At first glance, news from China’s clean energy sector last week all seem quite “rosy,” and pointing to a promising future for the market.
There is some good news, indeed. As Bejing’s top decision-maker boosted the new concept of “internal circulation oriented economy” development, both the central and local policymakers are active in setting up new schemes to support the clean industries, the healthy of which is critical to China’s “domestic-oriented” energy security.
However, there is worrying signs of the market being overheated, in terms of various bullish local policies, capacity expansion and ambitious technology plans…
Overall we came the following observations on the market:
- Beijing shows a stronger desire to solve the renewable subsidy deficit issue: the Ministry of Finance is gauging about the option to solve the massive renewable deferred payment problem by issuing bonds–allegedly.
- The tension between China and the US so far still has a limited impact on China’s wind value chain expansion–at least the downward spiral did not stop GE from launching its second onshore turbine production base in China.
- Hydrogen is the No.1 hot topic for local governments’ energy agendas. But that may be a problem. It is more urgent for Beijing to carry out a coherent national plan: this week, yet another province announced its long-term hydrogen development plans.
- Zero-subsidy is Speeding up: this year’s subsidy-free wind and solar projects double the capacity size of those in 2019
Please scroll down for the ten updates and our reviews.
Energy Iceberg: to serve as a Knowledge Base of Chinese Clean Energy Policy for Foreign Stakeholders
Contact Energy Iceberg to get to know our research services and information product launch for offshore wind, energy storage, and hydrogen:
According to local media, Ministry of Finance (MoF) is weighing the option to solve renewable subsidy deficit and deferred subsidy payment–the most serious challenge facing the renewable industry–by having State Grid or China Development Bank to issue new bonds. The decision on the proposal was not conclusive.
Energy Iceberg’s Note: China’s renewable subsidy is paid by the Renewable Energy Development Fund (REDF) that collect renewable surcharges from electricity consumers. However, due to insufficient surcharge collection and raising renewable capacity, the REDF has been struggling with the mounting deficit, which led to deferred payment to most renewable developers and financial issue for many renewable companies. The news signals Beijing’s intention–for the first time–to solve the deficit issue once for all. The new proposal sent a positive signal to the wind and solar value chain.
By the end of this year, total REDF deficit is expected to rise to ¥300b.
National Energy Administration (NEA) and the National Development and Reform Commission (NDRC) last week announced the construction timeline for the country’s subsidy-free renewable projects in 2019 and 2020. According to the document released by the duo:
- In 2020, China will add 44.44GW zero-subsidy renewable new builds, of which 11.39 is wind capacity, and 33.05 is solar PV.
- These projects, as well the zero-subsidy projects approved in 2019, are required to start construction by the end of this year.
- All wind projects are required to complete grid-connection by the end of 2022, while solar should finish by the end of 2021.
Energy Iceberg’s Note: the capacity of 2020’s subsidy-free projects, notably, doubles of that in 2019. Last year China approved 20.76GW subsidy-free wind and solar projects to start. The new policy cleared the construction timeline for these projects.
Among the 44GW subsidy-free renewable projects announced by NEA and NDRC, eight projects will build battery storage units, and two will use the renewable power for hydrogen production.
The ten “new energy” integrated projects are located in Jilin, Hubei, Shanxi, Gansu Province and Ningxia Hui Autonomous Region.
Developers of the eight renewable-plus-storage projects are State Power Investment Corporation, Strong New Energy, China Resources Power, Fenghua Energy, Concord New Energy, Xi’an LONGI Silicon Materials, China Power Construction.
And the two green hydrogen developers are Ningxia Baofeng Energy and Lanzhou New Area Petrochemical Industry Investment.
General Electric (GE) announced last week that the first low-speed wind turbine produced in its equipment production base in Puyang City, Henan Province, rolled off the assembly line.
The Puyang wind power production base is GE’s sixth onshore wind turbine production base in the world and the second in China. Last Sep, the firm has kicked off first phase construction of the production hub.
Turbines produced in the Puyang Base aim at China’s low-speed wind market, with an estimated annual production capacity of 200-300 units.
