Q3 2012.
New Installations Gusting Forward
Wind energy keeps growing in China, at an exponential rate. In 2006, it had roughly 3 GW of installed capacity, good for 4% of the global share. Since then, it has reached approximately 35% of installed global capacity – a 25-fold increase, while the rest of the world only expanded by a factor of 2.6.
The nation shows no signs of slowing down the pace, either. China added 2.9 GW new wind capacity in Q3, and is on track to add another 9 GW in Q4 to reach 80 GW total capacity. China consumed 50.4 billion kilowatt-hours (kWh) of wind power in the first six months of 2012, currently supplies a quarter of all wind energy supplied to the grid worldwide, and will soon become the largest wind energy generator of any country in the world.
Curtailment’s Strong Headwinds
However, wind’s rapid expansion has come with problems. Growth has been concentrated in several northern and western provinces, with Inner Mongolia boasting twice the capacity of the next highest province, Hebei.
Like in many parts of the U.S., these regions with massive generation potential are sparsely populated, cannot absorb all the locally generated wind power, and see their wind farms subjected to curtailment when generation outstrips grid needs and transmission capacity.
The issue is arguably the highest hurdle for China to clear in realizing its full potential. Curtailment is caused by challenges like limited local demand, undersized transmission infrastructure, inflexible coal-baseload generation, and wind cycles that often run counter to demand.
The three highest-generating regions of the country all experienced more than 22 percent of generation curtailed from 2009-2011. And, in 2011, 15 terawatt-hours (TWh) of wind power were curtailed – 17% of all generation and an economic loss of RMB 5 billion (about $802 million).
Even though China is planning the world’s most ambitious grid upgrade and Inner Mongolia began a power exchange to replace local coal generation with wind, GTM forecasts curtailment issues are likely to persist.
Two Growth Jetstreams: Rising Demand and Constant Government Support
Regardless of nagging curtailment issues, China’s wind growth is remarkable, and an output of unique circumstances: skyrocketing demand and consistent (if inefficient) government support at the national and local level.
China’s electricity demand has mirrored the country’s economic rise, growing 15 times higher than 1980s levels. The government forecasts demand to rise from 5 trillion kWh in 2012 to over 8 trillion kWh in 2020. Rising power demand means more demand for wind turbines – especially along the densely populated coastal regions, which expect to install 3 GW of offshore wind by 2015.
Government policies have been nothing if not ambitious. Wind installation targets have been a part of China’s five-year development plans since 2000, laws mandate the grid must accept all power from renewable generation, feed-in tariffs have been functioning since 2009, businesses receive a 50% discount on the value-added tax of wind-generated electricity, and seven provinces have wind generation targets and local feed-in tariffs.
No Windbreakers In Sight
Ultimately, while China’s wind energy industry faces notable challenges, GTM’s report finds the sheer volume of projects in the development pipeline and scale of demand means the country will lead the world far into the future. “China’s wind industry retains its leadership position worldwide, whether looking at policy targets, overall installation numbers or innovation,” said Scott Clavenna, CEO of Greentech Media.
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