The biggest annual wind event the China Wind Power Summit (CWP) concluded last week, bringing some bullish 2025 and 2030 targets to the spotlight and caused quite a stir at the Chinese stock market. While the industry pledged for ambitious growth plans in the coming decades, the challenges ahead are apparent. We might need to take a cautious look over the exciting targets and news.
Some of our takeaways of last week’s clean power market:
WIND: the industry vowed to add 50-60GW new turbines to the market every year in CWP; a 12MW offshore PMSG is quietly on the way; check out our summary of CWP’s key product launches.
HYDROGEN: Sinopec signed a deal with Cummins that signals a clear ambition to the green hydrogen market; Lanzhou’s PV based power-to-methanol project concluded a milestone assessment.
POWER MARKET: China’s anti-corruption campaign on the energy and power industry appears to speed up again this year–vice head of NEA in charge of nuclear matters is now under investigation. State Grid’s 7 Trillion investment statement brought excitement to the stock market–but is that more or less investment on the way?
Please scroll down for 11 updates of last week’s wind, solar, hydrogen, battery and the power markets.
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Deputy head of China’s National Energy Administration (NEA), Liu Baohua, is being investigated for suspected serious violations of China Communist Party disciplinary rules and laws, said the top anti-graft agency last week.
In May 2014, Liu took over as the director of the Nuclear Power Department of NEA soon after Hao Weiping, then director who was under investigation (in 2016, he was sentenced to 12.5 years in prison for bribery charges). Since August 2017, Liu has become a member of the Party Group and Deputy Director of NEA, taking charge of electricity, nuclear power, and power market reform.
The 2020 Beijing International Wind Energy Conference and Exhibition (CWP 2020) was held in Beijing on 14-16 Oct 2020. As one of the largest annual events in the global wind power industry, this wind energy event, attended by more than a hundred speakers and thousands of representatives at home and abroad. 400 representatives of wind power companies signed the “Beijing Declaration on Wind Energy” (风能北京宣言), which proposed:
- In the “14th Five-Year Plan”, it is necessary for wind power to continue robust growth. The declaration said that the industry will add 50GW new turbine every year from now to 2025.
- After 2025, the market should add not less than 60GW every year.
- Cumulative installed wind capacity shall reach at least 800 GW by 2030 and at least 3 TW by 2060.
Energy Iceberg Note: there is obvious doubt from the industry over these targets. Firstly, most policymaking bodies so far emphasized on the role of solar over wind for the upcoming 14FYP renewable target. Previously, experts commonly expected the annual incremental wind capacity during 2021-2025 at 20-30GW/year. Then, whether the supply chain is ready for the task is a question, China’s previous record wind year was only 30GW new capacity. Finally, zero-subsidy would have an impact on the market.
The 12MW offshore semi-direct drive permanent-magnet synchronous generator (PMSG) independently developed by CRRC Yongji Electric was released last week. This is the first of its kind turbine generator in China. Well-known professors from Tsinghua University, Xi’an Jiaotong University and other universities and industry experts conduct on-site reviews.
CRRC Yongji Electric stated in a press release that, it would eye on the R&D of the overall design and key technologies of 12~15MW offshore floating wind turbines.
Energy Iceberg: Notably, CRRC Yongji Electric is the turbine generator supplier of Mingyang Wind Power. Previously, it supplied generators for Mingyang’s 7.25MW and 8-10MW platforms. This 12MW turbine generator indicates Mingyang’s upcoming innovations.
Our previous Chinese OEM R&D analysis now needs an update.
Envision Group’s CEO Zhang Lei said at the CWP 2020 last week that:
- By 2023, Envision’s technology can reduce the wind LCOE to ¥0.1/kWh in China’s northwestern provinces high wind speed regions.
- The cost of energy storage on the power generation side can also be realized at ¥0.1/kWh.
- At present, the cost of wind power in China’s northwestern provinces has reached about ¥0.16/kWh with the latest technology of Envision Group.
Energy Iceberg: last year, wind LCOE at the northern province was ¥0.2/kWh and storage was at ¥0.2-0.3/kWh. The average cost of coal-fired power in these regions is around ¥0.25. If Zhang’s prediction is correct, wind+storage would be highly competitive by 2023.
Energy Iceberg Summary: New Turbine Product Launches at CWP
New wind turbine types of Chinese OEMs exhibited at the CWP 2020 are summarized as follow:
- XEMC Windpower: 6MW-8MW for offshore
- Dongfang Electric: 5.5MW onshore, 7.5MW offshore.
