Exploring Hydrocarbon Depletion
HONG KONG—The Chinese government has halted the expansion of wind power in its northern provinces where a large number of turbines are churning out power that's being wasted. The move underscores the challenges facing China as it works to fulfill its clean energy ambitions.
Chinese regulators said the windswept regions of Inner Mongolia, Jilin, Heilongjiang, Gansu, Ningxia and Xinjiang will suspend the approval of new wind projects in 2016, according to a March 17 statement published on the website of China's National Energy Administration. The six regions have installed nearly 71 gigawatts of turbines, more than the rest of China combined. It's at least the fourth time in five years that Beijing has ordered wind operators there to slow down growth.
The decision highlights a growing concern among energy analysts that China's spectacular growth in renewable energy is bumping up against the reality of grid constraints and shrinking electricity demand. Solar panels and wind turbines were virtually nonexistent in China a decade ago, and now the country leads the world in installing both.
Wind power installations, in particular, have exploded over the last five years as part of the country's ambitious push to combat climate change and bring down dangerous levels of air pollution from its massive coal consumption. Already the world's wind energy giant, China installed an additional 33 gigawatts of wind turbines in 2015, more than half of new installations worldwide, as developers rushed to build as many projects as possible to meet a year-end deadline for subsidies.
But too much of that energy is being squandered. In 2015 alone, 33.9 billion kilowatt-hours of wind-powered electricity was wasted, government statistics show—equivalent to the electricity consumed by 3 million American households a year. That was about 15 percent of China's total wind power generation, up from 8 percent a year earlier.
Some of the wind-generated electricity had no place to go because there's no transmission infrastructure to carry the power to population centers. In other cases, developers couldn't compete with coal for contracts to connect to the grid.
U.S. PRODUCES 64% MORE WIND ENERGY THAN CHINA“China now has 42.3 gigawatts of wind power, and has surpassed the US in terms of total installed capacity.” China now occupies the world’s #1 slot in installed wind capacity, with the U.S. in second place. But here is a little known fact: the U.S. produced 64% more wind energy than China in 2011 with the same amount of turbines. There are a number of important reasons for this, but the main reason is that although China’s renewable energy law mandates that the utility purchases all renewable energy that is generated, the utilities often do not follow that mandate.
First off, the pace of China’s growth in the wind sector is so fast that there will always be some lag in getting those wind farms connected until the sector’s growth slows down.
[China's] Renewable Energy Law also stipulates that the utility must purchase all of the renewable energy generated by power producers (such as wind farms). However, the penalties for non-purchase of renewable energy are either not high enough or not well enforced. Many PPAs are either violated outright or end up with escape clauses, whereby the utility does not have to buy the wind power when it is not in its best financial interest to do so (for instance if electricity demand is low at night, but the wind farms are producing at full power). There is anecdotal evidence that many power purchase agreements (PPAs) in China today have escape clauses.
China’s wind resource is concentrated in the north and west, and wind farms with capacity factors much higher than 30% are rare. In the U.S., wind resource is more evenly dispersed with great resources in the Great Plains and Texas, as well as decent resources on both coasts and in the Northeast. It is more common for individual wind farms to have capacity factors higher than 30%, especially in the Great Plains. Second, wind developers in China often make poor siting decisions due to a lack of wind speed data, leading to a waste of investment. Finally, the quality of turbines produced by many Chinese wind turbine manufacturers (who only have a few years of experience in the sector) has not yet approached the quality of companies with longer history, like GE, Vestas, and Gamesa.
Improvements in China’s legal structure, development patterns, and technology will all lead to a wind sector that generates ample wind energy from all of the wind turbines it is installing. Until then, the U.S. remains the world’s #1 wind energy producer.
How the federal government subsidizes wind farms
Wind-farm developers are able to tap one of two federal tax programs for new projects.
The Production Tax Credit, established in 1992, offers wind farms tax credits in proportion to the electricity they generate in their first 10 years of operation.
Wind projects that started construction by Dec. 31, 2016, can obtain credits of 2.3 cents for every kilowatt-hour of power each turbine generates. For farms built after that, the amount of the tax credit drops by 20% each year until it expires at the end of 2019.
There is also the renewable-energy Investment Tax Credit, which is equal to 30% of the value of a project that started construction by Dec. 31, 2016. The credit steps down gradually each year to 12% in 2019, after which it expires.
Tanada wrote:the problem with the idea that 'everyone should go off the grid' is everyone or at least the vast majority still want grid service when their home system is offline for any reason. The more people who depart the grid the less incentive the grid owners have to maintain a large stable system with excess capacity. At some point it tips over into the grid producers and distributors losing money by staying in business.
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