A major policy change this week is Beijing’s suspension, for now, energy storage new-build plant based on recycled EV batteries. The suspension is seen as Beijing’s reaction towards the BESS station explosion a month ago. (See China Clean Energy Syndicate Issue 59, April 19)
However, we will like to point out that there are several policy shakeups announced in the past months regarding energy storage pricing, safety operation and grid access. The active shakeup indicates Beijing’s intention to promote the area. Be aware.
Other highlights of the Chinese clean energy market last week include:
- Green Bonds: China Development Bank set aside ¥500 b in loans to finance renewable and hydrogen, while PBoC said it needs to be much more green loan allocated to support clean energy investment.
- Hydrogen: series of major cooperation deals were announced this week including Sinopec and Trina Solar in terms of PV-to-Gas; meanwhile, the first regional FC ship targets is unleashed.
Please scroll down for the 9 updates.
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Net Zero Investment
China Development Bank (CDB) recently published a working plan for reaching 2030/2060 decarbonized targets set by the Chinese government. According to the plan, CDB will set aside ¥500 b in loans to finance green energy projects over the next five years, with ¥100 b earmarked this year. The green-lending instrument is being made available to a growing pool of investors to fund projects covering wind, solar, nuclear, energy storage and hydrogen energy, specifically:
- Hydrogen power in main rivers.
- Coastal nuclear.
- Grid-parity PV and wind projects.
- Offshore wind.
- Integrated energy complexes with wind, PV, hydro, thermal and storage hybrids.
- Trans-regional transmission grid.
- Pumped hydro.
- Pilot demonstration of energy storage and hydrogen energy.
- Construction of natural gas supply, storage, and distribution system.
- Coal-bed methane recovery, etc. Coal-bed methane recovery.
Energy Icebergy’s Note: In March, CDB issued ¥20 b inaugural green bond to raise funds for renewable energy projects such as wind and solar that promote decarbonization in the power system and transform the energy industry. See our previous analysis about this green bond.
A recent report from the People’s Bank of China (PBoC) indicated that the current proportion of green loans invested in the clean energy industry is less than 27% (of the total green loan), indicating a much higher percentage should be the case in the coming decades.
China’s energy industry is commonly expecting green energy to account for 80% of China’s energy consumption by 2060, from less than 20% currently. Green loans and financing mechanism will play a critical role to facilitate growth.
Statistics PBoC suggested that, as of the end of 2020, the total national green loan balance reached ¥11.95 t, accounting for 6.9% of the loan balance. Notably, the green upgrade of infrastructure and the clean energy industry has the highest loan balances, at ¥5.8 t and ¥3.2 t, respectively.
Jiuquan Wind Power Complex, the first 10 GW-level pilot wind power base in China, last week held a completion ceremony in Guazhou County of Gansu Province.
The project started construction in 2009. It has achieved a cumulative grid-connected wind capacity of 10.45 GW, accounting for 3.7% and 71.9% of the national and provincial wind power installed capacity, respectively.
Hydrogen Storage & Fuel Cells
China Petrochemical Corp (Sinopec) and Trina Solar last week entered into a strategic cooperation agreement in the space of PV and green hydrogen. The two aim to:
- Based on Sinopec’s existing gas stations, to develop distributed pv generation projects, PV + charging piles, and integrated project of photovoltaic, battery storage, and charging.
- also, cooperate in the fields of photovoltaic power-to-gas and photovoltaic material supply and R&D.
Dalian government issued a hydrogen industry development plan for 2020-2030. Notably, the plan specifies application goals for fuel cell ship applications, as one of the first local government to do so in China.
The key targets stipulated in the plan were:
- The city would have 1000+ hydrogen fuel cell vehicles (including buses, passenger cars, heavy trucks, tractors, sanitation vehicles, etc.).
- The number of hydrogen fuel cell ships would reach 20+.
- The city would have 10+ fuel cell rail transit vehicles.
- The installed capacity of distributed power generation systems, backup power sources, and combined heat and power systems would reach 20MW.
- The city would have 15+ hydrogen refuelling stations.
- The city would have 57000+ hydrogen fuel cell vehicles.
- The number of hydrogen fuel cell ships would reach 500.
- The city would have 30+ fuel cell rail transit vehicles.
- The installed capacity of distributed power generation systems, backup power sources, and combined heat and power systems would reach 200MW.
- The city would have 80+ hydrogen refuelling stations.
Energy Iceberg’s Note: Cao Desheng, director of the Maritime Bureau of the Ministry of Transport, last week suggested at a press conference that China will strictly implement air pollution regulations and policies related to shipping emissions, refine the collection mechanism of ship energy consumption data, and promote the application of batteries, clean fuels, renewable energy on ships.
Carbon fibre supply is currently experiencing a shortage in China for hydrogen storage containers manufacturing.
Huatai Securities’ recent research report said that, between 2021 and 2050, the hydrogen storage container market in China is expected to reach ¥323.4 b, driven by the demand for hydrogen development in the country.
China is likely to become the world’s largest vehicle-mounted hydrogen storage container market.
Industry experts suggested that in the face of the upcoming market demand for vehicle-mounted hydrogen storage bottles, carbon fibre could be a major stumbling block for the current hydrogen energy equipment manufacturing industry.
China’s top energy policymaker, National Energy Administration (NEA), last week released a critical policy on the “new-technology” energy storage project development (Feedback invitation draft) in the country.
“New type energy storage” generally refers to all the energy storage projects (excluding pumped hydro storage).
Three critical points in this policy to note:
- Third-Party Access: Grid companies should provide grid access services for energy storage projects in a fair and non-discriminatory manner.
- EV Battery Recycled Ban: To ban large energy storage plants from using retired electric vehicle (EV) batteries until the industry “crosses a key threshold” in utilizing batteries under different storage and cycling conditions.
- For existing large energy storage plants under construction and in operation, the draft calls for more inspections, including adding regular technical reviews of battery life and performance.
Energy Iceberg’s Note: There is a heated debate on the application of retired EV batteries in energy storage plants both in China and internationally. Large energy storage systems have higher requirements for battery cycling conditions and consistency. Nevertheless, the current recycling battery could have an inconsistent issue due to the lack of previous data tracking.
Meanwhile, the policy is a reaction towards several safety incidents in China, especially the explosion that occurred in April at a battery storage station in Fengtai District of Beijing.
Several leading companies from wind power, photovoltaics, and wind energy, including Tianrun New Energy (a wholly-owned subsidiary of the Goldwind), China Three Gorges Renewables, Sungrow New Energy Development, recently established a joint venture Platform Company in Xinxiang City, Henan Province.
The initial registered capital of the platform company is ¥500 m. Its business scope includes:
- R&D, manufacturing, sales, leasing and technical services of battery materials, battery products and energy storage systems.
- Construction and operation of energy storage stations.
- Development, construction and operation of wind farms and photovoltaic power stations.
Energy Iceberg: the JV indicates a new model where power utilities, wind and solar makers to join forces in the development of “Renewable Hybrid” projects in China.
U.S. electric vehicle maker Tesla Inc has opened a solar-powered charging station with on-site power storage in the Tibetan capital Lhasa, the company said in a Weibo post on Wednesday, its first such facility in China.
Tesla does not have a showroom in Tibet, a remote and long-impoverished region. In its post, the company cited the ample sunlight in the mountainous area as behind the move.
China is Tesla’s second-biggest market, but the charging site is its first in the country with dedicated solar power and on-site power storage.