China wind companies poised for green policy boost

There are hurdles ahead, however.

Most investors want to see clarity in regulations for project biddings and the lack of investment in power grid infrastructure and transmission lines may hold up some projects.

Although provisions were laid out to regulate the wind-power grid price, there are mixed views about open tenders and whether they drive prices below a level sustainable for many projects.

"We cannot say that we feel that every bidding process is fair. Sometimes the results are very surprising," said Goldwind chief financial officer Yu Danke.

Wind tariffs at 0.6 yuan a kilowatt-hour are 10-20 percent lower than those in major European countries like Germany, said Nomura's Pan, adding that Chinese projects generate returns of only 6-7 percent, compared to thermal power's 13 percent.

Energy from coal, which is the source for 80 percent of the nation's energy output, is sold at about 0.4 yuan a kwh.

Beijing also places more emphasis on companies meeting capacity than ensuring the actual flow of power, meaning productivity is lower than in other markets such as the United States.

Another challenge for China is that much of its wind energy capacity is located in Inner Mongolia, Gansu and the northwest province of Xinjiang, which are thousands of kilometers away from the east coast where most of the energy demand lies.

Despite the hurdles, few firms or investors are prepared to turn their backs on Chinese wind.

"There are things we don't like but the market is too significant," said Soares.

($1=6.826 Yuan)

(Editing by Lincoln Feast)