Technology overview
Pulverized coal combustion (PC) is the most widely used technology in coal-fired power plants globally. The technology’s developments in the past decades have primarily involved increasing plant thermal efficiencies by raising the steam pressure and temperature. Based on the differences in temperature and pressure, the technology is categorized into three tiers: subcritical, supercritical (SC) and ultrasupercritical (USC) (Table 1).
Table 1. Approximate pressure and temperature ranges
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
SC and USC technologies achieve high efficiency and consequently use less coal and result in reduced CO2 emissions. According to the IEA Clean Coal Center, CO2 emissions may be reduced by 23% per unit of electricity generated by replacing existing subcritical plants with SC/USC technology (Nalbandian 2008). Specifically, a 1% increase in efficiency reduces emissions by 2.4 million tons (Mt) CO2, 2000 tons (t) NOx, 2000 t SO2 and 500 t particulate matter over the life of the facility (Balling & Rosenbauer 2007).[1]
SC technology was invented in the late 1950s, initially in the United States and Germany. American Electric Power operated the Philo SC unit in 1957; the Philo SC was soon followed by Eddystone 1, a unit still in active service. USC facilities have been constructed and operated successfully since 1993 when Japan operated its 1000 megawatt (MW) Hirono 4. USC is routinely used for new pulverized coal power plants in Japan today. The efficiency gain also reduces fuel costs by 2.4%.[2] More advanced USC technology promises efficiencies of up to 55% for PC power plants. Its economic benefits are comparable to integrated gasification combined cycle (IGCC) and natural gas combined cycle (NGCC) technologies (Table 2).
Table 2. Estimated costs and thermal efficiencies
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
| Average efficiency | CO2 emissions, g/kWh | Power generation cost, US¢/kW | Total plant capital cost, US$/kW | |
| Subcritical | 36 | 766–789 | 4.0–4.5 | 1095–1150 |
| Supercritical | 45 | 722 | 3.5–3.7 | 950–1350 |
| Ultrasupercritical | >45 | <722 | 4.2–4.7 | 1160–1190 |
| IGCC | 42–44 | 710–750 | 3.9–5.0 | 1100–1600 |
| NGCC | 50 | 344–430 | 3.4–6.8 | 400–700 |
Although SC/USC is a mature technology, the majority of existing coal-fired power plants worldwide are still using subcritical technology. The barriers to the diffusion of SC/USC technologies are not technical but largely economic and regulatory. First, the long lifetime of coal-fired power plants slows fleet turnover. Through much of the 1980s and 1990s low fuel costs eliminated the economic impetus for the higher capital costs of higher efficiency cycles such as SC/USC. The United States, for example, has not built any new SC plants since 1991 (EPRI 2008), because the coal cost was low and stable over most of the past 30 years. In addition, uncertain regulatory environments and prolonged permitting processes have made capital expensive, skewing the economics even further toward increased fuel use and decreased capital costs. Of the more than 500 SC/USC units in the world, nearly half operate in Europe and Russia, 24% in the U.S., and 10% in Japan. The remaining 19% are in China (EPRI 2008).
Where does China stand?
Coal consistently contributes to over 75% of electricity in China (China Bureau of Statistics 2009). To meet its ever growing demands for electricity, China has seen rapid growth of coal-fired power generation. From 2003 to 2009 the country more than doubled its coal-fired generation capacity, making its fleet the largest in the world. However, the fuel consumption per unit of electricity generated during this period has steadily decreased (Figure 3). The use of SC/USC technology has significantly contributed to the improvement of energy efficiency. In 2004 China surpassed the U.S. in average fleet efficiency (EIA 2009). As SC/USC continues to be the plant type of choice for coal burning in China, average fleet efficiency will continue to increase over time.
Figure 3. Coal-fired electricity generation versus coal consumption per kWh in China,
2003– 2009
Source: China Statistics Bureau, 2007; China Statistics Yearbook 2008, 2009
In the foreseeable future coal will remain the baseload fuel of choice in China. By 2030 China will add another 1344 gigawatts (GW) of coal-fired power generation (IEA 2009). Therefore, deploying and diffusing SC/USC technology, hopefully coupled with carbon capture and storage, is essential to China’s effort to cut CO2 emissions and improve the efficiency of fuel use. The national government has long considered SC/USC as a key low-carbon technology. A number of policies, measures, instruments, and cooperative arrangements have been made and implemented to facilitate the localization and accelerate the diffusion of the technology.
China now is the largest thermal power equipment manufacturer in the world (World Bank 2008). Shanghai Electric Group (SEG), Harbin Electric Corporation (HEC), and Dongfang Electric Corporation (DEC) have emerged as three key manufacturers in China. Their annual outputs all exceeded 35 GW in 2007, higher than any other major manufacturer around the world. All three manufacturers boast the capacity to design and manufacture SC/USC equipment. The successful operation of QinBei Power Plant’s two 600 MW SC units in 2004 and Yuhuan Power Plant’s four 1000 MW USC units in 2006 reflect this capacity. By the end of 2009, a total of twelve 1000 MW USC units were in operation (Table 3), complementing a fleet of more than 80 SC units across China. All of the USC units and the majority of the SC units were manufactured in China. In addition to supplying the domestic market, China has increased SC/USC equipment exports to other developing countries, including India and Turkey.
