Roadmap to Asia-Pacific

Seeking power from winds in Guangdong

March 15, 2005

Winds of opportunity may be blowing in South China for Canadian firms with products or technology related to harnessing the power of the wind for electricity. With continued blackouts and brownouts across the region, efforts are being stepped up to find alternative energy solutions to help fill some of the burgeoning energy demands in one of China's fastest growing regions.

Since 2000, China’s demand for power has outpaced supply. In 2002, 12 provincial grids had to restrict power supplies during summer and winter. In 2003 the figure increased to 23. Per capita power generation in China is equal to 1/13 of that of the United States and 1/8 of that in Japan despite rapidly rising per capita power consumption.

China will need a total generating capacity of 1.5 billion kilowatts by 2010. By the end of 2003, China's installed capacity was 385 million kilowatts. Much of the required new capacity is to be filled by thermal power and hydro facilities. Developing renewable energy sources, such as wind, will be integral in meeting China's power needs. Presently, the use of wind in power generation is at an unprecedented level of commercialization.

Investing in wind power

In Guangdong, wind resources across its 3,300 kilometres of coastline are capable of generating 3 million kilowatts of power. Over the next six years, Guangdong plans to invest nearly $900 million in wind power, aiming to increase its wind power capacity to 800,000 kilowatts by 2010, from the current 66,000 presently being generated by Nan'ao and Huilai wind-power facilities, the second biggest wind farm in China.

Progress is also being made with the Zhuhai Gaolan Wind Power Project, with investment by the Beijing Guohua Electric Power Corporation of $30 million and the Yangjiang Hailing Island Project with investment by the Hong Kong Zhonghua Electric Power Company of $123 million.

The Shibei Wind Energy Plant in Huizhou is a demonstration project approved by the central government in a franchise business model. The Guangdong Yuedian Group was selected to build and operate it with an installed capacity of 25,000 kilowatts in phase one, due to be operational by the second quarter of 2005. Upon completion in 2006, the total installed capacity would reach 100,000 kilowatts, with 167 local generating units.

Mainland power producers are looking to the nascent wind power sector to diversify energy supplies and prepare for future regulations stipulating greater use of renewable energy. Preferential policies are being implemented to support development of clean energy resources in Guangdong. The price paid to wind power plants is $0.08 per kilowatt-hour (kWh), much higher than the ordinary on grid price of $0.05 per kWh. Encouraged by such prospects, investors—State-owned power conglomerates, private and foreign firms—have set their sights on the sector.

However, the development of wind power in China is still at an early stage, generating 560,000 kilowatts of electricity last year. The figure is rather small compared to Germany's 14.6 million kilowatts and the world's 39 million kilowatts. Wind power development in China continues to face the challenges of huge investment needs and high per kilowatt production costs.

Conclusion

Business opportunities for Canadian companies in this sector:

• Technology transfer,
• Project investment via partnerships with local electric companies,
• Domestically-made equipment production.

Useful local contacts

Guangzhou Institute of Energy Conversion, Chinese Academy of Science
Guangdong Yuedian Group

For more information, contact:
Connie Li
Trade Commissioner (Environment and Energy Sectors)
Canadian Consulate General in Guangzhou
Tel.: (011-86-20) 8666-0569, ext. 3353
Fax.: (011-86-20) 8667-2401
E-mail: connie.li@international.gc.ca
Web site: www.guangzhou.gc.ca