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Legal Update

China Lifts Restrictions on Foreign-made Wind Turbines

15 January 2010
Mayer Brown JSM Legal Update

China Lifts Restrictions on Foreign-made Wind Turbines

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 (???????????????????????) (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 (????????????????????) (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.

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Jack Su ( )

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