- Mingyang Wind Power: 11MW offshore, 6.25MW for both onshore and offshore.
- Shanghai Electric Wind: 4.55MW onshore and 6.5MW offshore.
- Envision: 5.5MW offshore (*not a new launch)
- Vestas: 6MW onshore
Energy Iceberg’s Note: this year’s R&D and new product launches are clearly less “impressive” and much less “size-driven.” Last year, DEC, CSIC Haizhuang, Goldwind and Mingyang all announced their milestone offshore R&D plans (+8MW and 10MW) around CWP.
This may be because: the busy installation rush is the key priority this year for the OEMs, while larger turbine R&Ds could wait. The 8-11MW turbine so far did not achieve major commercial success in the offshore market–as indicated by DEC’s launch of 7.5MW (while it has a 10MW to offer) and SEW launch a 6.5MW (while it has 7-8MW.)
Hydrogen & Fuel Cells
Sinopec Capital and Cummins Investment–a subsidiary of the US fuel cell supplier Cummins– concluded a Letter of Intent to promote hydrogen production technology based on electrolysis jointly.
According to the LOI, Sinopec Capital and Enze Fund will provide abundant market and financial resources. In the meantime, Sinopec’s resources and capabilities in supply chain optimization, sales and marketing networks will also strongly support the future hydrogen production technologies.
By the deal, Sinopec hopes soon to make inroads into China’s nascent green hydrogen market.
The world’s first thousand-ton PV-to-Gas-to-CH3OH demo project in Lanzhou, capital of Gansu Province, has successfully passed the 72-hour on-site assessment from 5-8 Oct. The project has accumulated more than 1,000 hours of stable operation.
Li Can’s team at the Dalian Institute of Chemical Physics (DICP), under the Chinese Academy of Sciences, is leading the demo project. The project consists of a solar power-to-gas unit, and a methanol production unit via CO2 hydrogenation. The facility currently produces about 1,000 tonnes of methanol a year.
Construction of the project was kicked off Feb. last year.
There are currently more than 25 PV Power-to-Gas projects in China.
Battery, Storage & NEVs
The Ministry of Industry and Information Technology (MITT) stated last week that the MITT would accelerate the approval and release of the “New Energy Vehicle (NEV) Industry Development Plan (2021-2035)”. The plan will clarify the development goals and key tasks of hydrogen fuel cell vehicles (FCVs) to promote the high-quality development of the FCV industry.
Meanwhile, the National Development and Reform Commission (NDRC) is leading the policy-making for the national hydrogen energy industry plan. NDRC will coordinate China’s hydrogen refuelling network construction works.
Energy Iceberg Summary: There seem to be two national policies on the way:
- MIIT 2021-2035 plan: will focus on NEV and hydrogen FCV development
- NDRC: a national hydrogen economy plan that focuses on hydrogen network
Jinan City of Shandong Province last week released new policies to accelerate the promotion and application of New Energy Vehicles (Feedback invitation draft). The policies introduced financial subsidy rules for EVs and FCVs, including:
- Subsidies for charging facilities: Maximum ¥200/kw for DC charging piles; ¥100/kw for AC charging piles; and a construction subsidy of ¥1,000/kw for power exchange facilities.
- Subsidies for charging infrastructure operation companies: an operating subsidy of maximum ¥0.2/kWh based on the actual charging capacity.
The city also required to use NEVs for new buses. It aims to promote more than 60 hydrogen fuel cell buses and invest in the construction of one hydrogen refuelling station for buses.
MITT began to solicit public opinions on a policy draft about “tiered/recycled battery” utilization for NEVs. The policy draft pointed out that the enterprises are encouraged to develop and produce tiered/recycled products suitable for base station backup, energy storage, charging and swapping. The policy also urges business models that facilitate the recycling of products such as leasing and large-scale application.
Share prices of many listed companies in the power equipment industry soared significantly on 12 Oct. Prior to that, chairman of the State Grid Corporation of China Mao Weiming, revealed to media that China will invest over ¥6T during the “14th Five-Year Plan” (FYP) period (2021 to 2025) on power grids.
Energy Iceberg Note: despite the market saw the statement as a positive note to the power market. That ¥6T, in fact, refers to total investment generated by grid investment (instead of pure grid investment). To compare, State Grid plans to invest ¥450B on power grids this year, which would effectively drive social investment of more than ¥900 bn. That means the total investment generated would be over ¥1.3 Trillion.
That means State Grid might, in fact, significantly cut its investment in the coming five years.