Located in central China, Hubei in 2014 had a nominal GDP of $441bn in 2014, contributing about 4% to China’s overall economy. Hubei is one China’s most industrialized provinces and industrial activity in 2014 accounted for 47% of its local economy, 5% above the national average of 42%.
As of year-end 2014, Hubei had a total installed power generating capacity of 62.1 GW, of which 58.4% (36.3GW) was accounted for by hydro, 40.2% (25GW) thermal and 1.2% (770MW) wind. Hubei installed 90MW of PV in 2014 and has a healthy project pipeline with up to 500MW expected to be built in 2015. In terms of generation, thermal (mostly coal) and large hydro projects combined to meet over 99% of local power demand in 2014.
Given the Hubei government target of 1,300MW additional wind and 500MW more solar PV by 2020, new and more aggressive local incentives are expected soon. However, local natural resources are somewhat limited. Hubei’s province-wide average annual wind speed of just 5m/second is the lowest among all China’s provinces (6m/second is typically needed to rotate a utility-scale turbine). To compensate, the local government provides a subsidy on top of what is offered by the federal government. This benefit is set at roughly 10% the current national feed-in tariff to allow Hubei wind farms to earn the same as average Chinese projects.
The outlook for solar is somewhat brighter over the next five years, given relatively stronger local conditions and demand from industrial players.
Hubei was one of seven provinces where carbon emissions trading pilots were initiated in China in 2013 by April 2014 had become the country’s second-biggest carbon market. The Hubei government has stated its interest in in joining a national emission trading market planned for 2016-17.