Originally published 15 January 2010
Keywords: China, restrictions, wind turbines, wind power sector market, NDRC
In a major turnaround, the Chinese Government has dropped its requirement that wind turbines have 70 percent Chinese content, thus potentially heralding additional foreign participation in an already crowded wind power sector market. In the next decade, China seeks to increase its wind power capacity five-fold to 100,000 megawatts.
Pursuant to the Circular Abolishing the Requirement on the Rate of Localisation of Equipment Procurement on Wind Power Projects (关于取消风电工程项目采购设备国产化率要求的通知) (NDRC Energy [2009] No. 2991) issued by the National Development and Reform Commission (the "NDRC") on 25 November 2009, the NDRC no longer requires that 70 percent of the wind-power equipment used in China should be produced domestically, whether by foreign or local manufacturers.
In early 2004, the NDRC approved for the first time open tenders for wind farm concessions in Rudong, Jiangsu Province and Huilai, Guangdong Province. On 4 July 2005, NDRC published the Circular Regarding Requirements of the Administration of Wind Power Construction (国家发改委关于风电建设管理有关要求的通知) (NDRC Energy [2005] No. 1204), stipulating the requirement that at least 70 percent of the wind turbine equipment needs to be produced in China in order for the project be approved. In 2005, four more wind farm concession projects were approved by the NDRC in Huitengxile, Inner Mongolia Autonomous Region, Dongtai, Jiangsu Province and two projects in Tongyu, Jilin Province. All the projects approved in 2005 were required to source at least 70 percent of the wind turbine parts domestically.
This restriction previously limited investment opportunities for the leading foreign wind turbine manufacturers. According to CLSA Research, China has 70 wind-turbine makers with a capacity of about 15,000 megawatts per year.
Learn more about our Hong Kong office and Energy practice.
Visit us at www.mayerbrown.com
Copyright 2010. JSM, Mayer Brown International LLP and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: JSM, a Hong Kong partnership, and its associated entities in Asia; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and Mayer Brown LLP, a limited liability partnership established in the United States. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.
This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.
