Chinese workers are seen installing a wind power turbine at a wind farm in Weifang city, east Chinas Shandong province. Photo by Imaginechina: AP

China has recently agreed to invest about $7 billion in new wind projects in Gansu, the arid northwest province with the most abundant wind resource. Nearly two dozen big Chinese power companies have committed to wind projects in Gansu, encouraged by massive low-interest loans from the state banks and various government subsidies.

Over the past few years, China’s wind sector has gotten increasing amounts of attention. In 2007, about 15% of all global wind investments occurred in China. In 2008, about $12 billion was invested in the Chinese wind power market, which by some estimates is now the world’s fastest-growing.

In 2005, China’s wind power capacity was 1.26 gigawatts. By the end of 2008, that figure had jumped to 12.21 GW, or about 1.5% of China’s total nameplate power generation capacity. By the end of 2010, China expects another 4 GW of wind capacity to come online. Since 2007, the government has raised the total wind power capacity target from the original planned 30 GW to 100 GW by 2020. In the government’s “New Energy Resource Stimulus Program” to be in place soon, the price model for the wind power from the government is very favorable to investments in wind. Multiple wind farms with a total capacity of 10 GW or more are to be built in Xinjiang, Gansu, Inner Mongolia, Hebei, Jiangsu, Jilin, and Liaoning provinces.

Moving even faster are the manufacturers – over 70 enterprises have started to make wind turbines and parts, more than double that in the rest of the world. To protect the domestic wind power equipment business, the National Development and Reform Commission (NDRC) has ruled that 70 percent of the equipment in any wind farm must be domestic. Imported equipment is subject to tariffs. This has been labeled by the international news media as “trade protectionism”.

Although currently there is excess electricity capacity and the power industry is losing money, and although wind electricity is more expensive than coal-fired electricity, the wind energy industry in China is still booming. Some companies put up the turbines as soon as a good wind source is located, just to occupy the spot for future development. Many local governments and power enterprises only seek the wind power capacity for political correctness without considering the availability of wind sources and the feasibility of land use. All of these are part and parcel of China’s constant desire to be liked by the rest of the world. If wind is fashionable everywhere else, one can bet it will boom in China.

But as usual there are problems. The national transmission power grid doesn’t have sufficient back up capacity to manage the intermittency of the wind. “Because wind energy is unstable, it is a pollutant and affects the safety of the power grid. The capacity of the transmission power grid is limited, not all of the wind power can be transmitted whenever a wind farm is built,” said Hu Xueha, the deputy chief engineer of China’s Power Grid Research Institute. Many wind farms are being built even though adequate transmission isn’t available. In January 2008 alone, some 300 gigawatt-hours of electricity was wasted due to insufficient transmission capacity. According to recent data from the China Power Union, only 72% (8.94 GW) of China’s total wind power capacity was connected to the grid. The result: a lot of wind turbines have been “sun bathing” -- as the Chinese call it.

China’s problems with adequate transmission and back-up generation capacity are not unique. Similar problems are occurring in the US. Thus, while wind appears to be booming, it take some time – maybe a long time – before China’s wind sector becomes a financially sound business.