China’s booming economy and the expectation of a substantial population growth in the coming years will result in an increased demand for energy. China’s need for electricity is expected to increase by almost five per cent a year, and as a result they are expected to be the world's largest electricity-consuming nation by 2030.
If this challenge is not handled appropriately, the substantial demand for energy could increase the country's energy dependency, making the environmental problems they face today even worse.
Wind power - part of the solution for these strategic challenges
China has already acknowledged that wind power may be part of a solution for the country’s future energy challenges. According to China's own estimates, the country has a wind potential of 250 GW onshore and 750 GW offshore, and the potential of becoming the largest global wind market in as little as 3-5 years.
China is in the process of creating a platform for the development of wind power. At the core of these efforts is the Chinese Law on Renewable Energy, which was implemented in January 2006. The law sets a national target of 5 GW wind power installed by 2010 and 30 GW by 2030. However, China is expected to reach its 2010 target already by the end of 2007 or at the beginning of 2008, and the National Development and Reform Commission (NDRC) has recently stated that up to 120 GW could potentially be installed in China by 2020.
Besides the law on renewable energy, the NDRC has recently published a national climate change program and a medium and long-term plan for the development of renewable energy in China. The latter establishes new targets for the share of China’s total energy consumption to be generated from renewable energy: 10 per cent in 2010 and 15 per cent in 2020.
The NDRC has also announced that the Chinese government intends to allocate 265 billion U.S. dollars for further development of renewable energy in China. This amount is equal to one tenth of China’s total gross domestic product (in 2006).
Still some way to go
Despite these positive regulatory initiatives for renewable energy, there are still barriers and uncertainties that need to be overcome for China to exploit its full wind potential.
One of the most important issues that needs to be addressed is the establishment of a well-functioning and long-term support system, which will provide security for investors, secure bank financing and stimulate innovation and domestic research and development.
Other issues that need to be addressed are:
- Expansion and upgrading of the electric grid
- Establishment of transparent rules for project approval
- Implementation of technical standards in order to ensure reliability
- Development of incentive schemes for grid operators