VZCZCXRO2425
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0425/01 2030815
ZNR UUUUU ZZH
R 210815Z JUL 08
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 7424
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 GUANGZHOU 000425 
 
SENSITIVE 
SIPDIS 
 
EMB BEIJING FOR DOE 
USDOE FOR OFFICE OF THE SECRETARY 
USDOE FOR INTERNATIONAL AFFAIRS 
USDOE FOR FOSSIL POLICY AND ENERGY 
STATE FOR EAP/CM, EB/TRA, AND EB 
STATE ALSO PASS USTR FOR CHINA OFFICE 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EMIN SENV PGOV TRGY CH
SUBJECT: Gone with the Wind - Guangdong Advances Wind Sector 
Development 
 
¶1. (U) Summary: As Guangdong's power crunch worsens, and the 
province faces brownouts and blackouts in the years ahead, local 
officials are looking at new ways to generate energy, including the 
use of wind and the construction of China's largest off-shore wind 
farm.  Scarce land resources and difficulty in acquiring equipment 
and technology could inhibit this effort, which would, in any case, 
be but a small fraction of Guangdong's overall energy mix, with coal 
continuing to remain the dominant source for power generation.  End 
summary. 
 
--------------------------------------------- ----- 
Investing in Wind: Guangdong's Wind Farms Mushroom 
--------------------------------------------- ----- 
 
¶2. (U) With an average annual electricity consumption rate of 14.5% 
between 2000 and 2006, Guangdong province is looking hard for ways 
to solve its growing power crunch.  While coal continues to dominate 
the region's power generation, rising prices, transportation 
challenges and mounting air pollution have pushed government and 
enterprise alike to seek alternative solutions. 
 
¶3. (U) Guangdong is nationally ranked fifth in wind power 
generation, behind Inner Mongolia (3 million kwh), Hebei (3 million 
kwh), Jilin (500,000 kwh) and Liaoning (500,000 kwh). In 2006, 
Guangdong had an installed wind power capacity of 211,140 kwh, which 
is already edging toward 300,000kwh.  There are currently three 
operating wind farm sites in Guangdong province - Nan'ao, Huilai, 
and Shanwei cities.  Guangdong has begun construction on additional 
wind farms in Zhuhai (24,600 kwh capacity), Xuwen (120,000 kwh 
capacity), and Taishan (200,000 kwh capacity) cities, which will 
dramatically increase the province's wind generating capacity.  The 
first phase of the Taishan Chuan Dao project, a venture by the China 
Guangdong Nuclear Power Holding Company (CGNPC), is expected to be 
complete by year's end.  A facility spread across two islands, Phase 
I of the project has a 48,500 kwh capacity, tapping area wind 
resources with a total potential output of 180,500 kwh.  The entire 
project will be connected to the larger power grid via undersea 
transmission cables. 
 
¶4. (U) Guangdong is also set to construct China's largest off-shore 
wind farm.  A joint effort between the Guangdong Baolihua New Energy 
Stock Co. and the Lufeng municipal government, the facility will 
cover 240 kilometers of sea area.  With a projected wind power 
capacity of 1.25 million kwh and the planned construction of an 8 
million kwh supercritical power plant, which will have heightened 
energy-efficiency compared to standard subcritical plants, the wind 
farm by itself will far surpass Guangdong's initial 2006 wind 
capacity goal of 700,000 kilowatts (note: this goal was raised to 
880,000 kwh in the later half of 2006).  Greenpeace estimates that 
by 2020, Guangdong will have a wind power capacity of 20 million 
kwh.  In addition, wind farms are planned for Yangdong, Yangxi and 
Hailing, which are located in Yangjiang municipality.  Together, the 
farms will add generating capacity equal to 1 million kwh. 
 
