China’s battery and energy storage market is sizzling hot right now. Last week we witnessed two major investment deals–one of battery for mobility, and the other is about storage.
Amid investment heat, the renewable industry in China is in hot debate, though. (Our previous article provides some background on the topic.) For now, the future direction of the policy/investment trend for storage remains further observation.
The highlights of last week’s updates in China’s clean energy market [June 29- July 05]:
- Battery & Energy Storage: We have compiled a summary of new investment cases announced by Chinese battery companies in 2020H1. State grid revealed another storage joint venture deal, while Daimler announced to take a stake in Chinese battery maker Farasis.
- Hydrogen: “The world’s first” solar PV-based power-to-MeOH project with “a Thousand-Ton Capacity” Begins in Lanzhou, Gansu province
- Wind: Tianfeng securities estimated 33-35GW onshore wind capacity to be installed in China this year, of which 4-5GW are offshore turbines
- Solar: PV power plants in China is soon to reach grid-parity in 2020
Scroll down for the 13 updates this week. Hope they could bring some new ideas for your week.
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Ministry of Finance (MoF) last week announced that a total of ¥1.71b of subsidies for renewable energy would be allocated in 2020. Of the total amount, ¥0.65b and ¥1.05b are for PV and wind projects, respectively, while biomass projects would receive a total amount of ¥13.63m subsidy.
More info on China’s RE subsidy set up: https://energyiceberg.com/china-renewable-power-price/
Brokerage Tianfeng Securities last week released a forecast of China wind power installed capacity in 2020 and 2021.
The brokerage believes that:
- 2020: 33-35GW onshore wind capacity would be installed, of which 30-33GW is grid-connected capacity; 4-5GW offshore wind capacity would be put up, of which 4GW would achieve grid connect by the year-end.
- 2021: 25-27GW onshore wind capacity would be installed, of which 25GW is grid-connected capacity;6-7GW offshore wind capacity would be put up, of which 6GW would achieve grid connect by the year-end.
Qingdao’s 2GW “Deep and Far Sea” offshore wind farm project recently revealed more details:
- Total direct investment for the wind power part of the project is said to be ¥30b
- The project encompasses several business scopes including offshore aquaculture, power-to-gas, wind-power desalination business, as well as equipment development.
- The project site is 70km off the blue valley coastline, the water depth is about 30 meters, and the total construction capacity is 2 GW.
- The developer plan to carry out the project in two phases. The first phase involves the construction of offshore wind farms of 1GW.
- The first phase of the project is scheduled to start in 2021 and aims at achieving full production capacity in 2022.
More info on China’s floating offshore wind market, check out our report: https://energyiceberg.com/deep-sea-floating-wind-in-china/ https://energyiceberg.com/china-floating-offshore-wind-market-01
The sale of 100% equity of XEMC Windpower was concluded last week, months after the Chinese OEM put up for sale. Hunan Xingxiang Investment Holding Group (Hunan Xingxiang) becomes “the only eligible transferee” that has show intention to buy, the company said. The total transaction amount would be around ¥924m.
Hunan Xingxiang is a provincial state-owned capital operation platform of Hunan Province, which is 100% controlled by the State-owned Assets Supervision and Administration Commission of Hunan Provincial Government.
Statistics of Chinese industry media Beijixing suggest that there were more than 147 wind tenders held in the first half of 2020, encompassing 15.59GW capacity.
17 OEMs have won shares in these tenders.
Energy Iceberg: the offshore tender amount is 6.339GW, almost half of the total tender capacity. The offshore wind momentum is high.
The solar photovoltaic power market in China is approaching grid parity, said the research team of China Industrial Securities last week.
According to the data of the firm, the recent bidding prices of Chinese solar PV projects have reached an all-time low, with just ¥0.033/KWh subsidy [Energy Iceberg Note: or ¥0.033/KWh higher than the coal-fired power benchmark prices]. The subsidy amount is 50% lower than that of the previous year.
Meanwhile, the weighted average electricity price of these solar PV projects are at ¥0.372/KWh, which has been comparable to the regional coal-fired power prices in most provinces in China.
These prices show that the industry is near grid parity.
The firm also believes:
- Domestic PV demand this year is estimated at 50GW;
- Oversea market demand (for Chinese PV products) would be around 80GW;
- Global PV installation in 2020 would be around 120-130GW.
Hydrogen Storage & Fuel Cells
The investor and developer of the project is Lanzhou New Area Petrochemical Industry Investment Corp, a local government-owned industry development entity. The project is said to build up a solar photovoltaic power plant, electrolyzer power-to-gas unit, as well as carbon dioxide adding equipment for methanol production.
Energy Iceberg Note: this is probably the third green hydrogen to chemical production project in China. Since last year, several local governments (esp. in Gansu province) initiated investment plans for such projects to support the green transition of its coal and chemical industry.
Energy Iceberg Note: green hydrogen application remains a nascent area in China. Read our previous thought on hydro-to-gas https://energyiceberg.com/china-hydropower-to-hydrogen/
Doosan Mobility Innovation (Doosan Mobility) and China’s Zhuhai Ziyan UAV signed a strategic cooperation agreement in late June to jointly promote the development and commercial operation of the hydrogen fuel cell system in UAV helicopters.
