China Focus: Xinjiang's new energy plants struggle to survive winter

Many wind farms and solar plants in far west China's Xinjiang Uygur Autonomous Region may not survive this year's harsh winter as they have been suspended due to overcapacity.

Electricity demand drops during the colder months of the year as people turn off their air conditioning units in favor of the government managed, and coal-powered winter heating. Having a large number of alternate energy plants, Xinjiang lacks sufficient infrastructure to transfer power out of the region. As a result, the regional State Grid has ordered that all, bar a few, cease operation and hibernate for the winter.

"The whole year's investment almost down the drain," said Cui Wei, a sales manager of a wind farm affiliated to Beijing-based Goldwind Science and Technology Co., one of China's wind turbine manufacturing giants.

The company built a 7.5 billion yuan (1.15 billion U.S. dollars) wind farm with power capacity of 1.5 million kilowatt-hours in Xinjiang, however, 40 percent of the plant has been temporarily shut and the whole plant will suspend business by the month end, Cui said.

According to Yang Yongli of the State Grid's Xinjiang branch, in winter the region's power consumption is almost half of the summer peak as many manufacturers and construction sites halt work when the cold front arrives.

New energy's contribution to the State Grid is limited to below 300,000 kilowatt-hours to make way for the power generated by coal-power plants, while the total installed capacity in the region stands at 15 million kilowatt-hours, the branch said.

The unstable nature of solar and wind power generation means, at the current time, it is not an appropriate power source for the winter heating. As such, when the winter winds blow into the westerly region, many thermal power stations begin to warm up, bringing with them air pollution, the State Grid said.

Heavy smog in winter is a nightmare for Urumqi, the regional capital, grounding flights, closing roads and forcing residents to stay indoors.

A new trading system, which is unique to Xinjiang, is being tested by the region's electricity authority as a way to shift power generation from thermal plants to new energy.

Instead of transmitting electricity to the overloaded state grid, new energy stations supply power directly to factories that have been ordered to shut down their own power plants. The authority pays a subsidy of 0.2 yuan for every kilowatt-hour those factories buy from new energy plants.

So far 55 wind farms and 36 solar plants with a total capacity of 5.35 million kilowatt-hours have joined the deal, and another 8.43 million kilowatt-hours have begun to be added to the trading list starting from late November, said Gong Wenjun of the regional power exchange center.

Yet, a lot of new energy companies are still waiting to be included in the scheme, with many citing the lack of infrastructure as the largest obstacle.

Xu Xiaofeng, an operation director of a new energy plant, said the company's 50,000 kwh wind farm in the suburban district of Dabancheng in Urumqi has sold nearly 7 million kilowatt-hours via the trading scheme this year, but its other wind and solar plants, which boast 110,000-kwh-capacity, have been left idle.

Industry insiders said the new trading system could recoup some of the losses for new energy companies, but the only real solution is to improve the region's outbound grid transmission.

Xinjiang has transferred 53.1 billion kilowatt-hours of power out of the region since 2010, equivalent to coal delivery of 16.5 million tonnes. New energy accounts for 6.1 billion kilowatt-hours, or about 11 percent of the total delivery.

The regional government plans to add another four outbound channels, pushing the total delivery capacity to 50 million kilowatt-hours by 2020.

"Xinjiang's winter wind and solar resources have been wasted for nothing," said Cui, whose company has suffered a loss of nearly 500 million yuan this year alone. "The situation should take a turn for the better next year." Endi