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,” said Li Junfeng, Secretary General of the Chinese Renewable Energy Industry Association (CREIA) in early 2011, reflecting on new wind installations in the year 2010. The Global Wind Energy Council (GWEC) corroborated this statement, announcing last month that China had “consolidated its market position as global market leader”, installing another 18 gigawatts to bring its total capacity to nearly 63 gigawatts.
No doubt, 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.
Let’s back up for a second. Here is a chart showing the cumulative installed wind capacity in the U.S. and China. China is split up into two estimates. The solid red bars indicate capacity that has been connected to the grid, and this data comes from the China Electricity Council (CEC). The red/white bars indicate capacity that has been put in the ground but has not yet been connected to the grid, and this data comes from GWEC. The U.S. data is for grid connected capacity and comes from the Energy Information Administration (EIA). So, for grid connected wind capacity, the U.S. and China are now neck and neck, although China’s year on year growth rate is much higher than that of the U.S.
Installed capacity is one thing, but energy generated from that capacity is an entirely different statistic. Using data from the CEC and EIA, I put together a second chart showing the growth in wind energy generation. Both the U.S. and China have increased their wind generation by 20-25 terawatt hours (TWh) per year over the last couple years. In 2010, the U.S. generated 90% more wind energy than China but that margin fell to 64% in 2011 as China hurries to connect the large amounts of turbines it is installing each year. For another comparison, wind power accounted for about 1.6% of China’s overall generation portfolio in 2011, while it accounted for 2.9% of the U.S.’s portfolio.
Four questions arise in my mind when I see this discrepancy:
1. What are the bottlenecks in connecting China’s wind capacity to the grid?
2. Are the utilities (State Grid, Southern Grid) purchasing all of the wind energy that is generated?
3. Are the wind farms in China performing worse than in the U.S.?
4. If so, is this a question of wind resource, siting decisions, or technology gap?
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. Also, many of China’s wind farms are in remote places, so it takes longer to get those hooked up. China is investing a lot in ultra-high voltage (UHV) transmission lines to get wind power from remote locations to demand centers. The question of who pays for the grid connection and extra transmission question is complicated in the U.S. but the Renewable Energy Law of China stipulates that the utility must pay for it. This is not always the case however.
The 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.
To address the third question, let’s look at capacity factors. If we look at the capacity and generation statistics and do some simple arithmetic, we’ll find that the U.S. average capacity factor is 29% while China’s is only 18%. In fact, it should be a couple percentage points higher since this simple calculation doesn’t account for the fact the wind farms are connected throughout the year (according to CEC, China’s was 22% in 2011). Even with this discrepancy, China’s wind farms are not performing as well as those in the U.S.
Why is this? I’m not sure of the proportion of contribution from these factors, but resource, siting decisions, and technology all play a role. First, 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.