6.3 Capacity Building for the Rapid Commercialization of Renewable Energy in China

6.3 Capacity Building for the Rapid Commercialization of Renewable Energy in China

1) Background

Efforts to promote renewable energy in China have intensified in recent years, with several domestically and internationally supported initiatives, but the widespread commercialization and adoption of associated technologies is impeded by many challenges in capacity, financing, policy, technology, and information. The international cooperation project Capacity Building for the Rapid Commercialization of Renewable Energy is meant to strategically address a number of these challenges, with an emphasis on spurring forward a group of technologies on the brink of commercialization. The project is supported by the Government of China and the Global Environment Facility (GEF) through partnership with the United Nations Development Program (UNDP) and with co-financing from Australia’s AusAID and the Government of the Netherlands.

2) Project Objectives and Strategy

The overall objective of the project is to support the accelerated commercialization of key renewable energy technologies in promising market sectors. To achieve this, the project combines emphasis on two main priorities throughout all components:

· Building Capacity (of organizations, key decision-makers, and experts in government and in business)

· Commercialization (through the lowering of technical, institutional, and policy barriers and through the introduction of international best practices for market-ready renewable energy technologies)

The project strategy is based on a market sector approach, with activities focused on the technology application areas of: (1) biogas, (2) grid-connected wind, (3) solar water heaters, (4) hybrid village power, and (5) bagasse cogeneration; additional, crosscutting focal areas are (6) finance, (7) business development, and (8) policy. Finally the Project has supported the establishment of a renewable energy industry association and has worked closely with the Central Government in support of the nation’s renewable energy programs.

3) Project Implementation, Financing, and Timeline

China’s National Development and Reform Commission (NDRC) is the Project’s lead domestic implementing agency; with implementation support also provided by the State Environmental Protection Agency (SEPA). The United Nations Development Program (UNDP) is the international implementing agency. The United Nations Department of Social and Economic Affairs (UNDESA) is the executing agency.

The project’s overall budget is US $25.8 million, including funding from UNDP-GEF ($8.8 million), Australia ($3 million), the Netherlands ($2.53 million), and the Government of China ($11.5 million).

The project was launched in March 1999 and will have a duration of six years, closing in at the end of 2005.

4) Selected Project Activities and Achievements

Selected project activities and achievements are summarized below for market sector and crosscutting components, as well as for the industry association established:

Wind Power: To address the negative impacts of lack of high-quality site-specific resource data on wind farm development in China, the project is supporting the assessment of wind resources at ten sites. Activities center on introducing international best practice and raising the capacity of local institutions in the area of resource measurement and data analysis. Achievements include:

· Direct stimulus of China’s wind farm project pipeline: The ten sites under evaluation by the project have been incorporated into the Government program for evaluating 30 new, high potential (100 MW or more) wind sites by 2005 for near-term development. The Government plans to use the assessments in pursuing commercialization by competitive bidding. Sites characterized by the project represent at least 1,000 MW of the 4,000 MW targeted by the Government for development by 2010.

· Nationwide adoption of wind resource measurement methods: In order to increase the bankability of projects, the Government will adopt the project’s field installation and data acquisition procedures and protocols for the 20 additional sites it is planning to evaluate by 2005.

Figure 20: Project training in wind data acquisition.

Industrial-Scale Biogas: The project has supported three industrial-scale biogas pilots and associated business development activities, aiming to promote greater utilization of the potential represented by China’s growing resource base of organic discharge from livestock farms and manufacturing facilities. Achievements include:

· Multiplier effects for biogas project development: Business development workshops held in association with the project’s three pilot plants have included breakout sessions for business discussions between developers and end users. These sessions have resulted directly in the development of at least 34 more new biogas plants, with additional multiplier effects expected. Now that project activities have shown biogas to be more than a means of environmental compliance in China, the financial sector has also begun to be active in the industry.

· Increased capacity of biogas developers: As a result of the project, biogas engineering companies are pursuing more commercial project development strategies and have improved their business development skills. One developer, for example, has indicated that project activities have resulted in substantial expansion of its business, including projects abroad.

Figure 21: Project co-financed pilot biogas project: two-stage aerobic digestion

at the Jiuchang Distillery in Qingdao, Shandong Province

Solar Water Heaters: Addressing the challenges presented by the highly variable quality of products in China’s solar water heater market place, the project has provided direct support to the Government in the areas of standards, testing, and certification.

