There is a lot to catch up regarding China’s clean energy market, as we came back from a three-week summer break.
As companies and organizations gradually released their 2020H1 reports, it is clear that the Covid-19 pandemic and the mounting tension between China and the US have taken their tolls on China’s energy market.
Some of our main observations on the market:
- Wind and Solar Statistics in 2020H1 does not look that good: Yes, all power sectors (except for hydropower) have been hit by the Coronavirus pandemic with less installed capacities put in in 2020H1 compared to that in 2019H1. But, notably, wind and solar appear to be hit much harder. The incremental capacity of wind dropped 30% YoY, marking the worst installation contraction in all time, as we found. When fewer renewable projects are commenced, however, wind and solar investment growth achieved new records, which could be an alarming signal.
- Offshore Wind Still Looks Promising, Despite Facing its Unique: Despite the alarming signals of construction delay, the offshore wind market remains an attractive investment option for Chinese companies and the governments. Meanwhile, the market delivered several good news, including the first 10MW turbine finally installed in the sea.
- More Regional Government Emphasized on “Green Hydrogen”: Two more regional government unveiled their hydrogen industry development plans, both of which emphasized on renewable-to-gas projects, showing growing recognition of the importance of green (instead of grey) hydrogen development.
- The Next Big Thing is Renewable Integrating with Storage, Although Developers are Not that Happy: more deals have been announced among renewable players, power developers and battery storage suppliers.
Please scroll down for the 13 updates and our reviews.
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China Electricity Council has published China’s 2020H1 Power Market Data. Below is a summary of the wind market:
- Incremental grid-connected wind capacity in 2020H1 is 6.32GW, of which 5.26GW comes from onshore wind and 1.06GW from offshore.
- Cumulative grid-connected wind capacity by 2020/06/30: 217GW, of which 210GW is onshore, and 6.99GW is offshore.
- The incremental wind capacity dropped 30.5% year-on-year. It is 2.77GW less than the incremental installed capacity in 2019H1.
- Meanwhile, wind investment hit an all-time highest record of 85.4bn yuan ($12.2bn), with a 154% YoY increase.
Energy Iceberg’s View: wind installation (incremental capacity) saw the steepest drop in all time, while investment increase is the fastest in all time. The contrast is a concerning sign. Energy Iceberg will break down the data in our analysis this week.
China’s first 10MW offshore wind turbine – and Asia’s largest yet – was installed and connected to the grid on Sunday at the Xinhua Bay Phase II project, off Fujian province. The prototype designed by Dongfang Electric Corp (DEC) and deployed for developer China Three Gorges (CTG) takes the country into double-digit turbine ratings as its offshore wind sector accelerates.
Energy Iceberg’s View: the launch of the 10MW is far from the end of the game. Instead, it is just the beginning of another competition among the Chinese OEMs to deliver even larger machines. Already, Ming Yang announced a month ago a plan to develop an 11MW prototype, with a bullish plan to put up the first model next year.
Ming Yang Smart Energy switched on a prototype of 5.2MW turbine, MySE5.2-166, which flies a 166-metre-diametre rotor powering a hybrid drive train. The turbine will now undergo trials at Dabancheng wind complex–largest onshore wind base in China–near Urumqi, the capital city of Xinjiang autonomous region.
China’s southernmost province of Hainan inked a deal with renewables giant State Power Investment Corp (SPIC) last week that could also pave the way for floating wind development in the South China Sea. The cooperation agreement foresees SPIC investing in ‘deep-sea’ wind power, hydrogen, energy storage and a clutch of other sectors in the island province, which has so far been a laggard in renewables.
Energy Iceberg’s View: A less developed region in China’s rich east coastal provinces, Hainan province will see its economic and political position rising fast, as the decision-maker announced a national strategy in June to develop the province into “a globally significant free-trade port (FTP)” within thirty years.
Whether Beijing’s plan is likely to succeed is up for debate. But by the new strategic positioning, Hainan is likely to see its energy demand–especially electricity demand– to rise quickly, which is also due to the province’s keen promotion of electric vehicle, hydrogen and other electrification projects. It aims to shelve fossil-fuel based cars by 2030. Against the backdrop, the island is looking at offshore wind as a critical solution for its electricity demand.
Previously, Hainan was one of three most undeveloped area in terms of wind construction. It has stranded onshore wind construction since 2009. And it halted two offshore projects of Guodian and Huaneng in 2017, despite having a plan (in 2013) to build 3.6GW offshore wind.
The signing of this agreement is, thusly, of significant meaning. It indicates a “wind of change” in the province’s overall attitude toward offshore wind. Given Hainan’s massive maritime space–largest in China, it is likely to become the next major offshore wind regional market in China
Notably, the province especially emphasized on “deep sea” offshore development, which hints a good chance for floating wind.
Solar market data detailed in China’s 2020H1 Power Industry Review:
- Incremental installed capacity of Solar PV: 11.52GW, of which 7.082GW is mounted centralized PV capacity, and 4.435GW is from distributed units.
- Cumulative capacity by 2020/06/30 reached 216 GW, including 149 GW from centralized PV and 67.07 GW from distributed.
- New solar units added to the power system was 2.77 GW less than that installed in the same period last year, marking a 19% YoY decrease.
