It is clear that the clean energy industry in China is singing a song of ice and fire. While the wind and solar sectors are facing the challenge of supply chain shortage and the looming future of project dip, the nascent battery storage and hydrogen markets are booming, with new investment plans announced daily.
Last week’s updates look mostly positive, as the market saw several “first-of-this-kind” clean energy programs announced or kicked off.
- First Offshore Wind Plus Battery Energy Storage Project: as we have long predicted, energy storage would be a must-have as China’s eastern coastal regions are rapidly building up offshore wind capacity
- China’s First National Hydrogen “Subsidy” Policy Draft is said to be released soon: the draft has some changes, including a new emphasis that would help fuel cell technology companies.
- Siemens Energy Achieved its First “Green-Hydrogen” Order in China: the firm has been successful in the conventional power sector in China and now face an opportunity in the wind, hydrogen, and storage.
- National Oil Company Sinopec Revealed its First Capital Investment in the Solar Sector: China’s three national oil companies (CNPC, Sinopec, CNOOC) are taking (slightly) bolder moves in the energy transition. Sinopec focused on hydrogen and CNOOC mostly eyes on offshore. Comparatively speaking, CNPC is a bit lagging behind.
Hope you kick off a “back-to-work” week from holiday with inspirations from the following ten updates and our reviews.
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Major Clean Energy Policy
The technology regulator of Guangdong government last week announced to accept R&D applications for special provincial fundings in the following areas:
- Design and manufacture of permanent magnet generators (PMSG) and control equipment for 10MW+ offshore wind turbines.
- Research on key technology and equipment of large-capacity offshore floating wind turbine in the deep-sea area.
- R&D of critical technologies for the integration of offshore wind power and natural gas power.
- R&D of liquid hydrogen storage technology and equipment.
- Modular-based floating small-scale reactor (SMRs).
- R&D of new high-efficiency crystalline silicon solar cell paste.
Chinese Wind Energy Association (CWEA) finally released installed capacity data regarding China’s wind turbine OEMs in 2019.
- There were 17 OEMs added new installed capacity in 2019, totalling 26.785 GW.
- The leader of the market, Goldwind, registered 8.014 GW incremental capacity, which is almost 30% of the total market share.
- The 2nd to 5th placers are Envision Energy, Ming Yang Smart, China Windey and Dongfang Electric. The combined market share of top-5 players was 73.4%.
Aurorean Energy and Shanghai Environmental Protection Energy agreed last week to jointly develop and construct a battery energy storage plant for Shanghai Fengxian offshore wind project.
The offshore project, thereby, becomes the first in China that equips with battery energy storage capacity. Notably, Shanghai Fengxian project is also the first offshore wind project in China that embarks competitive pricing–instead of a fixed feed-in tariff.
The development of battery storage plant for the Fengxian project is a pathfinder for the business model and economics of combing offshore wind and battery energy storage in China.
Energy Iceberg’s Note: we have long predicted the necessity of energy storage for the eastern offshore wind projects. Check our full review https://energyiceberg.com/china-offshore-wind-energy-storage/
China’s offshore wind power industry is exploding in installation. Industry association data revealed that:
- As of the end of 2019, the whole country’s offshore cumulative grid-connected capacity was 7.026GW, accounting for about a quarter of the world amount and ranking second only to Britain and Germany.
- It is estimated that the country’s cumulative installed capacity will exceed 10 GW by the end of this year, which is twice that of the “13th Five-Year Plan” and will rank first in the world.
- The installation surge has brought strains on the supply chain and pushed up the cost of installation. Up to now, the average cost of offshore wind power projects in Jiangsu province–the most critical offshore wind market in the country– has increased by ¥1,000-2,000/KW compared with last year, and some equipment and construction costs have increased by more than 30%.
Energy Iceberg Note: the short-term demand surge has triggered more domestic players to take part in the market. However, risks of quality control in the supply chain are also rising, as many suppliers are inexperienced in offshore wind. Consequentially, the sector is facing raising construction/supply chain cost and long-term safety issue. https://energyiceberg.com/chinas-offshore-wind-market-2020-2030/
Sinopec Capital Corp., the investment arm of China Petroleum & Chemical Corporation (Sinopec), last week announced to invest in Fengyang Silicon Valley Intelligent Co. (FSVI). The move will allow the national oil company (NOC) to set foot in solar PV upstream supply chain–for the first time.