Table 3. Large-scale USC units operated in China by the end of 2009
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
| Average efficiency | CO2 emissions, g/kWh | Power generation cost, US¢/kW | Total plant capital cost, US$/kW | |
| Subcritical | 36 | 766–789 | 4.0–4.5 | 1095–1150 |
| Supercritical | 45 | 722 | 3.5–3.7 | 950–1350 |
| Ultrasupercritical | >45 | <722 | 4.2–4.7 | 1160–1190 |
| IGCC | 42–44 | 710–750 | 3.9–5.0 | 1100–1600 |
| NGCC | 50 | 344–430 | 3.4–6.8 | 400–700 |
| Unit capacity | Number of units | Manufacturer | Remarks | |
| Huaneng Yuhuan | 1000 MW | 4 | Shanghai Electric Group | First unit operated on Nov. 28, 2006 |
| Huadian Zouxian | 1000 MW | 2 | Shanghai Electric Group | First unit operated on Dec. 28, 2006 |
| Guodian Taizhou | 1000 MW | 4 | Harbin Electric Corporation | First unit operated on Dec. 4, 2007 |
| Guohua Zheneng Ninghai | 1000 MW | 2 | Shanghai Electric Group | First unit in operation in 2009 |
To manufacture state of the art products, China acquires the designs for turbines, boilers, and generators from industry leaders in other countries through joint ventures or by purchasing licenses. By working with overseas thermal technology leaders, the three key manufacturers are able to produce SC/USC equipment (Table 4). HEC, for example, pays Mitsui Babcock over ten million Yuan (US$1.5 million) in licensing fees for every 600 MW boiler it produces (Tsinghua Study 2009). In addition to sourcing some core technology designs internationally, China still largely depends on imports to obtain alloys that can sustain high pressure and high temperature for the USC boiler. Globally only a few firms, including Japan’s Sumitomo and Nippon Steel, Germany’s VDM, and the U.S.’s Haynes and Special Metals can develop these special materials (Viswanathan et al. 2008). China is by no means the only importer.
Table 4: Sources of SC/USC technologies and transfer methods
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
| Average efficiency | CO2 emissions, g/kWh | Power generation cost, US¢/kW | Total plant capital cost, US$/kW | |
| Subcritical | 36 | 766–789 | 4.0–4.5 | 1095–1150 |
| Supercritical | 45 | 722 | 3.5–3.7 | 950–1350 |
| Ultrasupercritical | >45 | <722 | 4.2–4.7 | 1160–1190 |
| IGCC | 42–44 | 710–750 | 3.9–5.0 | 1100–1600 |
| NGCC | 50 | 344–430 | 3.4–6.8 | 400–700 |
| Unit capacity | Number of units | Manufacturer | Remarks | |
| Huaneng Yuhuan | 1000 MW | 4 | Shanghai Electric Group | First unit operated on Nov. 28, 2006 |
| Huadian Zouxian | 1000 MW | 2 | Shanghai Electric Group | First unit operated on Dec. 28, 2006 |
| Guodian Taizhou | 1000 MW | 4 | Harbin Electric Corporation | First unit operated on Dec. 4, 2007 |
| Guohua Zheneng Ninghai | 1000 MW | 2 | Shanghai Electric Group | First unit in operation in 2009 |
| Production capacity (MW) | Technology source | Transfer approach | ||
| Shanghai Electric Group | Boiler | 4500 | Alstom | Licensing |
| Turbine | 36000 | Siemens | Joint venture | |
| Generator | Siemens | Joint venture | ||
| Harbin Electric Corporation | Boiler | 53000 | SC: Mitsui-Babcock; USC: Mitsubishi | Licensing |
| Turbine | 12000 | 600 MW: Mitsubishi; 1000MW: Toshiba | Licensing | |
| Generator | Toshiba | Licensing | ||
| Dongfang Electric Corporation | Boiler | 25000 | BHK | Joint venture |
| Turbine | 20560 | Hitachi | Licensing | |
| Generator | Hitachi | Licensing |
The life cycle of SC/USC technology adoption and localization in China
In the 1980s Chinese factories were often idled for days each week because of power shortages. The Chinese government also faced severe foreign exchange constraints that its nascent export sector could not balance. Thus, China needed a source of cheap, domestic power in order to fuel export-oriented development and resolve its foreign exchange constraints.
China had a small thermal power manufacturing capacity before the 1980s. In the late 1950s, the government started to import 6 MW, 12 MW, and 50 MW pulverized coal manufacturing technologies from the former Soviet Union and Czechoslovakia. Building on imported technologies, China began to manufacture 125 MW, 200 MW, and 300 MW PC generators in the 1970s. However, these domestically made PC sets were extremely unreliable; accidents happened frequently. Consequently, many Chinese power plants turned to the international market to purchase 300 MW PC sets.
The large-scale imports of 300 MW PC sets and their drain on already stressed foreign exchange prompted the Chinese government to prioritize the localization, and particularly the domestic manufacturing, of advanced thermal power technologies. All of the existing PC manufacturers were state-owned enterprises (SOE), products of the state planning system. Their statist orientation and the fact that Chinese efforts began before SOE reform meant this was a planned process from the beginning. These companies collaborated in ways that one would not typically expect of competitors, and the work was undertaken more on the level of a national effort such as a space program than a private enterprise–driven system.
