China Clean Energy Syndicate [10-16. Feb. 2020]

Dear

Good morning!

Below are the updates of China’s clean energy and power sector during last week, with these highlights:

  • WIND: 2019 Chinese wind OEMs ranking (by BNEF) shows that Goldwind, Envision, and MYSE remain the Iron Top-3
  • SOLAR:  unsurprisingly, Beijing will cut solar tariffs in 2020, but the reduction is unexpectedly steep
  • HYDROGEN: Shanghai’s Shenergy emerges to invest in hydrogen
  • EV&BATTERY: the market expects 2.8GW electrochemical storage capacity installed by the end of this year; the livelihood of EV firms are under threat amid subsidy cuts and coronavirus outbreak
  • ENERGY: China is caught between a rock and a hard place– between work suspension and resumption, but energy regulator said +80% of the electricity firms have restarted

Have a Great Week Ahead

Warm Regards,

Yuki

This is Energy Iceberg’s “China News Syndicate”–a weekly updates of major news about Chinese clean energy market. As a subscriber to Energy Iceberg, you will receive the “Syndicate” besides our weekly analytical article.We curated the following updates and commentaries upon screening +300 local, diversified, and insightful sources that we trust. Make sure to reply to let us know how you think.


Energy Policy

Coronavirus on Industries: China Pushes for Work Resumption

With growth at its slowest in nearly three decades, China’s leaders seem eager to strike a balance between protecting an already-slowing economy and stamping out an epidemic that has killed more than 1,000 people and infected more than 40,000. After reviewing reports on the outbreak from the National Development and Reform Commission (NDRC) and other economic departments, Xi told local officials during a Feb 3 meeting of the Politburo’s Standing Committee that some of the actions taken to contain the virus are harming the economy, said two people familiar with the meeting, who declined to be named because of the sensitivity of the matter.

Coronavirus on Energy: Provinces and Cities Have Introduced Electricity Price Discount and "Weavering" Policy in Attempt to Save SMEs

Thirteen provincial or municipal governments (Sichuan, Zhejiang, Shandong, Heilongjiang, Hubei, Guizhou, Yunnan, Shaanxi, and Anhui, Ningxia, Inner Mongolia, and Xinjiang, and Chongqing) have introduced electricity tariff discounts. These discounts include:

  • 30% of the electricity cost will be “subsidized” by the government
  • 10% reduction of water and natural gas tariff (for industrial users)
  • 10% discount for water and gas bill of retail and services industries Feb- Mar
  • payment weaver for SMEs, who would receive continuous power supply upon credit-run-off and allow top up later on.

Energy Iceberg Note: these measures are good news to the SMEs but not so much to power projects or the grids. As we mentioned in our analysis, Chinese government will utilize energy-cost-reduction measures to boost economy revival during and after the coronavirus outbreak. Local governments may seek further lower power tariff, and it is more difficult now for the local governments to support renewable subsidy.

Check out our analysis on Coronavirus’s impact on China’s renewable power sector here: https://energyiceberg.com/coronavirus-impacts-renewable-in-china/

Wind

Goldwind, Envision, and MYSE Further Cement Their Top 3 Positions in 2019

According to BNEF:

  • 2019 incremental wind installation–28.9GW, of 37% YoY growth
  • onshore capacity 26.2GW (+36%); offshore 2.7GW (+57%)
  • the market show trend of further consolidation, with top-five accounting for over 76% share now
  • top-10 were: Goldwind, Envision, MYSE, Windey, Shanghai Electric, CSIC Haizhuang, Dongfang Electric, United Power, XEMC, and CRRC
  • SGRE, Vestas, and GE achieved 437MW, 283MW, and 210MW, respectively
BENF 2019 Chinese Wind OEM Ranking

A New Offshore Wind Province to Pay Attention: Shandong

So far the northern coastal province has yet to install any turbine in the sea, but last year it kicked off the first 300MW project–CTG’s Laizhou Bay demo that will test the hybrid development of aquaculture and offshore wind. (Basically, the turbine foundation will serve as the artificial reef. )

Energy Iceberg Note: In total 2.1GW and six projects are in the preparational stage now. It is an emerging area within China with potential opportunity. 

