China, Technology, Innovation and the Environment: energy security pushes China into Wind Power

The Chinese government recently upgraded its wind installation capacity target for 2020 to 150 gigawatts from 100 gigawatts, representing a compound annual growth rate of 20% for accumulated wind-generation capacity, according to Yuanta Research analysts Min Li and Wendy Wang.

Growth in the wind industry has been driven by a strong resource base, supportive policies, improving economics and grid upgrades, they said in a note to clients issued recently.

“The Chinese government has implemented supportive policies for wind growth, while total cost per watt is declining due to decreases in wind turbine costs and centralized operation of wind farms,” the analysts said.

The government is also building ultra-high voltage transmission lines to send electricity from western China to the eastern coastal regions, they said.

Given that, Yuanta expects beneficiaries to include component manufacturers with dominant market share in China, direct-drive turbine manufacturers and key engineering, procurement and construction providers to wind farm operations, along with the wind-farm operators themselves.

Wind would make a particularly good choice for a nation whose environmental problems have been growing along with its population.

“China’s environment has deteriorated significantly over the previous decades,” the analysts said, with glaciers in the nation’s northwest decreasing in size by 21% since the 1950s, all of China’s major rivers having shrunk over the past five decades and annual average air temperature increasing by 0.5 to 0.8 degree Celsius.

The reason for the toxic emissions is simple: China’s main source of energy supply comes from coal.

In 2008, 76% of China’s electricity generation came from coal, which is “being rapidly depleted,” with China’s 115 gigatonnes (billion metric tons) of coal reserves expected to run out in 48 years, the Yuanta analysts said, citing data from a survey by McKinsey.

Wind as an energy source, however, is “one of the most cost-competitive of renewable energies, at a levelized cost of 500 yuan ($73.23) per megawatt hour for 2008,” said Li and Wang.

They also expect the cost per megawatt hour to fall further — to below 400 yuan in 2020.

By comparison, natural gas costs $101 per megawatt hour for a 500-megawatt combined-cycle power plant, while a 50-megawatt geothermal binary plant costs $92 per megawatt hour, according to the Geothermal Energy Association, which cited a 2007 report from the California Energy Commission.

Wind is also quite abundant in China, and the industry has plenty of room to expand.

The national “possesses huge potential wind-power generation capacity due to its vast geographical area,” the analysts said.

The China Renewable Energy Industries Association estimates that China’s exploitable onshore wind capacity is 380 GW, with offshore wind capacity at 750 GW.

Current utilization is less than 5% of onshore capacity, Yuanta analysts said

via China finds that energy security’s a breeze Asia Markets – MarketWatch.