Three high-level policies were unveiled last week that would have long-term and significant impacts on China’s clean energy market. They are noteworthy:
- China’s Communist Party released principles–though referred to as “suggestions”– for the upcoming 14th FYP drafting. Most of the principles are vague rhetoric. Still, regarding the clean energy sector, these principles suggest strong supporting policies ahead for EVs, fuel cell, and small energy system (Energy + Internet) development.
- Ministry of Ecology & Environment unveiled a draft of the national carbon trading plan to invite industry feedback. The expectation is running high that the country could set off a national carbon trading scheme as soon as next year.
- The State Council finally released the highly-expected 15-year Long-Term Planning for China’s new energy vehicle sectors. Targets for the EV and fuel cells have become even more aggressive in the final policy (compared to the feedback asking draft).
Scroll down for news of these three policies and six other updates in the wind, solar, hydrogen, battery energy storage sectors.
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China Unveils 15-Year Long-Term Plan for New Energy Vehicles
The State Council, China’s cabinet, last week unveiled a development plan for the country’s new energy vehicle (NEV) industry from 2021-2035 that aims to accelerate the country into being an automotive powerhouse.
The official plan showed several modifications to the draft document released by the Ministry of Industry and Information Technology last year. Modifications mainly focus on battery changing and charging, hydrogen fuel cell, smart vehicles, and power batteries.
Expectation Rise High on China to Launch National Carbon Trading Market in 2021, as Beijing Released Trading Rules
The Ministry of Ecology and Environment last week released a new consultation plan for a long-delayed national emissions trading scheme (ETS).
Under the new plan:
- Entities will be able to use China certified emissions reduction (CCER) credits to offset as much as 5% of emissions by volume.
- The consultation plan sets a cut-off point of 26,000 t/yr of CO2 equivalent (CO2e) emissions. Entities/companies with higher emissions will participate in the ETS. This level is equivalent to the consumption of 10,000 t/yr of standards coal equivalent.
- A single CCER unit will be able to offset 1 ton of CO2e, which could come from sources such as renewable projects, carbon sinks and methane recovery.
Energy Iceberg Note: the ETS policy is regarded as one of the vital implementation policies of President Xi Jinping’s pledge to achieve “carbon neutrality by 2060”. A national carbon trading market is highly beneficial to the wind and solar power producers, who can earn extra revenue from selling carbon credits.
Chinese Communist Party Sets Down 14th Five Year Plan Principles
The Communist Party of China (CPC) Central Committee last week published the proposals for mapping out the critical directions for China’s development from now to 2035. The proposal outlined 60 critical principals for the government to formulate the 14th FYP (2021-2025, FYP) for National Economic and Social Development and the Long-Term
Below are the principles set down related to the new energy sector:
- Promote the development of the strategic & emerging industries: Including new energy, new energy vehicles, green environmental protection, and other industries.
- Push Forward infrastructural construction: Promote energy revolution, improve energy production, supply, storage and market system; build up smart energy systems, optimize power production structure and transmission channels, improve the capacity of new energy consumption and storage, and enhance the capability of supplying energy to remote areas.
- Accelerate green, low-carbon and sustainable development: Develop green economy, support green technological innovation, promote clean production, develop environmental protection industries, and promote the green transformation of critical industries. Promote clean, low-carbon, safe and efficient use of energy. Support some areas to take the lead and hit carbon emissions peak, formulate an action plan for peak carbon emissions before 2030.
CTG New Energy to Construct World’s Largest Wind +Solar+Storage Hybrid Plant: 3GW
China Three Gorges New Energy (CTG New Energy) will build a colossal renewable plus battery storage hybrid project in Ulanqab, Inner Mongolia province, which is dubbed as the largest renewable power station with battery storage in the world, once completed.
Following three stages of construction, the Ulanqub New Generation Grid-Friendly Green Power Station Demo Project will include 2.7 GW of wind, 300 MW of solar and 550MW/1100MWh battery energy storage.
Energy Iceberg’s Note: it is certainly smaller than Australia’s Asian Renewable Energy Hub (AREH) which eventually aims to install 15GW renewable capacity. CTG’s claim over Ulanqab project may refer to the fact that it has the largest battery storage size for the wind/solar plant.
PV Glass Supply Shortage Connondrum–Industry Calls for Policy Suppor
Major module manufacturers in China, including Risen Energy, LonGi, JA Solar, Trina Solar, Jinko Solar and Canadian Solar, last week jointly called for government intervention over ‘out of control’ glass prices.
