China Clean Energy Syndicate – [2020 Apr. 27]

Subsidy is the keyword of last week. Beijing finally released the subsidy plan for EVs and FCVs for the next four years, setting down a positive tone for the duo’s development. But securing similar “subsidy extensions” for wind power and solar sectors still seems to be challenging.

Below are the latest weekly updates of Chinese’s new energy market [week 20-26 Apr], of which we would like to point out a few highlights:

  • EVs & FCVs: Beijing is willing to provide 4-more-year subsidy fo EVs and FCVs development
  • SOLAR: PV export figure in Mar. indicated the slowly warming-up overseas demand despite COVID-19 spreading
  • BATTERY: The two major power grid companies in China show new investment momentum in the EV charging network
  • HYDROGEN: the “world’s largest” solar-to-H2 project is announced
  • WIND: Dongfang Electric and China Three Gorges will put up China’s first 10MW machine in the sea soon, while GE is pushing forward the 12MW Haliade-X factory construction
  • POLICY:  Beijing unveiled the scope of “New Infrastructures” investment policy

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Have a Great Week Ahead.


Wind

China's First-of-its-Kind 10MW Turbine is Soon to be Put up in the Sea
China's First-of-its-Kind 10MW Turbine is Soon to be Put up in the Seanews.bjx.com.cn

Dongfeng Electric has shipped out its 10MW prototype turbine from its Fujian based factory to Xinghua Bay Phase 2 Project. Installation is soon to take place.

GE Pushes Forward Construction Resumption of its Guangdong Offshore Wind Assembly Base that Will Produce Haliade-X 12MW

GE’s Jieyang-based turbine factory has kicked off construction since last Nov. Right now, construction of the factory has restarted for almost two months, following 1-month work disruption, GE announced.

Energy Iceberg Note: GE expects to produce the first 12MW Haliade-X in China around 2021H2.

XEMC Secured Local Government Approval to Sell Turbine Unit Valued at ¥1.027Bn

Xiangtan Electric Manufacturing Corporation (XEMC) received approval from the Hunan provincial state-owned asset supervisory and administration commission to sell 100% equity of XEMC Windpower in the regional equity exchange market. The turbine unit is estimated to value at ¥1.027bn.

Energy Iceberg Note: XEMC plans to sell the turbine making unit due to financial struggles on the group level. Its wind unit remains one of China’s top-10 OEMs. 

By the acquisition of Dutch Darwind, XEMC has built up offshore wind turbine R&D capability and was, previously, planning to develop 7-10MW prototypes. But the firm’s R&D process appears to under serious dealy and is, undeniably, slower than competitors like DEC, CSIC Haizhuang, and MYSE. XEMC’s share in China’s wind market has been sliding, too, its position fell to 9th last year from previously 5th. Given the drastic competition ahead between Chinese wind OEMs in the coming years, the future of XEMC Wind faces uncertainty. 

Check our summary of Chinese wind OEM’s double-digit turbine R&D updates: https://energyiceberg.com/chinese-oems-turbine-development/

Solar

SPIC Sets Off a 1.3GW PV-Wind & Energy Storage Hybrid Project In Shanxi Province

State Power Investment Corporation (SPIC) announced to build a hybrid renewable energy project of total investment cost ¥ 7.3 bn. The hybrid project comprises 1 GW mounted solar PV plant, along with 300 MW of wind power and 100 MW of battery storage units.

The project is located at Yushe county of Shanxi province on barren hills and slopes.

Energy Iceberg Note: although over 11 provincial governments have released a policy to curb wind and solar project development, the mega renewable complexes with energy storage capacities appear to face limited impact. Hybrid projects that combined renewable power with battery storage units or hydrogen will be, no doubt, the future trend. 

Tongwei Planned to Raise ¥6Bn For Capacity Expansion Amid PV Makers' Collective Capacity Increase Competition

Poly-silicon & solar cell producer, Tongwei Co. (Tongwei) last week issued a private placing to raise ¥6bn. Most of the capital raised will be spent on the construction of two solar cell facilities of 15GW combined capacity in Meishan and Jintang. Some 1.8Bn, however, will be used to support the firm’s cash flow.

Tongwei has released several plans for capacity expansion this year, of which the total investment size has exceeded ¥30 bn.

  1. In Feb, Tongwei put forward the most significant single investment in history and planned to build an annual output of 30GW high-efficiency solar cells factory in Jintang, Chengdu.
  2. In Mar., the company announced to build two high-purity silicon projects in Leshan of Sichuan and Baoshan of Yunnan, which are of 35,000 ton and 40,000-ton annual production capacities, respectively.