In 1980 China signed an array of technology transfer agreements with several American companies to obtain subcritical design and manufacture technologies. The agreements included purchasing 300MW and 600 MW gas turbine technologies from Westinghouse and boiler technologies from Combustion Engineering Company (CE). In the 7th and 8th Five-Year Plans (1986 – 1995) developing subcritical technologies, was listed as a key national project.
While China was focusing on the localization of subcritical technologies, SC technologies had already become mature and were widely deployed in many developed countries. In order to close the technology gap, in 1992 the then State Economic and Trade Commission (SETC), a central government agency, purchased two 600 MW SC units from the ABB Group and CE Power Solutions. Both units were installed in Huaneng’s Shanghai Shidongkou II plant. Through operating these two units, the Chinese experts started to accumulate knowledge about SC technologies.
In 1995 the then State Power Corporation (SPC) and former State Administration of Machinery Industry (SAMI) conducted a feasibility study and began project planning for its own SC manufacturing capacity. The feasibility study included organizing a group of experts to assess whether China had the capacity to adapt the technology and which organizations should be included in the technology localization. After five years of study and planning, the 10th Five-Year Plan officially endorsed the localization of 600 MW SC as a Key National Program. The program covered the import, adaptation, and re-innovation of three key SC components: boiler, turbine, and generator.
The Chinese way of acquiring SC technologies raised two issues. The first issue is related to the ownership of imported technologies. The SETC first purchased SC technologies and shared the technologies with all the main Chinese companies. We have been unable to see the original contract, but there was a belief at least in some quarters that the technology was being sold to only one Chinese manufacturer. That may well have been because of misunderstandings of the nature and role of SETC. The second issue is the mixed feelings of the ABB and CE, which sold the technologies to China but lost the market because the Chinese decided to purchase licenses from Japanese companies. This issue in part relates to market conditions at the time, when these companies actually had few customers. However, because of the varied interpretations of these events, this history in part helped create a trust deficit between Chinese technology seekers and Western technology providers.
The second stage of the localization process as defined in the introduction mainly includes decoding the technology. Decoding is a broad process including learning-by-operating and learning-by-doing. It involves multiple actors such as component and system producers, R&D institutions, and upstream and downstream firms (Figure 4). Coordination among these actors is crucial to consolidate the learning and begin the local adaptation process. In the SC/USC case, the former State Development and Planning Commission (SDPC) directed a collaborative R&D team including participants from China Machinery Industry Federation (CMIF), DEC, HEC, state funded research centers, and major universities such as Tsinghua University, Shanghai Jiaotong University, and China University of Mining and Technology. As the team learned the complexities of SC technology they identified the technical specifications for China’s SC needs and the necessary domestic capacity to manufacture the components. Based on these identifications, the team chose Hitachi as the IP provider for the boilers and generators and Mitsubishi for turbines. CE Power Solutions was left out of the arrangement, as the team did not find their design as strong a fit to China’s needs and capacities (Tsinghua Study 2009).
In 2003 China manufactured its first two SC units. DEC manufactured the boilers, while turbines and generators were produced by HEC. Huaneng’s Qinbei Power Plant was selected as the operation base for these first two SC sets and in 2004 they were brought successfully online.
Figure 4. Key players involved in the localization of SC technology
While pushing for the localization of SC, SPC also started the feasibility study of USC technology in 2000. Two years later the Ministry of Science and Technology (MOST) officially approved the R&D and deployment plan for USC technologies. The plan was run under the National High-Tech Program (863 Program), National Basic Research Program (973 Program), and National Key Technology R&D Program during the 10th Five-Year Plan. SEG and HEC were tasked to manufacture the first 1000 MW USC units, and in 2004 the Huaneng Group’s Yuhuan Power Plant was chosen as the localization base. Two years later, in December 2006, a total of four 1000 MW USC units started to operate at Yuhuan.
The success of the localization of SC/USC technologies in China can be attributed to a number of factors. However, since the process was centrally planned and funded, the Chinese government’s front-end supports and back-end pulls play an especially important role. Figure 5 summarizes the specific R&D programs/projects involved in the development of SC/USC technologies in China.
Figure 5. China’s front-end R&D supports for the localization of SC/USC
Having established domestic manufacturing capacity, the Chinese government designed and implemented an array of incentive policies as well as regulatory mandates to motivate power plants to adopt SC/USC technologies. In 2006 China mandated that all new coal-fired power plants with 600 MW capacity or above must apply SC/USC technology. Simultaneously, the government published a list of small and inefficient power plants planned for closure by 2010. In addition, China has announced a series of economy-wide policies to encourage energy efficiency efforts, including the Medium and Long-term Plan for Energy Conservation (2005), the 11th Five-Year Plan (2006), the State Council Decision on Strengthening Energy Conservation (2006), the Top-1000 Energy-Consuming Enterprise Program (2006), the Revision of Energy Conservation Law (2007), the Allocation of Funding on Energy Efficiency and Pollution Abatement (2007, 2008), and the China Energy Technology Policy Outline (2007) (Figure 6). These policies and regulations provided incentives such as tax credits, low-cost financing, price guarantees, loan guarantees, government procurement, and new-product buy-down.
Figure 6. Policy incentive and regulatory mandates
The success of the localization of SC/USC technologies dramatically brought down their costs in China. Two factors worked together to achieve this. By focusing on technology adaptation, the Chinese were able to scale-up demonstrations quickly and coordinate their learning in order to push down the cost curve. Domestic production also took advantage of a difference between the cost structures in China and that in the OECD.