Offshore Wind Construction Continues Despite Coronavirus Outbreak; Power Construction Corporation of China (PowerChina) Sealed Three Deals Totalling ¥12.5Bn

PowerChina announced that the company’s holding subsidiary, Huadong Engineering Co., and Jiangsu Huawei Wind Power Co., Ltd., signed EPC contracts for Jiangsu Qidong Offshore Wind Power H1, H2, and H3 Projects. The three offshore wind farm construction projects worth a combined ¥12.5 bn. Off Qidong city, Jiangsu, the three projects are of installed capacities of 250MW, 250MW, and 300MW, respectively.

Energy Iceberg Note: Huadong Engineering Corporation Limited is one of the key offshore wind installation company in China. Please refer to our previous article for more information. This article of us introduced electricity engineering firms and “Huadong Institute”: https://energyiceberg.com/china-offshore-wind-engineering/

Huaneng Renewables Soon to Complete Privatization from Hong Kong Market: State-owned Renewable Firms Seek to Head Back to China A-Share

The HK listed new-energy business unit of state-owned power giant China Huaneng Group has achieved all of the required steps for privatization from the Hong Kong Stock Exchange. Huaneng Renewable will be delisted from the Hong Kong Stock Exchange on Feb. 24.

Energy Iceberg Note: Huaneng Renewable is Huaneng’s wind and solar power business unit. The privatization is mostly due to a perceived difference of Chinese companies’ valuation between the Chinese stock market (Shanghai, Shenzhen) and that of Hong Kong, or A and H shares, respectively. Prior to the privatization of Huaneng, State Power Investment Corp and Dongfang Electric’s subsidiaries have also kicked off privatization procedures. The market expects more Chinese renewable companies to return to A-share. China General Nuclear Renewables (formerly Meiya Power) may sort to delisting from the H-share or will seek to be traded in both markets. 

Solar

Solar Power Directory Pricing Announced and Lower Than Expected
Solar Power Directory Pricing Announced and Lower Than Expectednews.solarbe.com

It is not official yet, but National Development & Reform Commission (NDRC) has revealed to several major solar power firms its decision to cut the directory prices (the price ceiling tags) for solar photovoltaic. The price tag cut has been highly anticipated, but the reduction– much as 18%– is higher than expected. The new directory price ceilings for zone 1, 2 and 3 projects would be lower to ¥0.33, ¥0.38, and ¥0.47 per kWh. Meanwhile, a fixed subsidy for industrial and commercial distributed solar projects are set at “not higher than ¥0.05/kWh.” The regulator has not decided on the rate for residential solar.

Energy Iceberg Note: previously the industry expected ¥0.35, ¥0.4 and ¥0.5/kWh as the new directory prices. The latest price tags are lower than previously expected, showing Beijing’s effort to limit renewable subsidy spending. Check our analysis to understand the current renewable pricing policy and setup: https://energyiceberg.com/china-renewable-power-price/

Shocking Capacity Expansion Plan: Tongwei Investing US$2.86 bn to Build 30GW PV cell Manufacturing Hub in China

Tongwei is poised to build the world’s largest single manufacturing solar cell facility, amid looming economy challenge brought by coronavirus outbreak.

Major polysilicon and merchant solar cell manufacturer, Tongwei Group and subsidiary Tongwei Solar are to significantly increase high-purity polysilicon production and high-efficiency solar cell production over the next five years. Tongwei said that a new 30GW solar cell manufacturing hub in Chengdu, Sichuan province, would be built over a five-year period at an estimated cost of ¥20 bn ($2.86 bn).

The project would be built in four phases in which the first and second phases would cost around ¥4 bn ($573 mn) each to expand solar cell capacity by 7.5GW, up from 20GW currently. The first phase of the 7.5GW solar cell project would be started before March 2020 and is expected to be completed during 2021.

Canadian Solar secures BRL $225.2 mn Financing for Lavras Project in Brazil

Canadian Solar announced it has secured Brazilian reais 225.2 mn (US$ 55 million) non-recourse project financing from Banco do Nordeste do Brasil S.A. (BNB) for its Lavras solar power projects Since the beginning of 2019, Canadian Solar has secured BRL 1,007 million (US$ 247 million) solar project financing with BNB. The 152.4 MWp Lavras project will be funded over 21 years across the construction and operation phases of the projects. The inflation-linked debt tied to the National Consumer Price Index (IPCA) will provide improved capital and resource alignment with the Brazilian economy.