FSVI is a wholly owned subsidiary of Changzhou Almaden Co. which is a leading enterprise in the field of photovoltaic glass. It mainly produces ultra-thin photovoltaic glass and special optical glass for displays.
Energy Iceberg: This is the first time Sinopec Capital has invested in the upstream photovoltaic supply chain. The company has also invested heavily in the hydrogen energy industry. This latest investment shows that Sinopec is promoting its energy transition strategy via the investment entity.
Our review on NOCs’ energy transition move amid oil price slump: https://energyiceberg.com/oil-price-slump-on-china-renewable/
Hydrogen Storage & Fuel Cells
Rumours in Apr. suggest that China’s Ministry of Finance (MoF) has sent a first draft of the “hydrogen demonstration subsidy”policy (a feedback-inviting draft) to several regional governments, as Energy Iceberg previously mentioned in our syndicate and in our analytical report.
There are more updates suggest that MoF is soon to finalise a final version of that policy, which has been modified and is under study. The earliest policy release date could be by the end of Aug.
Compared to the feedback inviting draft in Apr., the latest version provided more specific criteria for cities (or regions) to secure national financial rewards. The new criteria appear to place a strong emphasis on fuel-cell part technology development of the city/region.
- The new draft allegedly would require selective demonstration regions to “have technology breakthroughs in and achieve industry applications” of membrane electrodes, bipolar plates, proton exchange membranes areas.
- The demonstration regions would need to embark more than 500 sets of each of these key components in their fuel cell vehicle projects
- The policy also set a higher bar for FCVs’ operation time, requiring the demonstrative vehicles to run over 20,000 km.
It is believed that companies with independent core technologies of the above-mentioned area will receive better financial support from local governments.
According to public data, the total amount of registered hydrogen energy companies has reached 2196, as of Aug this year.
Last year, China registered 529 new hydrogen companies. The amount is more than five-fold compared to that in 2014.
Affected by the Coronavirus outbreak, only 242 hydrogen companies were registered in China in the first half this year–with limited year-on-year growth. However, since March, the number has been gradually recovered.
With more than 380 companies registered, Guangdong Province is the area with the largest amount of hydrogen firms.
Siemens Energy and Beijing Green Hydrogen Technology Development Co, a subsidiary of China Power International Holding (CPIH), signed an agreement last week by which the German company will provide a skid-mounted proton exchange membrane (PEM) electrolysis system “Silyzer 200” to the Chinese firm’s Hydrogen Innovation Industry Park in Yanqing, Beijing.
The industry park of CPIH will provide fuel-cell public transportation solutions to the Winter Olympic 2022 games to be held in Yanqing.
The deal marks Siemens Energy’s first megawatt-level hydrogen contract in China. The project is expected to be delivered in May 2021.
In September 2019, Siemens signed a Memorandum of Understanding on cooperation in green hydrogen development and comprehensive utilization with State Power Investment Corporation Limited (SPIC), which is the ultimate controlling shareholder of CPIH. The hydrogen production project is the first result of the MoU.
EV & Battery
Research Institute of the Ministry of Industry and Information Technology released a white paper on the development of the lithium-ion battery sector. The document pointed out that in 2019:
- China’s lithium-ion battery shipments reached 131.6GWh, up 15.4% YoY.
- Energy storage lithium-ion battery shipments, among others, achieved 8.6GWh, increased 23% comparing to that of 2018.
- The proportion of energy storage lithium-ion battery shipments has increased by 6.5% compared to that of 2018.
Clean Energy Related
The China Rare Earth Price Index last Monday went up 8.6% from the previous month to 375.67.
The price rise is believed to relate to
- The recent escalating Sino-US confrontations
- Earth mines in Myanmar–an import source for China–is expected to reduce or even temporarily suspended production
Meanwhile, the market commonly expects that China would kick off a new round of rare earth purchase and reserve expansion. Affected by anticipation, prices in the domestic medium and heavy rare earth have risen sharply.
Energy Iceberg Note: In 2011, the State Council of China for the first time proposed the establishment of a rare earth strategic reserve system. In the following year, the country purchased and stored rare earth by two initiatives. In 2017, the country carried out the third rare earth purchasing and reserve expansion move.
But, the price raise should not be a long-term issue for the renewable industries. Check our previous analysis https://energyiceberg.com/trade-war-rare-earth/