The total investment of four 1000 MW USC sets at the Yuhuan Power Plant, for example, cost 14.5 billion Yuan (US$2.2 billion), equivalent to 3625 Yuan/kW (US$541/kW). This is about 40% lower than the cost in OECD countries (Table 5). The comparatively low costs make SC/USC technologies more affordable and have consequently assisted with accelerated diffusion in China.
Table 5. Comparison of plant capital cost
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
| Average efficiency | CO2 emissions, g/kWh | Power generation cost, US¢/kW | Total plant capital cost, US$/kW | |
| Subcritical | 36 | 766–789 | 4.0–4.5 | 1095–1150 |
| Supercritical | 45 | 722 | 3.5–3.7 | 950–1350 |
| Ultrasupercritical | >45 | <722 | 4.2–4.7 | 1160–1190 |
| IGCC | 42–44 | 710–750 | 3.9–5.0 | 1100–1600 |
| NGCC | 50 | 344–430 | 3.4–6.8 | 400–700 |
| Unit capacity | Number of units | Manufacturer | Remarks | |
| Huaneng Yuhuan | 1000 MW | 4 | Shanghai Electric Group | First unit operated on Nov. 28, 2006 |
| Huadian Zouxian | 1000 MW | 2 | Shanghai Electric Group | First unit operated on Dec. 28, 2006 |
| Guodian Taizhou | 1000 MW | 4 | Harbin Electric Corporation | First unit operated on Dec. 4, 2007 |
| Guohua Zheneng Ninghai | 1000 MW | 2 | Shanghai Electric Group | First unit in operation in 2009 |
| Production capacity (MW) | Technology source | Transfer approach | ||
| Shanghai Electric Group | Boiler | 4500 | Alstom | Licensing |
| Turbine | 36000 | Siemens | Joint venture | |
| Generator | Siemens | Joint venture | ||
| Harbin Electric Corporation | Boiler | 53000 | SC: Mitsui-Babcock; USC: Mitsubishi | Licensing |
| Turbine | 12000 | 600 MW: Mitsubishi; 1000MW: Toshiba | Licensing | |
| Generator | Toshiba | Licensing | ||
| Dongfang Electric Corporation | Boiler | 25000 | BHK | Joint venture |
| Turbine | 20560 | Hitachi | Licensing | |
| Generator | Hitachi | Licensing |
| China, US$/kW | OECD, US$/kW | |
| Subcritical (300 MW) | 650–800 | 1095–1150 |
| Supercritical (600 MW) | 550–700 | 950–1350 |
| Ultrasupercritical (1000 MW) | 550–700 | 1160–1190 |
By the end of 2008, China had a total of 100 SC/USC units in operation (Nalbandian 2008). This is only second to the U.S., which has 120 SC units. The large-scale operation of SC/USC has significantly contributed to energy conservation and CO2 reduction. In 2007 and 2008, China’s coal consumption per kWh respectively reduced 9 grams of coal equivalent (gce) per kWh and 7 gce/kWh. The efficiency gain in 2008 was equivalent to a savings of 27 million metric tons of standard coal, or the avoidance of 55 million metric tons of CO2 emissions (Tsinghua Study 2009). In terms of capacity, temperature, and pressure, China’s technologies are comparable to those in the countries owning the most advanced SC/USC technologies (Table 6).
Table 6. Comparison of SC/USC technology features, 2008
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
| Average efficiency | CO2 emissions, g/kWh | Power generation cost, US¢/kW | Total plant capital cost, US$/kW | |
| Subcritical | 36 | 766–789 | 4.0–4.5 | 1095–1150 |
| Supercritical | 45 | 722 | 3.5–3.7 | 950–1350 |
| Ultrasupercritical | >45 | <722 | 4.2–4.7 | 1160–1190 |
| IGCC | 42–44 | 710–750 | 3.9–5.0 | 1100–1600 |
| NGCC | 50 | 344–430 | 3.4–6.8 | 400–700 |
| Unit capacity | Number of units | Manufacturer | Remarks | |
| Huaneng Yuhuan | 1000 MW | 4 | Shanghai Electric Group | First unit operated on Nov. 28, 2006 |
| Huadian Zouxian | 1000 MW | 2 | Shanghai Electric Group | First unit operated on Dec. 28, 2006 |
| Guodian Taizhou | 1000 MW | 4 | Harbin Electric Corporation | First unit operated on Dec. 4, 2007 |
| Guohua Zheneng Ninghai | 1000 MW | 2 | Shanghai Electric Group | First unit in operation in 2009 |
| Production capacity (MW) | Technology source | Transfer approach | ||
| Shanghai Electric Group | Boiler | 4500 | Alstom | Licensing |
| Turbine | 36000 | Siemens | Joint venture | |
| Generator | Siemens | Joint venture | ||
| Harbin Electric Corporation | Boiler | 53000 | SC: Mitsui-Babcock; USC: Mitsubishi | Licensing |
| Turbine | 12000 | 600 MW: Mitsubishi; 1000MW: Toshiba | Licensing | |
| Generator | Toshiba | Licensing | ||
| Dongfang Electric Corporation | Boiler | 25000 | BHK | Joint venture |
| Turbine | 20560 | Hitachi | Licensing | |
| Generator | Hitachi | Licensing |
| China, US$/kW | OECD, US$/kW | |
| Subcritical (300 MW) | 650–800 | 1095–1150 |
| Supercritical (600 MW) | 550–700 | 950–1350 |
| Ultrasupercritical (1000 MW) | 550–700 | 1160–1190 |
| First SC/USC operated | Number of SC/USC units | Average unit capacity, MW | Average pressure | Average reheat, ˚C | First Reheat ˚C | |
| China | 1991 | 93 | 646 | 25.3 | 563 | 568 |
| U.S. | 1959 | 120 | 724 | 25.0 | 543 | 543 |
| Japan | 1968 | 53 | 661 | 25 | 562 | 575 |
| Germany | 1960 | 21 | 585 | 26.0 | 551 | 563 |
| UK | 1967 | 2 | 375 | 25.1 | 599 | 568 |
| India | 2008 | 1 | 660 | 24.7 | 540 | 565 |
Chinese companies have now started to export SC/USC equipment. In 2008 China’s Dongfang Electric Corporation sold a 600 MW SC unit to Turkey. This was China’s first export of SC technology. In September 2009 Dongfang signed a contract with the Indian East Coast Electric Power Corporation to build a coal-fired power plant equipped with two 660 MW supercritical units. The contract not only includes equipment and facilities but also expertise and services. In addition to Dongfang, Shanghai Electric Power Corporation’s overseas sales have also seen a sharp increase, accounting for 45% of total revenue in 2008, up from 13% in 2006 (Autonet 2009).
