China's current wind power pricing mechanism must be overhauled, according to a report released jointly by the Chinese Renewable Energy Industries Association (CREIA), Greenpeace and the Global Wind Energy Council (GWEC).

The report, titled "A Study of the Pricing Policy for Wind Power in China", reviews the development of wind power and its pricing system in China. It looks closely at state-sponsored wind concession projects. The report says the tendering system used for wind power pricing is unclear and has had a negative impact on investment.

China's Renewable Energy Law came into effect early this year. Electricity pricing implementation rules state that the grid feed-in rates of wind-sourced power should be determined by tender. This has drawn a barrage of criticism from industry players, who fear that the practice will lead to low prices that deny investors a reasonable profit.
The report calls on the Chinese government to change the tender mechanism for wind power pricing to a fixed tariff system, so as to build a fair environment for competition that will serve the long-term development of the Chinese wind industry.

"Wind power is a new industry which needs support. The current pricing policy does not support wind power development, and must be changed," says CREIA secretary general Li Junfeng, a leading author of the report.

GWEC chairman Arthouros Zervos points out that "price volatility and uncertainty caused by the current regulation harms foreign and domestic private manufacturers and developers, who are discouraged by pricing pressure they cannot sustain."

Steve Sawyer, the Climate and Energy Policy Advisor of Greenpeace International, says, "China has a superb opportunity to develop wind power, but the development relies heavily on an enabling pricing system. We hope that this report will provide the basis for discussions on how to improve the pricing policy for Chinese wind power."

China has taken great strides in wind power development in recent years. By the end of 2005, it had built 61 wind farms with a power generating capacity of 1,260 MW, ranking seventh on the list of the world's major wind players. Last year the Chinese government lifted its wind goal for the year 2020 from 20,000 MW to 30,000 MW. The target can be achieved ahead of time, if appropriate policies are in place, the report says.

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