Asian Development Bank backs Sino-Japanese wind farm

The Asian Development Bank (ADB) has announced it is to provide $24m in financing for a Sino-Japanese wind farm project in Inner Mongolia.

The $73m wind farm, to be based in the city of Chifeng, is being built by a consortium comprising state-owned utility China Datang Corp and Japan's Kyushu Electric Power and Sumitomo Corp.

The project, officially announced yesterday, is expected to supply 133GWh of electricity a year to the national grid, while reducing China's carbon dioxide emissions by 140,000 tonnes annually.

ADB, which is providing the financing in the form of a long-term loan, said the deal is part of a wider strategy to support China's drive to reduce greenhouse gas levels and promote private investment in renewable energy. It is the first private-sector wind farm in the country to receive funding by the bank.

ADB investment specialist Hisaka Kimura said that the move could provide a major boost to other renewable energy projects in the country. "The lack of finance on reasonable terms has held back the development of clean energy projects in [China]," he said. "This project could become a model for future collaborations between state-owned enterprises and foreign investors in renewable energy projects."

The consortium members had been in talks about the project since 2005. They had hoped for the wind farm to be in operation by the end of 2008, but construction was apparently held back by a lack of third-party financing.

The ADB last month announced that it would invest $2bn a year in clean energy projects in Asia-Pacific.

In related news, an analysis from news agency Reuters released last week predicted that China could attract up to $150bn in wind power investment over the coming years, but will need clearer regulations and an improved power infrastructure.

New transmission lines and improvements to existing power grid infrastructure will be required to accommodate the growing number of wind farms in the country, the report warned.

The report also found that investors were calling for a more transparent regulatory process for project bidding, noting that some industry insiders believed current bidding practices had driven prices below a sustainable level.

"We cannot say that we feel that every bidding process is fair. Sometimes the results are very surprising," Yu Danke, chief financial officer of Chinese turbine maker Goldwind, told Reuters.