Summary
The case of supercritical/ultrasupercritical (SC/USC) coal power generation highlights the importance of creating and nurturing supportive systems and infrastructure for technology deployment. To improve energy efficiency in the power sector, the Chinese government employed a dense array of instruments to induce the launch of an innovation life cycle for SC/USC technology. These primarily included initial government subsidized procurement of new technologies, front-end R&D supports, and back-end policy pulls. The front-end R&D supports were constructed and channeled through China’s numerous publicly funded R&D programs. The back-end policy pulls were executed by the National Development and Reform Commission (NDRC) and Ministry of Finance (MOF) via various incentive policy and regulatory mandates. Front-end supports contribute to technology launches and start-up, while back-end pulls help to scale-up manufacturing production; stimulate market demands; and therefore drive down costs.
Onshore wind power
Technology overview
Wind energy technology is relatively mature compared to most other types of renewable energy. The technological development of wind energy in recent decades has been largely focused on increasing turbine size. From 10 meters with a capacity of 50 kW in the mid-1970s, wind turbines have grown to diameters of 126 meters with a 7 MW capacity. A U.S. company, American Superconductor, is currently developing full 10 MW turbine components and system design through a partnership with the U.S. Department of Energy. The turbine is set for testing in 2012. Large turbines can usually deliver electricity at a lower average cost, because the costs of foundations, road building, maintenance, grid connection, and other factors are the same regardless of the size of the turbine. A large-scale turbine’s typical electricity cost is US$0.04–0.06 per kWh, while for a small turbine it is about US$0.10 per kWh, as the fixed costs are supported by less electricity production.
Other technological developments in wind include variable-pitch rotors, direct drives, variable-speed conversion systems, power electronics, better materials, and improved ratios between the weight of materials and generating capacity (IEA 2006). All these developments have helped to improve wind energy’s affordability and reliability. Consequently, compared to other renewable energy sources, the price of wind power is the closest to that of fossil fuel energy. Potential breakthroughs in wind power development include better power electronics to improve the interface with the grid, improved composite materials for lighter-weight and stronger blades, simplified power trains to end the need for gearboxes, which account for 30% of costs, and online diagnostics for better monitoring.
Figure 7. Global installed wind energy capacity (GW) by nation, 2009
Source: GWEC 2010; WWEA 2009
Due to constant technological improvement as well as enabling policies, worldwide installed wind power capacity has risen rapidly, from about 14 GW in 1999 to 158 GW in 2009, of which the United States and Germany accounted for approximately 41% (Figure 7). The 158 GW installed capacity was estimated to generate 340 terawatt-hours (TWh) electricity and save 204 million tons of CO2 in 2009 (Sawyer 2010). An ambitious scenario by the Global Wind Energy Council (GWEC) shows that if the current annual growth rate of over 30% continues, global wind energy capacity could increase to over 1000 GW by 2020 and 2,400 GW by 2030. This would lead to annual CO2 savings of more than 1.5 billion tons in 2020 and 3.2 billion tons in 2030 (GWEC 2010).
Where does China stand?
China’s wind industry has followed a strikingly different model from the Chinese thermal power sector. The wind sector is marked by multiple, competitive companies with varying amounts of support from government. The ownership of these companies varies from state-owned enterprises such as DEC to joint-stock companies such as Goldwind and to privately owned companies such as New Unite. Their integration with international markets has also varied. In recent years the Chinese government has strongly stimulated demand, but it has not forced suppliers to supply world-class product. Chinese wind suppliers can sell in the domestic market without certification and other quality controls demanded by international purchasers. The result is a domestic market with extremely low barriers to entry but less opportunity to engage in exports.
