Zhangbei County is a poor windswept collection of villages high on a plateau in Northwest Hebei province. Its ancient grassland pastures were once home to nomadic Mongolian herders. Now settled farming communities struggle in the arid and frost-prone climate. The land they till turns easily to desert and can’t be used for much more than growing potatoes and buckwheat. Not much of a crop and not enough to lift Zhangbei off the government’s “priority poverty relief list”.
So local officials have come up with a different plan. They want to turn the county’s fierce winds to its advantage, by investing in wind power. “For us, the wind was merely a disaster, but now it’s our treasure,” Zhangbei’s Wind Power Office Director Yu Wanming told the 21CN Business Herald.
Zhangbei built its first wind turbine in 1998, but didn’t develop any large-scale wind farms until 2006, after China’s Renewable Energy Law came into effect. Now there are 13 wind-power projects involving most of the major Chinese players, including recently listed Longyuan Power and state-owned China Energy Conservation Investment Corporation (CECIC).
The rural community has already allocated more than a third of its 4,185 square kilometres to wind farms, and has an installed capacity of 3 million kilowatts in operation or under construction. “Zhangbei has set a goal for wind power generation of 4-5 million kilowatts by 2020,” explains CECIC’s general manager, Deng Hui.
But not all of the electricity generated is being put to use. So far just 700,000 kilowatts is connected to the grid, with 300,000 more expected by the end of the year.
It’s a common problem in China where wind power has grown much faster than the electric grid’s capacity to use it. There are plans underway to build a nationwide “smart grid” that would enable long-distance transmission of renewable energy (see WiC45).
County officials are also hoping to create jobs and tax revenue via a nascent wind turbine industry: “With the blade factory to be completed this summer, a wind power industry chain will basically take shape,” explains Yu.
“Now the government is driving enterprise instead of being driven,” says Deng, who has been involved in developing the county’s wind resources since 2002. The Zhangbei government has cut red tape facing wind farm developers and provides them with land at a discounted rate (about $35,700 an acre).
In return the wind power industry provide tax revenues of more than $6 million last year. Grid-connected wind farms are expected to bring in more than $15 million in taxes this year, and that could go as high as $88 million if Zhangbei meets its 2020 goal.
The local government is so committed to the technology it’s even betting that “wind power tourism” will bring in more revenue from visitors from nearby Beijing. “Wind power is now our business card,” says Yu, who doesn’t hold with arguments that the turbines could spoil the views of the grasslands.
In fact, he points out that the county is spending $11 million on a “wind power viewing park”.
But wind power is still heavily dependent on state support, and Zhangbei runs the risk of being caught out by policy changes. The central government has announced it is ending the requirement that 70% of turbines be sourced domestically, even as competition heats up in the sector.“The government, although it drew up favourable policies, didn’t come out with a clear plan for the industry,” warns wind power executive Xu Zhichun. He worries that turbine quality and technology haven’t kept pace with the industry’s rapid growth.
In the meantime, the benefits from wind power can’t come soon enough for Zhangbei’s farmers. The Yanzhou News reported that drought, hail and snow caused nearly $65 million in economic losses last year, and the county spent nearly $1 million in disaster relief funds.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.