Closer Look: Tilting At Unconnected Windmills
(Beijing) -- China may not sustain its headlong growth in the wind power industry with recent gusts signaling that a deflection is underway with the latest regulatory assessment on technology standards.
In February, a serious setback took place on the Jiuquan Wind Power Base in the northwestern province of Gansu, which led 600 turbines to drop off-grid, resulting in an instant power loss of 840,000 kilowatts.
The ensuing probe by the State Electricity Regulatory Commission pointed to safety problems with wind equipment manufacturers, the wind farm builder, power grid infrastructure and technological standards.
Unlike similar snafus which took place elsewhere before, the Jiuquan wind farm was a key project launched by the National Energy Bureau, with first-phase installed capacity having reached 5 million kilowatts. Following the incident, the government has suspended further approvals for the Jiuquan wind farm.
The accident also calls into question China's wind power development model, which features huge capacity, high voltages and remote locations. But questions remain over whether such a power delivery system will ever become economically viable.
China's installed wind power capacity rose to the top spot globally last year, after aggressive government policies promoting expansion starting in 2005. But getting that wind power on-grid has become a huge issue – as it has already created a bottleneck for the sector's long-term growth.
On-grid wind power capacity was at 29.6 million kilowatts at the end of last year, lagging well behind its installed capacity of 40 million kilowatts, China's largest electricity company State Grid Corp. said in a report April 15.
Against such a backdrop, the nation will predictably slow down its growth pace in installed wind capacity as focus will be shifted more toward improving power delivery efficiency.
Upstream equipment manufacturers will take a beating with the slowdown.
In March, Sinovel Wind Group Co. (SSE: 601558), China's largest wind turbine producer, refused to accept core electrical components shipments from American Superconductor Corp. until it reduced its inventory levels, indicating a deterioration in domestic market conditions.
Domestic wind turbine firms have come under further pressure as State Grid earlier this month drew up harsher technology standards for wind power to be connected to the grid.
Mid- to small-sized wind equipment producers will be shut out of market by the technological threshold if it is finally approved by the electricity regulator.
Harbin Air Conditioning Co. (SHE: 600202), making inroads into the research and development of wind power equipment two years ago, announced its exit in February, with more expected to follow suit.
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