China has abundant wind resources. Its technically exploitable onshore wind resources at a height of 10 meters are estimated to be 250–300 GW, and its offshore potential is about 750 GW (China Wind Power Center 2009). In recent years, China has made impressive progress in wind power development (Figure 8). In 2008, 6.2 GW of wind energy capacity was added, bringing total installed capacity to 12 GW and making China the fourth largest wind power generator in the world, behind the United States, Germany, and Spain (WWEA 2009). The rapid development of wind power has greatly outpaced the goal of 5 GW by 2010, which was set by the 11th Five-Year Plan. In May 2009 the NDRC announced plans to at least triple the 2020 goal for wind energy to 100 GW (Shanghai Daily 2009).
In spite of this remarkable progress, China’s wind energy technology lags behind the European Union and the United States. Chinese turbine manufacturers struggle to compete with foreign counterparts in terms of reliability and quality. Foreign turbine manufacturers and joint ventures also still take a significant portion of China’s domestic market share, representing 42% in December 2008 (Figure 8). Through joint venture, license purchasing, or joint design, China is able to manufacture turbines, blades, gearboxes, and generators. However, it still relies on imports to acquire control systems and bearings (Table 7), which is also the case with leading wind turbine producers around the world (Kirkegaard et al. 2009). These limited technological capabilities have affected the pattern of wind power development within China. This is reflected in three ways.
Table 7. Localization of wind energy technologies in China, 2008
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
| Average efficiency | CO2 emissions, g/kWh | Power generation cost, US¢/kW | Total plant capital cost, US$/kW | |
| Subcritical | 36 | 766–789 | 4.0–4.5 | 1095–1150 |
| Supercritical | 45 | 722 | 3.5–3.7 | 950–1350 |
| Ultrasupercritical | >45 | <722 | 4.2–4.7 | 1160–1190 |
| IGCC | 42–44 | 710–750 | 3.9–5.0 | 1100–1600 |
| NGCC | 50 | 344–430 | 3.4–6.8 | 400–700 |
| Unit capacity | Number of units | Manufacturer | Remarks | |
| Huaneng Yuhuan | 1000 MW | 4 | Shanghai Electric Group | First unit operated on Nov. 28, 2006 |
| Huadian Zouxian | 1000 MW | 2 | Shanghai Electric Group | First unit operated on Dec. 28, 2006 |
| Guodian Taizhou | 1000 MW | 4 | Harbin Electric Corporation | First unit operated on Dec. 4, 2007 |
| Guohua Zheneng Ninghai | 1000 MW | 2 | Shanghai Electric Group | First unit in operation in 2009 |
| Production capacity (MW) | Technology source | Transfer approach | ||
| Shanghai Electric Group | Boiler | 4500 | Alstom | Licensing |
| Turbine | 36000 | Siemens | Joint venture | |
| Generator | Siemens | Joint venture | ||
| Harbin Electric Corporation | Boiler | 53000 | SC: Mitsui-Babcock; USC: Mitsubishi | Licensing |
| Turbine | 12000 | 600 MW: Mitsubishi; 1000MW: Toshiba | Licensing | |
| Generator | Toshiba | Licensing | ||
| Dongfang Electric Corporation | Boiler | 25000 | BHK | Joint venture |
| Turbine | 20560 | Hitachi | Licensing | |
| Generator | Hitachi | Licensing |
| China, US$/kW | OECD, US$/kW | |
| Subcritical (300 MW) | 650–800 | 1095–1150 |
| Supercritical (600 MW) | 550–700 | 950–1350 |
| Ultrasupercritical (1000 MW) | 550–700 | 1160–1190 |
| First SC/USC operated | Number of SC/USC units | Average unit capacity, MW | Average pressure | Average reheat, ˚C | First Reheat ˚C | |
| China | 1991 | 93 | 646 | 25.3 | 563 | 568 |
| U.S. | 1959 | 120 | 724 | 25.0 | 543 | 543 |
| Japan | 1968 | 53 | 661 | 25 | 562 | 575 |
| Germany | 1960 | 21 | 585 | 26.0 | 551 | 563 |
| UK | 1967 | 2 | 375 | 25.1 | 599 | 568 |
| India | 2008 | 1 | 660 | 24.7 | 540 | 565 |
| Manufacturing capacity | IP ownership | ||
| Turbine | Yes | Joint venture; licensing; joint design | |
| Blade | Yes | Joint venture; licensing; joint design | |
| Gearbox | Yes | Yes | |
| Generator | Yes | Yes | |
| Bearing | Yes | Joint venture | |
| Control system | No | No | |
Figure 8. Market share of accumulative installed capacity by investment, 2004–2008
Source: China Mechanical Electrical Data Online
First, a majority of turbines erected in China are small, with 600–850 kW turbines accounting for 80% of the market share (Figure 9). In 2006 the average size of turbines in China was 830 kW, compared to 1634 kW in Germany, 1634 kW in the U.S., and 1100 kW in Spain. Today, the United States is developing 10 MW turbines, while China just tested 3 MW turbines. In February 2010, China’s first 3 MW offshore wind turbines independently developed by Sinovel Wind Group Corporation passed the 240-hour test (Sinovel News 2010).