Hydrogen Storage & Fuel Cells

Contemporary Amperex Technology (CATL) Stock Price Rose by about 80% in Two Month, Following Cooperation with Tesla

China’s largest automotive lithium-ion battery maker CATL reported having resumed production. The firm’s manufacturing base, at Ningde of Fujian, has more than 80% of employees as migrant workers from foreign provinces, but some were staying in the plant during the Chinese’s New Year. On Feb.10, CATL’s market value reached ¥364.9 bn, 80% up compared to that two months ago. 

Shanghai-based Provincial Energy Giant Shenergy Completed First Hydrogen Investment–More to Come

Chinese local hydrogen fuel-cell stake manufacturer, Shanghai Qing Chen Co., completed series-A funding and will be invested by Shenergy group, a Shanghai government-owned power and gas company. The invested amount is not disclosed. Shanghai Qing Chen Co is a “high-tech enterprise” manufacturing of high-density fuel cell stacks. Qing Chen has already developed three fuel cell stake products: 45-50KW fuel cell and battery system for EV hybrid vehicle, and two others (with lower battery capacity) suitable for buses and trucks, respectively.

Energy Iceberg Note: The investment demonstrates Shenergy ‘s growing interest in hydrogen. Shenergy, a local energy company, is a dominant LNG playerand with a sizable thermal and renewable power assets. It also has better access to energy projects in Shanghai region. 

Last Sep., Shenergy teamed with Shanghai Jiaotong University and Lingang Group to invest ¥10 bn in developing a hydrogen industry park in Shanghai Lingang within the pilot Shanghai Free Trade Zone. We also advise foreign companies to team with provincial-level energy partners for development in China. https://energyiceberg.com/china-hydrogen-companies/

EV & Battery

Cumulative Installed Capacity of China's Electrochemical Storage Market is  Projected at 2833.7MW by the End of 2020
Cumulative Installed Capacity of China's Electrochemical Storage Market is Projected at 2833.7MW by the End of 2020mp.weixin.qq.com

CNEAS recently revealed 2019 statistic and 2020 projected figures China’s electrochemical storage capacity:

  1. the cumulative installed capacity of global electrochemical storage by 2019: 8216.5MW, 4.5% of the whole energy storage market, 0.9% YoY growth
  2. collective installed capacity in China: 1592.3MW, 4.9% of China’s energy storage market, 1.5% YoY increase.
  3. the estimated installed capacity of electrochemical storage in China by the end of 2020: 2,833.70MW
  4. cumulative installed capacity by 2030 projection: 19319.17MW

Car Market Especially Hit by Outbreak: EV Producer BYD's EV Sales in Steady Decline in the Past 7 Months, with a Sharp -75% Decline in Jan.

Chinese automotive company BYD reported a total sales of 25,173 vehicles in 2020 Jan., down 42.68% YoY, of which new energy vehicle sales are 7,133 and registered 75.12% decline. Meanwhile, fuel-based car sales were 18,040, up 18.28% compared to that in Jan. 2019. The decline mainly came from the EV sector.

Notably, the firm has seen its EV sales continuous dropping in the past seven months. From Jul. – Dec. 2019, the sales figures were 16,600, 16,700, 13,700, 12,600, 11,200, and 13,100, down 11.8%、23.4%、51.0%、54.6%、62.7%和71.9%, respectively.

Energy Iceberg Note: Beijing’s decision to cut the national subsidy for EVs is a key factor. But recently MIIT hints that the regulator may be changing its mind and will carry out the subsidy cut slower than previously expected. 

Clean Energy Related

83% of the Electricity Power Companies Have Resumed Work

“80%” of the state-owned enterprises in the production sector (energy production, e.g.) have resumed production, State Asset Supervisory and Administration (Sasac) spokesperson revealed on Feb 12.

He mentioned that 97% of petroleum and petrochemicals companies had gotten back to work, and 83% power generation and transmission companies have restarted. He also said, “there is no potential issue” of energy supply in the nation.

Energy Iceberg Note: In the same week, two thermal power plants disclosed two cases of coronavirus infections. And such cases led to immediate suspension of the plant for 14 days for quarantine purpose. Although Beijing pushes for production resumption, the industry is highly concerned about the risk of outbreaks.

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