Doosan has quickly stepped up its fuel-cell game in China since entered in the market in 2018. Previously, the S. Korea firm cooperated with Shenzhen Keweitai to develop a multi-rotor hydrogen-powered UAV (listed on 20 Apr.) and then cooperated with Chengdu Zongheng to develop hydrogen power based on vertical takeoff and landing UAVs.
SPIC Zhongguancun Yanqingyuan hydrogen fuel station last week completed its first fueling test for SPIC’s fuel cell bus, marking the commercial start of the power utility’s first fueling station.
This hydrogen fuel station is an innovative demon project of SPIC to assist the Beijing Winter Olympics, and it is also the first hydrogen refuelling station of SPIC.
Energy Iceberg Note: our previous summary of Chinese power players investing in hydrogen https://energyiceberg.com/china-hydrogen-companies/
Battery & Energy Storage
State Grid last week reached a strategic cooperation deal with battery maker Guangdong Dynavolt. By the cooperation, the two set to build up a “horizontally integrated”energy storage value chain (Energy Iceberg Note: from battery making to storage plant development). The duo said to continue work together on building a wind-PV-coal-oil-energy-storage hybrid plant in Jimsar county of China’s Xinjiang.
Energy Iceberg Note: this is the second joint venture that the monopoly utility announced this year with a battery manufacturing and energy storage company. The other was a similar JV with CATL. Since 2018, there are more than 20 JV cases announced between Chinese battery makers with conventional energy players, showing significant interests in the field.
The Covid-19 outbreak this year and growing market competition is the “double whammy” facing the lithium battery makers in China. The following market trend has been observed:
- In the past six months, the number of new battery manufacturing projects (for mobility) has decreased substantially, with only a handful of leading players announced new investment plans.
- Meanwhile, lithium battery projects (for sectors other than mobility) have increased, mainly from electric tools, electric bicycles, energy storage, 5G base stations, 3C digital, TWS, etc.
- A large number of small and medium-sized lithium battery companies in China are looking for new market opportunities.
Summary of new domestic battery investment/capacity expansion projects in H1:
- Zhejiang Narada Power: A 6GWh lithium battery project with annual output started construction on 20 Jun., in Jieshou City, Anhui Province;
- AVIC Lithium Battery: The Xiamen A6 project completed factory construction and planned to start production in Q4 2020;
- Dazhi Technology: The firm announced in May to raise ¥1b to invest in a 2.4GWh power battery project;
- Changhong New Energy: The first phase of the Mianyang small power lithium battery project has officially started construction；
- Contemporary Amperex Technology (CATL): In Apr. The firm’s Kstar Energy Storage Equipment Manufacturing Project kicked off construction in Xiapu, Fujian Province, with a planned investment of ¥1b. The first phase plans to build up a 1GWh production capacity for its PACK battery.
- Eve Energy: The ¥2.5b Jingmen Power Battery Project begun construction in Mar.；
- Sunwoda Electronic: The firm announced in Mar. to establish a joint venture with Cixi Municipality Government of Zhejiang Province and invest ¥5.2b in expanding its lithium battery capacity in the area；
- Lithium Werks: The 20GWh lithium battery project with a total investment of $1.5b has started construction in Mar.;
- CATL: The firm announced in Feb. to invest ¥10b to build Cheliwan lithium battery project, an16GWh capacity factory;
- Gotion High-Tech: The firm signed an investment agreement with Liuzhou City Government of Guangxi Province in Jan. to build a 10GWh power battery project;
- Leoch International: The 4GWh annual lithium battery project set off construction in Suixi County, Anhui Province.
Daimler is to take a 3 per cent stake in Farasis, the Chinese battery cell maker, as the German carmaker ramps up its electric vehicle production. Daimler’s investment in Farasis, which plans to float, comes as European automakers, which are largely reliant on Asian battery manufacturers for their electric car ambitions, seek a foothold in the new auto supply chain.
In May, Volkswagen became the first global carmaker to buy directly into a domestic Chinese battery maker, after announcing it would spend €1.1bn to acquire a 26 per cent stake in the Shenzhen-listed manufacturer Gotion High-Tech and become the company’s largest shareholder.
China’s largest automotive lithium-ion battery maker, Contemporary Amperex Technology (CATL), set up a new technology company together with Henan Yuexin Intelligent Machinery Co. (Henan Yuexin) last week.
The joint venture was incorporated with a registered capital of ¥65 mn. Henan Yuexin and CATL each own 69.23% and 30.77% of the equity shares, respectively. The business scope of the new company focuses on the research and development of Electrified Unmanned Mining Truck and unmanned mining technologies.
Energy Iceberg Note: the electrification of mining trucks has attracted the attention of domestic manufacturers quietly this year. It is estimated the battery demand from the sector would be about 1.5GWh annually (incremental demand).
Notably, electrification is gradually moving ahead in more industries in China. Besides mining, the electrification of engineering equipment in the harbour and civil engineering area is also speeding up. EV and battery firms in China, including Xugong, Sanyi, Skywell, BYD, and CATL have initiated investment in the new areas.