Production capacities of the firm are expected to increase to 220,000-290,000 ton (silicon) and 80-100GW (solar cell) by 2023.

PV Export in Mar. Exceeded Market Expectation, Suggesting Recovery of Overseas Demand

China’s PV module exports in Mar. jumped 165% MoM to 7.49 GW, compared to 2.83GW on Feb. 2020. Although the 2020/03 export marked a 0.88% YoY decrease compared to 2019/03 figure, the result has exceeded previous market expectation.

In the first quarter of 2020, China’s PV module exports totalled 14.77GW, of which Jan., Feb., and Mar. each registered 4.45GW, 2.83GW, and 7.49GW export, respectively.

The market continues to consolidate, with the top-5 companies taking up to 53.48%. The top-5 companies in module export in Mar were Jinko (+ 108.54% MoM), JA Solar 0.91GW (+ 226.98% MoM), Trina Solar 0.81GW (+ 144.17% MoM), Artes 0.67GW (+ 153.66% MoM), and Longi Solar 0.65GW (+ 189.21% MoM).

Battery Storage

The Big-2 Grid Companies Set off Grand Plans for Building EV Charging Infrastructure

World’s leading power utility State Grid Corp. of China (SGCC) announced to invest ¥2.7 bn this year on building electric vehicle (EV) charging stations as part of the government’s push to support “new infrastructure” development (see the last news in this issue). The firm said to build 78,000 charging stations in 18 provincial regions, with 53,000 earmarked for local residential areas and 18,000 for public use.

In a similar direction, China Southern Power Grid Co. (CSG) said it would build stations with 380,000 charging points in the next four years, which is tenfold of its current numbers.

Eve Energy Unveiled ¥2.5bn Investment to Add two Battery Production Lines

Eve Energy announced to have concluded an investment contract with Jinmen local government of Hubei province to invest ¥2.5bn on building a lithium-ion battery project.

The project envisions building up 6GWh annual lithium-ion battery for storage sector and 5GWh/y for EVs. The former is estimated to cost ¥1.2bn and the latter ¥1.3bn.

Energy Iceberg Note: series of battery manufacturing production construction/expansion plans have been revealed in recent month, a reflection of battery makers rushing to take up market shares under positive policy signal.

Beijing Unleashed Official Decision over New Energy Vehicle Subsidies

China’s Ministry of Finance, Ministry of Industry and Information Technology, Ministry of Science and Technology and National Development and Reform Commission last week jointly released the new policy on new energy vehicle (NEV) subsidies.

Five new measures to note of the policy:

  1. Subsidies for buying NEVs are extended to 2022, and tax exemptions on purchases extended for two more years.
  2. Since 2020, subsidies will be reduced by 10% increments each year. In 2021, the subsidies will be cut by 20%, then by 30% in 2022.
  3. Commercial NEVs, such as those used for public transport, taxis, ride-hailing service, sanitation vehicles, urban delivery and postal vehicles are exempted from the subsidies reduction in 2020. Then the subsidy will be cut by 10% in 2021 and 20% in 2022. 
  4. There is a limit of the numbers of NEVs under the financial support package, which is 2 million NEVs.
  5. Eligible electric passenger vehicles for the subsidy need to be sold under ¥300,000. 

Electric Passenger Vehicle Subsidy Measures

Electric Commercial Vehicle Subsidy Measures

Electric Trucks Subsidy Measures

Hydrogen Storage & Fuel Cells

China's New Plan for FCV Subsidies

The new policy on new energy vehicle subsidies released last week laid down the subsidization rules for fuel cell vehicles (FCVs), too:

  1. subsidies for FCVs will be regional-focused rather than nation-wide
  2. the financial support for FCVs will be “reward-based,” instead of the conventional subsidization model
  3. the policy sets clear that the financial incentive is of a 4-year time frame
  4. the financial incentives aim at promoting manufacturing and technology localization; the policy emphasized that the industry to make break-through in obtaining local knowledge and production capacity of “key components” (such as the MEA)

Ningxia Plans to Build a "World's Largest" Solar-Hydrogen Hybrid Project

Ningxia Baofeng Energy Group (Baofeng Energy) announced to start construction of a pilot hybrid project with ¥1.4 bn investment. The project, located in northwestern Ningxia province, plans to install 200 MW PV units and electrolysis H2 production unit of 160m cubic meters annual capacity (with 80m m3 oxygen production capacity.) The first-stage construction focused on setting up the H2 electrolyzers of 20,000 cm/h capacity.

The project also plans to build an H2 fueling station in Yinchuan city of 1,000 KG/D H2 capacity. Baofeng currently owns two oil&gas fueling stations, which will also be upgraded for oil-gas-H2 fueling.