The main bearing of a 12MW floating offshore wind turbine prototype developed by local company Zhongneng Integrated Smart Energy Technology Co has been dispatched to the assembly site in Shandong.
The firm said it planned to install a smaller version of the V-shape prototype, a 6MW version, in the sea off Xiaoguan island latter this year.
Energy Iceberg Note: the prototype is part of Shandong’s plan to develop a 2GW floating offshore wind complex with green hydrogen production scope. The project is developed by Shandong Zhongneng Integrated Smart Energy Technology Co, an affiliate of a renewable equipment producer Tonex. It should be noted that the project developer (or the turbine developer) has no successful track record so far in China’s offshore wind market. More info about this project: https://energyiceberg.com/china-floating-offshore-wind-market-01/#Tonex_Demos_in_Fujian_Shandong_A_Mystery
A research affiliate of State Grid, Global Energy Interconnection Development and Cooperation Organization (GEIDCO), recently released its power market forecast for 2025-2050.
The grid operator mentioned the following figures as the expected wind capacity for the coming decades:
- By 2025, the installed wind capacity will reach 540GW, of which 510GW comes from onshore projects and 30GW is offshore wind capacity.
- Onshore wind development will mainly take place in 22 wind power bases in Xinjiang, Gansu, Eastern and Western Inner Mongolia, Jilin, and Hebei provinces. The estimated total installed capacity in 2035 and 2050 would reach 250GW and 400GW, respectively.
- Offshore wind construction would take place mainly in Guangdong, Jiangsu, Fujian, Zhejiang, Shandong, Liaoning and Guangxi Province. The estimated total installed capacity in 2035 and 2050 would arrive 71 and 132 GW.
Chinese silicon wafer makers have collectively raised prices since Aug, recently with silicon wafer producer Xi’an LONGI and solar cell maker Tongwei announcing higher rates.
The raise is due mostly to the cost increase in the raw material. Polysilicon price has jumped by 13.67% by the end of last week.
About 50% of China’s polysilicon production capacity is concentrated in Xinjiang Automatous region, which is hit recently by a local outbreak of COVID-19 and drastic lockdown. Then large silicon material manufacturers last month collectively conducted overhauls or equipment maintenance, resulting in less supply to the market.
Besides, explosions in two large polysilicon plants occurred in Xinjiang, which further aggravated the tight situation of capacity supply and demand.
Hydrogen Storage & Fuel Cells
China National Petroleum Corporation (CNPC) and Shenergy Group last week established a ¥30m hydrogen energy joint venture. The business scope of the JV includes hydrogen energy technical services, technology development, hydrogen storage as well as refuelling facilities.
CNPC and Shenergy–the local energy firm owned by Shanghai government–each own 40% of the firm. The remaining 20% is owned by another local government-run company Shanghai Lingang New City Investment and Construction.
Yet another Chinese provincial government–of Henan– last week released a local hydrogen energy development plan, as hydrogen market continues to heat up. This specific plan envisions:
- By 2023: 5 cities of the province would become China’s fuel cell vehicle (FCV) demonstrative cities; the area would see no less than 60 demo fuel cell bus and logistics lines; the region would have more than 3,000 FCVs and 50 refuelling stations up and running.
- By 2025: the province would have 5,000 FCVs and 80 refuelling stations in operation. The total production value of its fuel cell supply chain would exceed ¥100bn.
Battery & Energy Storage
China’s major renewable developer State Power Investment Corp (SPIC) has launched a tender for its 4GW wind-solar-battery-storage complex project in Hami, Xinjiang Autonomous Region.
The tender mainly plans to seek suppliers for the project’s first phase wind construction (1GW).
Construction of the 4GW renewable complex is scheduled to begin later this year and fully launch operation by the end of 2025. The complex will put up wind turbines, solar PV, concentrated solar power (CSP), and large-scale battery storage capacity.
Energy Iceberg Note: Xinjiang–the largest wind production region in China– has been barred from new renewable investment for more than two years, as the province struggled to lower its renewable curtailment rate. But the ban has been somewhat lifted since this year. We expect to province to revamp large renewable base construction. But SPIC’s project suggests that these new bases are likely to incorporate battery storage or hydrogen production technology.