Tristan Edmondson
Tristan Edmondson is founding partner at Mint Research, a business intelligence firm concentrating on China's clean technology sector.
Talking about the wind power panacea ignores the real work being done to cut China's carbon emissions
Harvard and Tsinghua Universities published a joint report this week estimating that wind alone has the potential to meet the country's electricity demands by 2030. This is absolutely impossible, but before I look at why, consider why this report is of such importance.
China's economic development could be the final chapter in man's industrial development that tips us into climate chaos, but China has every right to lift its people out of poverty. On a historical basis China has produced only 8.5 percent of global carbon emissions, and current per capita carbon emissions are well below world averages.
The developed world is coming round to the fact that it got rich by pumping carbon into the atmosphere, and if China is to be helped not to do the same, we must help pay for it. Only last week the EU offered US$22bn for developing countries to combat climate change.
Therefore, when Harvard and Tsinghua produced their wind report this week, it is not only of interest to the Chinese people and those who worry about climate change, but to everyone in the developed world.
Harvard and Tsinghua's claim that China's entire electricity needs could be powered by wind is an interesting theoretical concept but is not of practical consideration.
The media interpretation of the study has misunderstood the basic economics behind wind power in China and is an unnecessary distraction from the complex task of carbon emission reduction. China cannot ever power all of its electricity needs from wind power, and would currently seriously struggle to power even 30 percent of its needs, a figure quoted by the report. This is for a number of reasons.
Wind power is intermittent, especially over land where the report proposes to build wind farms. This unreliability requires back up power, and in China that means coal. If all the right technologies were in place, wind would require 60 percent of its electricity production to be backed up by traditional power plants. Wind can only ever be a useful addition to an electricity grid's electricity production.
In order for large scale wind power to contribute power to China's growing electricity needs, an advanced smart grid must be in place which can distribute intermittent wind power.
Power storage is also vital for utilising the maximum amount of wind power capacity. China is building the beginnings of a smart grid, with several ultra high voltage lines planned to be built by 2012, and various upgrades to the distribution network underway. However, the kind of complete grid rebuild and massive power storage capability that a largely wind-based electrical power system would require would mean the adoption of technology not available in China, and the investment of almost as much capital as the cost of the wind turbines themselves.
China's domestic wind industry is growing fast, 80 percent of wind turbines installed in China today are produced by domestic companies and China is number four in the rankings of worldwide wind capacity.
However, domestic wind turbines are beset with problems that stem from the bidding rules for wind projects. The cheapest turbine always wins, and developers are not incentivised to actually produce any electricity.
Many wind developers are state owned enterprises whose aim is to win the project, not to make profit. Around a quarter to one third of wind turbines are not connected to the grid because the wind turbines are not of sufficient quality, and because grid companies do not want the expense of upgrading their infrastructure to cope with wind power.
Until these systemic problems are sorted out, actually producing electricity from China's growing stock of turbines will be difficult. Foreign turbine manufacturers have been rapidly losing market share in China due to the wind project bidding rules and the government regulation that stipulates every turbine made in China must contain 70 percent domestic components.
Of course in the future wind will be very important for China's energy production, but this hype about wind power as the magical panacea that will solve China's carbon emission problems is not only based on wrong thinking, it is also damaging to the real work being done to lower the increase in China's carbon emissions.
That hard, complex and practical work will involve many methodologies, collaborative efforts and sustained investment and development.
It means not only developing China's wind power capacity, but also making China's industry and buildings energy efficient, developing carbon capture and storage technology, enabling the grid for micro-generation, low tech solutions like solar water heating, business and public education about using energy more wisely, making solar electricity production economic, using the constant temperature of the earth for heating and cooling, and improving current wind technology so that it is not such an intermittent power source.
The hard work of creating a Chinese low carbon economy brings with it many opportunities for the companies with the right expertise and the right positioning.
The following related companies are sponsors of Proactive Investors: China Energy Recovery (OTC:CGYV), NF Energy (OTC:NFEC).