The firm claims the project as the world’s biggest solar-H2 integrated demonstration.

Energy Iceberg Note: our previous review on the renewable-to-H2 projects in China https://energyiceberg.com/china-hydrogen-market-2019/

Sinopec to Build a Mega H2 Project in Guangzhou

China Petroleum and Chemical Corp, or Sinopec, the world’s largest refiner, signed a strategic agreement with a Huangpu district government of Guangzhou city, to promote series of hydrogen projects in the region.

By the cooperation agreement, Sinopec sets to build 20 new fueling stations that combined H2 and oil fueling, EV charging services, as well as photovoltaic power generation in Huangpu district.

The district is keen on H2 development, with already two operating H2 fueling stations and five under development. Huangpu also built an innovative hydrogen centre and attracted investments from Sino-German Hydrogen Energy Research Institute, Hongji Chuangeng Energy, Xiongtao Hydrogen Heng, in the region. 

Shanghai Kicks off Construction For the Country's First Petro-Hydrogen Filling Station

Shenergy Group and Shanghai Lingang District Administration held a signing ceremony for the two’s joint cooperation last week. The two sets to work together to promote series energy projects in Lingang, the industrial development district in Shanghai, including hydrogen projects.

The development scope for hydrogen sector includes: 1) setting off demo projects that combined hydrogen policymaking, R&D, and commercialization; 2) gradually establishing hydrogen infrastructure networks (i.e. hydrogen filling stations); 3) setting up an industry fund to support hydrogen tech development.

Energy Iceberg Note: Shenergy, the regional energy giant owned and back by the Shanghai government, is a critical tier-2 player in China’s natural gas and electricity market. Offshore wind and hydrogen appear to the two recent interests. More about China’s power utilities: https://energyiceberg.com/state-owned-power-utilities/

​China's Cable-Making Giant Hanhe Cable Set Foot in Hydrogen Fuel Cell Market

Qingdao Hanhe Cable Co (Hanhe Cable) completed a 34.3% equity acquisition of new energy firm Shanghai Everpower Technologies for ¥260m on Apr. 16. The deal marks the cable-making giant officially entering China’s hydrogen fuel cell manufacturing market.

In the company filing, Hanhe Cable claimed that Everpower had developed the world’s leading and unique technology that combines hydrogen production and electricity generation within the same device. The founders and core R&D team of Everpower are known as former Ballard and Samsung technicians. Hanhe Cable said the firm committed to indigenous R&D and designs.

Previously, Everpower has worked with China Tower (Zhejiang affiliate) to develop the country’s first-of-this-kind fuel cell vehicle which serves as an emergency power source for the telecommunication company. On Nov. 10, 2016, the first demo FCV completed initial testing and successfully delivered to China Tower.

Clean Energy Related

NDRC Clarified the Scope of China's "New Infrastructure Investment"

China’s economic planner last week provided an official explanation on the scope of China’s “new infrastructure investment” strategy launched recently.

According to the National Development and Reform Commission (NDRC), China will provide policy incentives to stimulates infrastructure investment in the following aspects:

  1. information-technology based infrastructures, which include telecommunication networks (5G network, IoT, industry+IoT, satellite network, etc.), new IT-technology infrastructure (i.e A.I., cloud computing, blockchain networks), and computing power infrastructures (such as data centres, smart computing centre)
  2. “integrated infrastructure”, meaning the “upgraded” traditional infrastructures by combining with I.T. technologies and applications (i.e. traditional infrastructure plus internet, big data, and A.I.). NDRC points to smart transportation infrastructure and intelligent energy infrastructure as two examples
  3. innovative infrastructure that supports scientific research and technology R&Ds

Energy Iceberg Note: I.T. and telecommunication are the two fundamental elements/emphasis of the new infrastructure sector. 

While some analysts argued that, ultra-high-voltage grid (UHV) construction was not specifically mentioned in the three scopes. We believe the grid companies would seek to increase investment on grid construction, as UHV and smart grid development could still be included in the second scope. And to fit into the narrative of “new infrastructure,” the grid operators are likely to juice up investment and emphasis on smart applications such as data/A.I./blockchain. Smart grid or the former E-IoT concepts could revive in another forms…

Besides UHVs and smart grid, E.V. charging network (especially those combined with I.T. elements) would enjoy solid policy support. Despite the current low-utilization issue of China’s charging network, already the two grids announced to increase budgets for the area. 

Meanwhile, the development of China’s 5G network construction is a good chance for distributed power business cases, including battery storage, H2 storage, and others. 

We will need to update our former analysis of the new infrastructure strategy in the coming weeks: https://energyiceberg.com/china-new-infrastructure-investment-on-energy/

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