Last week, no doubt, was a busy week with the various significant energy and renewable regulations announced, including the State Council report, 14th Five-Year Plan and several major wind/solar policies announced. With the hectic new policymaking schedule, 2021 is a critical year to observe the critical changes in China’s renewable, hydrogen and energy storage sectors!
Our picks of China clean energy market updates from last week:
- Top Policy: 14th FYP listed hydrogen as one of the key issues for the first time; the FYP reinstates supports for energy storage, offshore wind, and distributed solar. To understand more details (& on other power sector issues,) we will soon launch a full review.
- WIND: Longyuan to launch China’s first floating offshore wind project integrated with aquaculture in Fujian
- HYDROGEN: BHP and HBIS join forces to utilise hydrogen in steel making
- Others: tunning into the price hike of rare earth
Please scroll down for the 8 updates from last week.
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Last week, the National People’s Congress (NPC) of China formalised the Outline for the 14th Five Year Plan and Long-Term Targets for 2035 (draft resolution).
Regarding the promotion of wind, energy storage and hydrogen, the policy sets to :
- Develop and Expand Strategic Emerging Industries: The country would develop hydrogen energy, energy storage and other cutting-edge technology and industrial transformation fields; implement future industry incubation and acceleration plans; plan for future industries.
- Construct a Modern Energy System: The country would accelerate the development of non-fossil energy; improve the development scale of centralized and distributed wind and photovoltaic power; accelerate the growth of distributed energy in the eastern and central regions; develop offshore wind power in an orderly manner.
- Increase the share of non-fossil energy in total energy consumption to around 20% by 2025.
Energy Iceberg Note: we will soon deliver a full review of the 14th FYP text regarding RE, Power, Hydrogen and Energy and its implications. Stay tuned!
The State Council Information Office last week held a press conference. Ning Jizhe, deputy director of the National Development and Reform Commission, said at the conference that China would roll out the 14th FYP for new infrastructure construction to boost the development of the digital economy, expand the application of 5G, as well as speed up the construction of industrial internet and data centres.
Energy Iceberg: The new infrastructure plan may cover power grids, energy pipelines, new industrial development, etc., which are worthy of attention.
China will ramp up investment to promote the development of renewable industries, according to guidelines jointly issued last week by five government departments, including the National Development and Reform Commission, Ministry of Finance, People’s Bank of China, China Banking Regulatory Commission, and National Energy Administration.
The guidelines aim to mobilize local government authorities and relevant financial institutions to jointly help companies overcome difficulties and support the healthy and orderly development of wind power, photovoltaic power generation, and biomass power generation.
Energy Iceberg Note: This policy aims to support the industry that is struggling due to the severe subsidy payment deficit problem and the subsidy cut-off this year. As new projects would not receive subsidy any more and existing projects struggle to receive subsidy payment (due to subsidy cash pool deficit), the whole wind and solar value chain face several cash flow issues.
Our full report on China’s renewable subsidy issues: https://energyiceberg.com/bond-to-rescue-subsidy-deficit/
The National Energy Administration (NEA) last week issued a policy (feedback inviting draft) regarding several issues of wind and solar power development in 2021. The policy sets to see the share of wind and solar in total power consumption go up 2% to 11% in 2021.
Besides the target, the policy laid down a few other new principles:
- Regarding provincial wind/solar installation targets: NEA will set a fixed renewable portion target to guide provincial governments to decide each regions’ renewable installation sizes; it will no longer set down specific provincial installation targets.
- Regarding offshore wind 14th FYP targets: Offshore wind development will be carried out in an orderly manner. NEA will organize the revision of provincial offshore wind power planning in conjunction with the 14th FYP this year;
- Regarding floating OW: NEA said it would issue planning and management measures for deep-sea offshore wind power and launch deep-sea offshore wind power demos.
- Regarding local OW subsidy: NEA urges local authorities to actively introduce incentive policies such as offshore wind power investment subsidies and kilowatt-hours subsidies to support the industry’s sustainable and healthy development.
Longyuan Power, a subsidiary of the state-owned China Energy Investment Corp. (CEIC), recently signed a framework agreement and the Xiuyu District Government of Putian City for a demo project combining deep-sea cage aquaculture and floating offshore wind turbine. This move signifies new breakthroughs of the world’s first offshore+acquaculture demo project.
The project is one of the ten key scientific and technological projects of the CEIC during the 14th FYP. It will:
- Explore and develop a set of technical solutions for the combination of floating wind power and deep-sea aquaculture.
- Build floating offshore wind turbines in the waters of Nanri Island.
Energy Iceberg Note: Check out our detailed report on China’s Deep-Sea Floating Wind Opportunity.
BHP Group, a leading global resources company, has signed a memorandum of understanding (MoU) with China’s HBIS Group (HBIS), one of the world’s largest steelmakers and a major customer of BHP’s iron ore, with the intention of investing up to US$15 mn over 3 years to jointly study and explore greenhouse gas emissions reduction technologies and pathways.
Under the partnership, BHP and HBIS Group intend to collaborate on three priority areas: hydrogen-based direct reduction technology (steel making by using hydrogen to reduce iron oxides), the recycling and reuse of steelmaking slag, and the role of iron ore lump utilisation to help reduce emissions from ironmaking and steelmaking.
SPIC Henan New Energy recently held a tripartite negotiation and signed a memorandum of cooperation with Henan Zhongping Yunneng New Energy Technology and Cummins. The three parties will deepen strategic cooperation in areas such as new energy development, energy storage, and hydrogen energy exploration.
Clean Energy Related
Recent research from Galaxy Securities estimated that the rare earth prices would maintain a definite upward trend in the first three quarters of 2021 due to the surge in new energy vehicle production and the global economy’s recovery.
The supply of the minerals has been tightening, another factor in the recent price hike. As Myanmar is one of the critical suppliers of rare earth to China, its recent military coup brings uncertainty to the market.
Beijing intends to tighten further control of the minerals’ domestic production and sale, too. Earlier in January 2021, the Ministry of Industry and Information Technology issued a draft version of the Regulations on Rare Earth Management to protect its national interests and industrial security as well as prevent activities, such as illegal mining, destructive mining, unplanned and over-planned production, illegal trading of rare earth products, and destroying the ecological environment, among others.
All of these factors contribute to a likely prolonged price hike of the rare earth market.