Figure 9. China’s installed turbine capacity, 2006
Source: Statistics on China’s Wind Energy Installation, 2007
Second, the average capacity of wind farms in China is much smaller than that of the European Union and the United States. In 2007, there were 158 wind farms across 21 provinces, municipalities, and autonomous regions with an average installed capacity of 37.4 MW (Shi 2008). To reach the goal set by the NDRC in 2004 of building about thirty 100 MW to 200 MW wind farms, and five to six wind power bases providing a total capacity of 1000 MW before 2020, China has recently accelerated the construction of large-scale wind farms. In 2009 the NDRC approved the construction of China’s first GW-scale wind base in Gansu province. The base will include eighteen 200 MW and two 100 MW wind farms (NDRC 2009). Simultaneously, a number of other 100 MW wind farms are being built in Shangdong and Liaoning provinces. While building more large-scale onshore wind farms, China has also started constructing an offshore wind farm. In February 2010 Shanghai Donghai Bridge Wind Farm completed the installation of 34 wind turbines with a total capacity of 100 MW. This is Asia’s largest offshore wind farm (Xinhua 2010).
Finally, a more damaging aspect in China’s wind energy development is the low utilization rate. The rapid growth in installed capacity has not gone hand in hand with growing generation capacity. According to Xinhua, only 8 GW of the 12 GW of installed turbines were grid connected at the end of 2008 (Xinhua 2009). Grid connected wind turbines are additionally hampered by poor reliability. A comparison between China and Denmark demonstrates China’s weak position (Figure 10).
Overall, China has made enormous progress in wind energy development over the past 10 years. However, it still has a learning curve to climb. Its domestically made wind turbines are less competitive in terms of quality and reliability; the scale of its numerous wind farms is comparatively small; and its rapidly growing installed capacity doesn’t go hand in hand with growing generation capacity. All these issues can be explained by how wind turbine technology was transferred and deployed in China as well as what drives or impedes the technology transfer and deployment.
Figure 10. Wind energy generation capacities, 2008
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
| Average efficiency | CO2 emissions, g/kWh | Power generation cost, US¢/kW | Total plant capital cost, US$/kW | |
| Subcritical | 36 | 766–789 | 4.0–4.5 | 1095–1150 |
| Supercritical | 45 | 722 | 3.5–3.7 | 950–1350 |
| Ultrasupercritical | >45 | <722 | 4.2–4.7 | 1160–1190 |
| IGCC | 42–44 | 710–750 | 3.9–5.0 | 1100–1600 |
| NGCC | 50 | 344–430 | 3.4–6.8 | 400–700 |
| Unit capacity | Number of units | Manufacturer | Remarks | |
| Huaneng Yuhuan | 1000 MW | 4 | Shanghai Electric Group | First unit operated on Nov. 28, 2006 |
| Huadian Zouxian | 1000 MW | 2 | Shanghai Electric Group | First unit operated on Dec. 28, 2006 |
| Guodian Taizhou | 1000 MW | 4 | Harbin Electric Corporation | First unit operated on Dec. 4, 2007 |
| Guohua Zheneng Ninghai | 1000 MW | 2 | Shanghai Electric Group | First unit in operation in 2009 |
| Production capacity (MW) | Technology source | Transfer approach | ||
| Shanghai Electric Group | Boiler | 4500 | Alstom | Licensing |
| Turbine | 36000 | Siemens | Joint venture | |
| Generator | Siemens | Joint venture | ||
| Harbin Electric Corporation | Boiler | 53000 | SC: Mitsui-Babcock; USC: Mitsubishi | Licensing |
| Turbine | 12000 | 600 MW: Mitsubishi; 1000MW: Toshiba | Licensing | |
| Generator | Toshiba | Licensing | ||
| Dongfang Electric Corporation | Boiler | 25000 | BHK | Joint venture |
| Turbine | 20560 | Hitachi | Licensing | |
| Generator | Hitachi | Licensing |
| China, US$/kW | OECD, US$/kW | |
| Subcritical (300 MW) | 650–800 | 1095–1150 |
| Supercritical (600 MW) | 550–700 | 950–1350 |
| Ultrasupercritical (1000 MW) | 550–700 | 1160–1190 |
| First SC/USC operated | Number of SC/USC units | Average unit capacity, MW | Average pressure | Average reheat, ˚C | First Reheat ˚C | |
| China | 1991 | 93 | 646 | 25.3 | 563 | 568 |
| U.S. | 1959 | 120 | 724 | 25.0 | 543 | 543 |
| Japan | 1968 | 53 | 661 | 25 | 562 | 575 |
| Germany | 1960 | 21 | 585 | 26.0 | 551 | 563 |
| UK | 1967 | 2 | 375 | 25.1 | 599 | 568 |
| India | 2008 | 1 | 660 | 24.7 | 540 | 565 |
| Manufacturing capacity | IP ownership | ||
| Turbine | Yes | Joint venture; licensing; joint design | |
| Blade | Yes | Joint venture; licensing; joint design | |
| Gearbox | Yes | Yes | |
| Generator | Yes | Yes | |
| Bearing | Yes | Joint venture | |
| Control system | No | No | |
|
|
Source: McKinsey & Company, 2009
Wind energy technology transfer and its barriers and drivers
China’s rapid development of wind energy technologies has primarily relied on technology transfer as opposed to domestic innovation. This is achieved through three mechanisms: joint venture; joint design; and license purchasing. Wholly foreign-owned investment, viewed by Western economists as an effective way of transferring knowledge and skills to local labors, however, is not considered a technology transfer mechanism by the Chinese.