Prices for glass that coats photovoltaic panels have risen 71% since Jul., and manufacturers are struggling to produce it fast enough to keep more than a week’s worth of sales in inventory. The shortage comes as the solar industry turns toward bifacial panels, which increase both power output and glass requirements.
The united appeal included the following information:
- The companies urged the government to consider extending the grid-connection subsidy deadline for solar PV projects due to the unexpected PV glass shortage, which led to PV product supply delay (2020 Dec 30 is the deadline)
- They urged regulators to consider introducing policies to cool down the PV installation rush to limit supply chain pressure
- The statement urged that policy-maker to loosen restrictions on glass production capacity expansions
Energy Iceberg’s Comment: extension of subsidy policy seems unlikely, and glass supply restriction could not solve the short-term shortage. We expect glass price would remain at a high level in the near term.
Hydrogen Storage & Fuel Cells
Jiaxing Kicks Off its Third Liquid H2 Project, Poised to be a Leader
The Port Management Committee of Jiaxing City in Zhejiang Province last week concluded a hydrogen cooperation framework deal with Linde Group and Shanghai Huayi Group. The total investment value of the agreement–including a basket of various H2 projects– is estimated to be more than $100 mn.
The cooperation framework includes projects related to hydrogen production and supply, purification and liquefaction, storage and transportation, and hydrogen refuelling stations.
By the agreement, Jiaxing is approaching to build its third liquid H2 project. Previously, Jiahua Energy (Jiaxing Petrochemical Energy) Co. and America’s AP Company separately invested in two liquid H2 projects.
AP’s project has kicked off construction in June 2020.
Hyundai Plans to Supply +4000 FCVs to China by 2025
- Hyundai Motor, Shanghai Electric Power, Shanghai Sunwise New Energy System and Shanghai Ronghe Electric Technology Financial Leasing recently signed an MOU to establish a hydrogen fuel cell commercial vehicle ecosystem around Shanghai and Yangtze River Delta area in China
- Hyundai Motor entered a separate MOU with China Iron and Steel Research Institute Group and Hebei Iron and Steel Group to encourage popularization of a hydrogen mobilities in Jing-Jin-Ji region
- Under the MOUs, Hyundai and its regional partners aim to supply a total of 4,000 fuel cell vehicles in China by 2025
- Hyundai’s XCIENT Fuel Cell, the world’s first heavy-duty fuel cell truck, makes its Chinese debut at 2020 China International Import Expo
SPIC Ramp up Investment in Hydrogen Fuel Cells
SPIC Hydrogen Energy Technology Development Co. (SPIC Hydrogen Energy) last week initiated a plan to raise some ¥100- 300 mn from its shareholders. The money raised is set to support further its hydrogen fuel cell R&D, pilot trials and industrial base construction.
The plan underlines its mother company State Power Investment Corp’s (SPIC) hydrogen fuel cell technology ambition.
SPIC Hydrogen Energy currently has five subsidiaries:
- Ningbo Green Power Fuel Cell Co.: fuel cell production, R&D, and sales
- Ningbo Green Power Hydrogen Technology Research Institute Co: fuel cell R&D and technology consultancy
- Ningbo Hydrogen Energy Materials Co.: bipolar plates manufacturing
- Wuhan Green Power Hydrogen Energy Technology Co. proton exchange membrane production and other macromolecular material R&D
- Beijing Evergreen Power Investment: an investment and assessment management firm with a focus on H2
Energy Iceberg: Last week, we released a summary of China’s ten major hydrogen investors that foreign companies could consider partnering with. SPIC is one of the leading company out of the ten. Learn more from this in-depth review.
EV & Battery
REPORT: Lithium-ion Market Demand 2025
China’s lithium battery storage capacity has reached 1.71GW by the end of 2019. In 2020, the annual growth rate is expected to exceed 50%.
Calculation of Western Securities suggests that in 2024, the total installed demand for lithium battery energy storage would reach 28.41GW/75.43GWh. The market space in 2024 will reach ¥37.7 bn (based on ¥0.5 /wh), which is about 20 times higher than the current market size.
Growth of battery energy storage installed capacity mainly comes from:
- Storage projects for Frequency Regulating (grid-side): The cumulative installed capacity of grid-side frequency regulating lithium battery energy storage would reach 5.36GW/2.68GWh.
- Storage projects for Peak & off-peak Regulating (grid-side): Lithium battery energy storage would reach 2.21GW/4.42GWh.
- New energy power generation storage: The cumulative installed capacity of lithium battery energy storage is expected to reach 9.23GW/27.69GWh in 2024.
- 5G base station construction: It is estimated that the installed capacity of lithium battery energy storage would reach 12.48GW/43.68GWh in 2025.