------------------------------------- 
Major Challenges  - Finding Land, ... 
------------------------------------- 
 
¶5. (SBU) Wind power development faces a variety of challenges, one 
of which is land resources and acquisition.  Most of south China's 
wind resources are located along the coastline, often rough terrain 
with the seasonal threat of typhoons and other severe weather. 
Also, coastal areas in Guangdong are densely populated and wind 
power development there must compete with other development 
priorities including other power plants.  In addition, linking wind 
farms to larger power grids can be difficult.  CGNPC's Niu pointed 
out that because wind farms are often located far away from the 
power grid's reach, construction of transmission lines can stall 
project completion. 
 
¶6. (SBU) Niu also claims that power grid companies are unhappy about 
increasing reliance on wind power because its supply is unstable. 
According to Niu, Guangdong has several high elevation-areas, where, 
even if the wind is strong, the area's low air density weakens and 
slows wind capacity.  In addition, wind power is a seasonal source 
of energy, with the highest generation occurring during winter 
 
GUANGZHOU 00000425  002 OF 002 
 
 
month, leaving a decreased capacity from April to October. On 
average, nuclear power plants run up to 8,000 hours a year and wind 
power plants run 3,000 hours a year.  However, due to Guangdong's 
varied terrain and seasonality of wind generation, plants in 
Guangdong run 1,500 to 2,000 hours. 
 
----------------------- 
...and Getting Turbines 
----------------------- 
 
¶7. (SBU) Xie Biao, General Manager of the Guangdong Yudean 
Shibeishan Wind Power Development Company, also cites the shortage 
of turbine supplies as an obstacle to wind power development.  In 
the past, foreign turbines manufacturers, such as Danish-owned 
Vestas, dominated the market.  According to Lin Shaokun, Vice Chief 
Financial Officer of China Resources Wind Power Development Company, 
developers are currently shifting toward domestically produced 
turbines as Chinese manufacturing capacity has grown with lower 
prices.  Lin explained, however, that for large megawatt-level 
turbines, developers still prefer imported ones because they are 
more reliable. Regardless, CGNPC's Niu emphasized that turbine 
supply was falling short of demand in all categories due to the 
recent 'mushrooming' of wind farms. 
 
------------------ 
Government Support 
------------------ 
 
¶8. (SBU) According to Lin Minghui, Chief of the Shantou Development 
and Reform Commission's Energy Section, the Guangdong government has 
remained highly supportive of wind power development through both 
policy and investment.  Between 2005 and 2010, the provincial 
government is expected to invest USD 726 million in developing the 
wind power sector.  In addition, the provincial government raised 
the wind power tariff as a financial incentive for wind power 
generating companies.  According to Article 20 of the Renewable 
Energy Law of the PRC, power grids that purchase alternative energy 
sources at a higher cost that conventional energy, such as 
coal-fired, are able to pass the cost along to the consumer at the 
retail level. In January, the set wind power feed-in tariff was 
raised from RMB 0.528 to RMB 0.689 per kilowatt-hour, which is 
higher than the average coal-power feed-in tariff of RMB 0.42 kwh. 
In addition, wind power companies receive subsidies of RMB 0.01 per 
kwh if the wind farm is located more than 50 kilometers from the 
power grid and a RMB 0.02 per kwh subsidy if the farm is more than 
100 kilometers from the grid. 
 
-------------------------------------- 
How Viable is Wind Power in Guangdong? 
-------------------------------------- 
 
¶9. (SBU) While Guangdong is rapidly increasing the development of 
its capacity, wind power remains a tiny portion of the overall 
energy mix.  According to Niu Zhiping, Guangdong's current wind 
power capacity of less than 300,000 kwh accounts for less than 1% of 
the province's power supply.  In Guangdong's Shantou city, one of 
the first areas in the country to develop wind power and the site of 
the Nan'ao wind farm, wind power only accounts for approximately 10% 
of the city's power consumption. According to Liao Xiaoping, Deputy 
Director General of the Shantou Development and Reform Commission, 
coal will remain the dominant power source in the foreseeable 
future. 
 
GOLDBERG