· Completion of China’s solar water heater standards framework: Each of the four solar water heater standards resulting from project support received final approval in October 2003, completing China’s standards framework for solar water heater component and system testing.

· Accreditation of two solar water heater test centers: Two of three solar water heater test centers established with project support have received Government accreditation.

· Industry enthusiasm for solar water heater standards: The effectiveness of efforts to involve industry in the development of a standards, testing, and certification regime for solar water heaters is evidenced in the strong enthusiasm industry has expressed for the new standards.

Hybrid Village Power: Through the development of two hybrid (e.g. wind-PV-diesel) village power pilots, the project aims to address issues of sustainability of village power systems. It also aims to provide China with a practical model for operation and management of systems and for promoting poverty alleviation through electrification. In the near future, the project will provide direct support to the Government’s rural renewable electrification programs through: (1) the training of village power system operating companies; (2) the creation of a database on systems installed and lessons learned in the Government’s Township Electrification Program; and (3) the training of expert teams responsible for developing the Government’s planned Village Electrification Program in three pilot provinces. Achievements to date include:

· Development of new model for village power operating companies: The project has given rise to the only operating company in China that manages multiple renewable village power installations. The project’s RESCO (Renewable Energy Service Company) manages five systems associated with the project’s pilot in Xinjiang and manages another five systems associated with the Government’s Township Electrification Program.

· Initial successes in productive applications of village power: Hybrid electrification at pilot sites in Xinjiang has stimulated small-scale enterprises in tourism, gem polishing, weaving, and electronics repair, as well as expansion of the local hospital’s capabilities. Such productive applications of village power increase income for the operating company, thus raising the potential for system sustainability (e.g. purchase of new battery packs when needed). In addition, productive applications can have poverty alleviation benefits.

· Popularity of Village Power Project Development Guidebook: Now in its second printing, this book prepared by the project has not only been well received in China, but is also being used as a guide in other countries.

Bagasse Cogeneration: The project aims to demonstrate the potential in China’s sugar mills for cogeneration of heat and power (and sale of electricity to the grid) by burning fibrous processing wastes. A pilot project is being constructed in Guitang, Guangxi Province. Workshops and study tours aim to build capacity for bagasse cogeneration in China and promote associated business development.

Business Development and Financing: The project has held a series of training programs and workshops on business development and financing for renewable energy. These activities have sought to enhance the business skills of managers and entrepreneurs and to raise awareness and understanding of renewable energy among the financial community.

Policy: In addition to direct support of government programs and strategic planning in the market sectors of biogas, solar water heaters, grid-connected wind, and village power, the project is also providing cross-sector policy support to the Chinese Government in the formulation of its Promotion Law for Renewable Energy Development and Utilization.

Figure 22: PV and Small Wind Turbine Hybrid System in North West China

5) Chinese Renewable Energy Industries Association (CREIA): The project has supported establishment of CREIA, one of the first completely business-led associations in China. CREIA offers a wide range of services and support, including web-based services; networking, training events, and study tours for industry; and policy support for Government. This fall, CREIA will launch its web-based Investment Opportunity Facility (IOF) to promote business development and financing for renewable energy companies and projects in China. Achievements include:

· Growth in CREIA’s membership: From an informal base of about 60 companies in 2000, CREIA has grown to a membership of 160 companies and individuals. Companies are attracted by the business development opportunities, information channels, and consultation offered.

· Financial self-sufficiency of CREIA: In a short time, the association has achieved financial self-sufficiency. In addition to a growing paid membership base, CREIA has been successful in landing contract work with a number of domestic and international organizations.

· Growing recognition of CREIA by international renewable energy community: CREIA has developed a reputation as the premier channel between China’s renewable energy companies and businesses and organizations in the rest of the world. Reflecting this, CREIA has been chosen as the East Asian Secretariat of the Renewable Energy and Energy Efficiency Partnership (REEEP).

· CREIA’s securing of China’s first “Emission Reduction Purchase Agreement”: CREIA secured this agreement (signed with the Dutch Government) under the United Nations Framework Convention for Climate Change’s (UNFCCC) Clean Development Mechanism (CDM) framework for one of its member companies and is well-positioned to play a leading role in CDM project development in China.

6) Project Management Office Contact Information:

Wang Zhongying ()

William Wallace ()

Wu Haiou ()

Tel. 86-10-6800-2617/18/19 Fax: 86-10-6800-2674 Website: www.ccre.com.cn

Address: A2107, Wuhua Plaza, A4 Chegongzhuang Dajie; Xicheng District; Beijing 100044