Joint ventures
In 1996 China initiated the “Riding the Wind Program,” aimed at promoting the development of domestic technical capacity through joint ventures. Joint ventures are limited companies incorporated by at least one Chinese party and at least one foreign party to conduct business approved by the Chinese government. They are an important form of foreign direct investment (FDI) in China. The first of these two joint-venture manufacturers were Xi’an-Nordex and Yitou-MADE. They were established with the agreement that Nordex and MADE would transfer wind turbine technology in return for preferential treatment in the Chinese market. The technology transfer was initially carried out with a requirement of 20% local content that gradually increased to 70% (Lewis 2006, 2007). In 2010 China dropped the local content requirement entirely.
However, the joint-venture program has not been successful in meeting the goal of enhancing wind energy technology transfer. Most international wind energy companies have chosen to invest in China as wholly foreign-owned enterprises rather than joint ventures. Vestas, for example, maintains 100% ownership of its subsidiary company in China. By 2008 joint ventures only occupied 3.3% of the Chinese turbine market (Figure 8). In addition, these joint-venture turbine manufacturers often function only as a provider of maintenance and post-sale services, with little R&D and innovation. This is also the case of the joint-venture automobile industry in China (Gallagher 2006).
The joint ventures’ failure to acquire advanced wind energy technology can be attributed to many factors. A main reason is foreign partners’ concerns over China’s IP protection; they are reluctant to give out proprietary information to companies that could become competitors one day. The Danish wind turbine manufacturer Vestas, for example, licensed its turbine technology to Gamesa in 1994. After years of development, Gamesa became Vestas’s most important competitor in the international market. This led to an early termination of the technology transfer agreement (Lewis 2007). Vestas’s experience has discouraged leading turbine manufacturers from transferring core technologies.
Licensing agreements
Purchasing production licenses from the international market is a more popular alternative to the joint-venture approach. The top three Chinese turbine manufacturers, representing 50% of the cumulative market share in 2008, purchased production licenses from foreign counterparts (Table 8).
Table 8. China wind power: sources of production licenses, 2008
| Main steam pressure, MPa | Main steam temperature, ˚C | Reheat steam temperature, ˚C | |
| Subcritical | <22.1 | Up to 565 | Up to 565 |
| Supercritical | 22.1–25 | 540–580 | 540–580 |
| Ultrasupercritical | >25 | >580 | >580 |
| Average efficiency | CO2 emissions, g/kWh | Power generation cost, US¢/kW | Total plant capital cost, US$/kW | |
| Subcritical | 36 | 766–789 | 4.0–4.5 | 1095–1150 |
| Supercritical | 45 | 722 | 3.5–3.7 | 950–1350 |
| Ultrasupercritical | >45 | <722 | 4.2–4.7 | 1160–1190 |
| IGCC | 42–44 | 710–750 | 3.9–5.0 | 1100–1600 |
| NGCC | 50 | 344–430 | 3.4–6.8 | 400–700 |
| Unit capacity | Number of units | Manufacturer | Remarks | |
| Huaneng Yuhuan | 1000 MW | 4 | Shanghai Electric Group | First unit operated on Nov. 28, 2006 |
| Huadian Zouxian | 1000 MW | 2 | Shanghai Electric Group | First unit operated on Dec. 28, 2006 |
| Guodian Taizhou | 1000 MW | 4 | Harbin Electric Corporation | First unit operated on Dec. 4, 2007 |
| Guohua Zheneng Ninghai | 1000 MW | 2 | Shanghai Electric Group | First unit in operation in 2009 |
| Production capacity (MW) | Technology source | Transfer approach | ||
| Shanghai Electric Group | Boiler | 4500 | Alstom | Licensing |
| Turbine | 36000 | Siemens | Joint venture | |
| Generator | Siemens | Joint venture | ||
| Harbin Electric Corporation | Boiler | 53000 | SC: Mitsui-Babcock; USC: Mitsubishi | Licensing |
| Turbine | 12000 | 600 MW: Mitsubishi; 1000MW: Toshiba | Licensing | |
| Generator | Toshiba | Licensing | ||
| Dongfang Electric Corporation | Boiler | 25000 | BHK | Joint venture |
| Turbine | 20560 | Hitachi | Licensing | |
| Generator | Hitachi | Licensing |
| China, US$/kW | OECD, US$/kW | |
| Subcritical (300 MW) | 650–800 | 1095–1150 |
| Supercritical (600 MW) | 550–700 | 950–1350 |
| Ultrasupercritical (1000 MW) | 550–700 | 1160–1190 |
| First SC/USC operated | Number of SC/USC units | Average unit capacity, MW | Average pressure | Average reheat, ˚C | First Reheat ˚C | |
| China | 1991 | 93 | 646 | 25.3 | 563 | 568 |
| U.S. | 1959 | 120 | 724 | 25.0 | 543 | 543 |
| Japan | 1968 | 53 | 661 | 25 | 562 | 575 |
| Germany | 1960 | 21 | 585 | 26.0 | 551 | 563 |
| UK | 1967 | 2 | 375 | 25.1 | 599 | 568 |
| India | 2008 | 1 | 660 | 24.7 | 540 | 565 |
| Manufacturing capacity | IP ownership | ||
| Turbine | Yes | Joint venture; licensing; joint design | |
| Blade | Yes | Joint venture; licensing; joint design | |
| Gearbox | Yes | Yes | |
| Generator | Yes | Yes | |
| Bearing | Yes | Joint venture | |
| Control system | No | No | |
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