Although China’s tenth Five Year Plan sets a windpower target of 1200 MW of installed capacity by 2005, even such a modest ambition is unlikely to be realised, still less the State Economic and Trade Commission’s target of 1500 MW, according to industry commentators within the country. The current level of 340 MW has taken 15 years to achieve and represents only about 0.11 per cent of the country’s totalled installed capacity.
Although the cost of windpower generated electricity is a problem, and domestic production of equipment is uncompetitive, the principle obstacles are political in origin. Central government allows wind farms to sell power at what it calls a reasonable profit, a highly marginal one according the pro-wind lobby, and compels power grids to purchase all the windpower generated in their locality; which makes windpower highly unpopular with the grids. But it is compelled to pay VAT at the full 17 per cent rate while other plants benefit from tax breaks. Coal burning plants pay only 8.5 per cent after deducting the tax embodied in the fuel they purchase, while hydro plants pay only 6 per cent.