The World Bank (WB) has had a long partnership with China and has worked with several government agencies, energy companies and banks to support the energy sector and the development of renewable energy.

Since its first involvement with the energy sector in China in 1984, a $145 million loan for the Lubuge Hydroelectric Project in Yunnan province, the WB has provided several billions of dollars of investment loans and grants to support the sector and the development of renewable energy.

"However, we would want to emphasize that in our development partnership with China, our financing is a means to engage with a broader range of important policy and institutional issues, many of which are critical for the development of a balanced and efficient energy sector," said Ranjit Lamech, currently the WB`s sector manager for energy in the Europe and Central Asia Region - and formerly the task manager of the China Renewable Energy Scale-up Program (CRESP).

In supporting clean and renewable energy development in China, according to Lamech, the WB has focused on project design and management, project analysis methodologies, environmental management practices, market-based policies and institutional arrangements, improving equipment standards, and building institutional capacity.

The two-decade partnership has been a success from both the client`s and the bank`s perspectives.

In the area of renewable energy, the WB and Global Environment Facility (GEF) supported the Renewable Energy Development Project (REDP), initiated in 1999, supported the development of the off-grid photovoltaic (PV) systems market.

REDP helped raise national standards to international levels, supported manufacturers in product development and in implementing effective after-sales service practices. The practice of having a PV systems certified to meet adequate quality standards was also introduced.

"China now has at least a dozen manufacturers of PV systems who meet the highest national standards, equivalent to the international standard. It is indeed exciting that several Chinese manufacturers now compete internationally and export equipment of high quality at competitive prices," he said.

CRESP: a key of innovation

Another important WB project supporting innovation in the field of renewable energy is the China Renewable Energy Scale-up Program (CRESP), launched in 2005 in partnership with the National Development and Reform Commission (NDRC) and GEF.

Several renewable energy investment projects, institutional development programs and technology upgrading initiatives are supported under CRESP - both at the national and provincial levels.

The emphasis on adopting cutting edge technologies, international-level standards and improving project selection and design approaches are the core themes of CRESP.

Under CRESP the technology development activities aim to improve the quality of Chinese-made wind turbines and have them meet globally recognized standards.

In an activity that has attracted widespread attention, five leading domestic wind turbine manufacturers, selected competitively, are being supported to achieve their goal of developing larger, MW-scale wind turbines.

"In terms of investments, one of the successes of this partnership was the focus on large-scale wind farms based on the competitive procurement of the turbines that delivered the lowest cost electricity output," he said.

A case in point is the Pingtan wind farm in East China`s Fujian province and operated by the Longyuan Power Company. This has grown into one of the largest wind power companies in China.

Lamech pointed out the significance of the program: "China has set an ambitious target for wind power generation over the next decade and the challenge to be addressed is how to achieve the target most efficiently and with the lowest possible cost."

Improving the quality and scale of wind farms would be critical to meet the wind power generation targets for 2020, he added.

"There is no doubt that China can meet these targets - given its commitment and implementation capabilities. After all, in the late 1990s, the installed wind power capacity in China was less than 600 KW but now China has over 12 GW installed and is likely to become the second largest wind power producer in the world within the next three to four years," he said.

Another successful renewable energy investment project has focused on small hydro-power plant rehabilitation.

China has a very large base of small hydro-power plants in operation that, with limited investment, can produce more clean energy.

The WB has worked with Zhejiang province on implementing a centralized institutional mechanism to support the development and financing of several relatively small projects - thereby promoting good practices and scaling-up the impact that small investments can have.

The WB officials also highly praised their productive partnership with a number of different levels of the Chinese government.

Lamech said: "It has been an extremely valuable learning experience for us at the World Bank too. Going forward, one area of focus should be on the training and certification programs offered by local universities and institutes. There will be a huge demand for skilled professionals to implement China`s renewable energy programs and cope with the engineering and construction challenges."

Future projects

The WB looks forward to extending its on-going partnership to support the development of offshore wind power projects.

A first step might be the development of wind projects in inter-tidal areas where the potential is considerable - especially off the coastlines of Jiangsu, Shanghai and Shandong.

In addition, efforts should be made to initiate projects in deeper offshore waters where the wind speeds are generally higher than in inter-tidal areas, such as Fujian, Zhejiang, Guangdong, Shandong, Jiangsu and Shanghai.

Future engagement will also build on the institutional development and clean energy focus of the WB`s lending and advisory work.

Elements of WB`s planned future energy activities in China include: developing financial sector intermediaries to scale up energy efficiency financing; incentive mechanisms to support the closure of inefficient power plants; advising on power and heating sector reform; assisting policy makers in assessing low-carbon policy measures; and supporting the adoption of renewable energy and clean coal technologies.