PRC Promotes Wind-Based Power To Reduce Dependence On Coal

MANILA, PHILIPPINES (21 December 2000) - To promote cleaner and renewable energy sources in the People's Republic of China (PRC), the Asian Development Bank today approved a US$58 million loan to help develop wind-based electricity.

The Wind Power Development Project will construct three grid-connected wind farms with a generating capacity totaling 78 megawatts (MW). The wind farms will be located at Dabancheng in Xinjiang Uygur autonomous region (30 MW), Fujin in Heilongjang Province (24 MW), and Xiwaizi in Liaoning Province (24 MW). The project will also help build the necessary institutional capacity and remove policy and institutional impediments in promoting wind-based power generation.

This is the first ADB-financed environment project in the PRC. It will be co-financed with a US$6 million loan from the Global Environment Facility (GEF), the Washington-based funding agency that supports projects with global environmental benefits.

"Wind farms will produce electricity without releasing carbon dioxide (which is a greenhouse gas that contributes to global warming), sulfur dioxide, nitrogen oxide and other pollutants into the air," notes ADB senior project officer Edu Hassing. "Wind farms are expected to become increasingly viable alternatives for conventional power generation in areas with sufficient wind speeds."

The government is promoting wind-based power generation to reduce reliance on coal consumption and pollution. The PRC has severe environmental problems. Losses caused by pollution damage are estimated at between 3.5 percent and 8.3 percent of GDP. Reliance on coal contributes significantly to air pollution. The PRC has nine of the 10 Asian cities with the worst air pollution and half of the world's 10 most contaminated cities. The social cost is high. Premature deaths related to air pollution are estimated at 150,000 per annum in urban areas.

However, development of wind-based power has yet to be carried out in a systematic and coordinated manner. Support is needed to facilitate a breakthrough and develop a local wind turbine industry at lower manufacturing costs. This approach will be strengthened by the Government's Partnership for Renewable Energy Development that will promote increased use of renewable energy including wind-based power generation and is expected to be operational later next year. This project will help meet the Government's objective to gradually increase the share of electricity generated from renewable energy to 5 percent.

The wind power development project represents a bottom-up approach at provincial level within the framework of national policies and targets. GEF support will help develop mechanisms for implementation of appropriate policies. In addition to a loan, GEF is therefore providing a US$6 million grant for consulting services for project implementation, barrier removal, and institutional strengthening. Both the GEF contingent loan and the grant will be administered by ADB.

The total project cost is US$98 million. The ADB loan will come from its ordinary capital resources with a repayment period of 20 years, including a grace period of three years. The interest rate will be determined according to ADB's variable lending rate for US dollar loans.

Provincial power companies will be the executing agencies for the project, which is scheduled for completion in December 2003.