- Average utilization hours registered 663 hours, 13 hours more compared to that of the same period last year.
China has set up a National Green Development Fund (NGDF) with a total asset under management (AUM) of ¥88.5bn. The fund is led by the Ministry of Finance (MoF), Ministry of Ecology and Environment and Shanghai Municipality.
Public data suggest that the fund management company NGDF has been set up in mid-July, with 26 investors–most state-owned entities–as shareholders. MoF is the biggest shareholder, controlling 11.3% of the total equity. China Development Bank (CDB), four state-owned commercial banks– Bank of China (BoC), China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC), and Agricultural Bank would each hold 9.04% share of NGDF.
The fund’s investment scope includes environmental protection, pollution prevention and combating, ecological restoration, as well as energy and resources areas conservation. It also plans to invest in green transportation and clean energy sectors.
Hydrogen Storage & Fuel Cells
Hebei Provincial recently unveiled its three-year plan for hydrogen industry development.
The target of the plan by 2022:
- to establish production capacity for hydrogen equipment and equipment parts;
- to build up a hydrogen value chain of annual production valued at ¥15bn;
- to put into operation 4,000 fuel cell buses and logistics vehicles, of which 2,500 would be operating in Zhangjiakou city.
By 2022, Heibei would have 7 wind-to-gas projects up and running, including:
- Hypor Wind-to-Gas Phase 2 (COD at 2021)
- Hebei Construction Investment Chongli Wind-Solar-to-Gas Phase 1 (COD 2021)
- China International Intellectech Wind-Solar-to-Gas (COD 2022)
- Hebei Construction Investment Chongli Wind-Solar-to-Gas Phase 2 (COD 2022)
- Hebei Construction Investment Guyuan Wind-to-Gas Phase 2 (COD 2022)
The total capacity of 1 and 2 is 16,850 kg/day; while that of 3, 4,5 is 114,000 kg/day. (The other two are Hapor Phase 1 and Guyuan Phase 1.)
The Development and Reform Commission of Qingdao City in Shandong Province recently released a consultation paper on its medium-to-long-term development plan for hydrogen energy industry (2020-2030). The plan has laid down ambitious targets:
- Short-term goals (2020-2022): By 2022, to build up more than 10 hydrogen refuelling stations and put into operation more than 600 fuel cell buses, logistics and sanitation vehicles, and establish a hydrogen energy value chain of annual production value of ¥5 bn.
- Medium-term goals (2023-2025): By 2025, to build up a hydrogen production base, with chemical by-product gas and renewable-to-gas as the two primary h2 sources; to put into operation of 25 refuelling stations, with 2,000 FCVs up and running; the local hydrogen industry value chain’s annual production value would reach f ¥20 bn.
- Long-term goals (2026-2030): By 2030, the region would become an “Oriental Hydrogen Island”, with one provincial-level engineering lab, 50 refuelling stations, and over 8,000 FCVs, and two fuel cell rail lines; The hydrogen industry’s annual production value would exceed ¥50bn.
Energy Iceberg’s View: a key thing to pay attention to is that the city is very interested in floating offshore wind combined with offshore wind-to-gas. The long-term goal sets to see its offshore wind-to-gas project up and running by 2050.
EV & Battery
China’s top EV battery maker Contemporary Amperex Technology (CATL) inked a strategic cooperation agreement with Southern Power Grid Electric Vehicle Service Co, a subsidiary of the second-largest grid operator China Southern Power Grid (CSG).
The two parties set to team up to explore business opportunities in distributed electrification, ship electrification, electric heavy truck’s battery replacing stations, as well as other energy storage areas.
Energy Iceberg Note: CATL continues to cement its position in EV and battery storage market, with several cooperation deals inked this year–including one with another grid operator State Grid of China (SGCC), In 2020 H1, CATL installed 8.64GWh of EV batteries, accounting for 49.4% of the total market share in China.
Xinjiang Goldwind Science & Technology Co. (Goldwind) unveiled last week that it had reached a strategic partnership with battery maker BYD. The two aim to explore business in generation-side energy storage services. Details of the cooperation have yet to be released.
Energy Iceberg’s Note: BYD is China’s 2nd largest battery manufacturer, and Goldwind remains China’s largest wind turbine maker. The cooperation between the two is a clear signal of a new trend in China’s renewable power market, where wind and solar power projects are under pressure to integrate with storage solutions.
The Science and Technology Department of the National Energy Administration (NEA) has officially solicited the first batch of energy storage demonstration projects in China.
China’s energy storage industry has developed rapidly in the past decade. Statistics show that China has put into operation 78 battery storage projects (with a size of 10MWh and above) since 2018, including:
- 16 grid-side energy storage projects
- 1 power-side energy storage plant
- 2 auxiliary service energy storage projects
- 12 control units solutions for mounted renewable plants’ grid connection
- 47 demand-side energy storage projects
Power Market Data
China Electricity Council (CEC) reported that the country’s grid operators registered record-breaking financial losses in the first half-year.
The poor financial performance was due mostly to Beijing’s policy to cut 5% of China’s electricity price throughout 2020 to help industries to survive the economic impacts of COVID-19.
China’s electricity consumption growth is expected to bounce in 2020 H2, CEC said in its recent report. It believes that 2020H2’s consumption would be up 6% compared to 2019H2.