Loan to boost China’s use of renewable energy
February 09 2006
The World Bank has approved an $86.33 million loan to scale up China’s use
of renewable energy as the country’s demand for power increases.
The World Bank’s Board of Executive Directors approved the follow up project
to the 2005 China Renewable Energy Scale-Up Program Phase 1 which would
develop a large wind farm in the Inner Mongolia Autonomous Region and
rehabilitate and develop selected small hydropower projects in Zhejiang
Province.
The overall renewable energy scale-up program aims to develop the Chinese
commercial market for energy suppliers to provide renewable energy to the
electricity grid on a large scale in an efficient and cost-effective way.
Renewable energy sources like wind power, solar power, and biomass have up
to now been produced only in small-scale, pilot programs, outside the main
electricity supply.
“China’s energy demands and its need to decrease air pollution make
large-scale renewable energy development an important goal,” said Noureddine
Berrah, lead energy specialist for China. “The idea behind the program is to
increase the commercial, large-scale use of renewable energy sources like
wind, small hydropower, and solar energy so that they contribute to meeting
the fast-growing electricity demand from homes, farms, and businesses.”
As China’s gross domestic product quadrupled from 1980 to 2000, its energy
consumption more than doubled to about 1300 million tons of coal equivalent
(Mtce). Projections for energy consumption indicate that fuel consumption
could double or almost triple by 2020 (between 2,500 to 3,300 Mtce), even if
energy efficiency efforts were increased. The follow-up project to the China
Renewable Energy Scale-Up Project (Phase I) provides investment funds to
help demonstrate success in large-scale renewable energy development by
local renewable energy developers as other local investment funds take time
to materialize.
A total of $67 million of the Bank’s investment would go to the development
of the 100 MW Huitengxile Wind Farm in the Inner Mongolia Autonomous Region,
which is currently home to approximately 70 MW of wind generation capacity.
An additional $19.33 million would finance the rehabilitation and
development of selected small hydropower projects (not exceeding 10 MW) in
Zhejiang Province.
The $86.33 million International Bank for Reconstruction and Development (IBRD)
loan is a variable spread loan which matures in 20 years with a 5-year grace
period. The project, which is set to start in April 2006 is expected to be
completed in March 2010.
|
|
