China Clean Energy Syndicate – [2020 June 22]

News in battery energy storage and grid construction attracted all the attention last week. We saw the National Development and Reform Commission (NDRC) listing energy storage in the national energy security strategy– for the first time. And State Grid announced its comeback in battery storage, with a brand-new and ambitious “digital new infrastructure” investment plan unleashed. 

While energy storage is heating up, the scenario in the renewable market is overshadowed.

Still, we would like to point out the key highlights during [June 15- June 21]:

  • Wind: another Chinese OEM shows progress in developing large offshore wind turbine, following five domestic peers’ footstep
  • Hydrogen: another local government– Jiashan County of Zhejiang Province– issued local subsidy measures to support hydrogen development.
  • Storage: NDRC’s new energy security policy listed storage as an essential task; SGCC announced two battery storage-related deals
  • Clean Energy Policy: NDRC reinstates coal capping mission and asks to use the reclaimed land of stranded coal mines for renewable projects

 Scroll down for the 11 updates. Hope they could bring some new ideas for your week.

Best Regards,

Energy Iceberg: to serve as a Knowledge Base of Chinese Clean Energy Policy for Foreign Stakeholders

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Wind

First Foreign Offshore Wind Project in China, invested by EDF, Installed the First Turbine

Dongtai IV (Zhugensha H1#) offshore wind farm last week successfully installed its first turbine off Jiangsu province. The 300MW project, jointly developed by China Energy Investment Corp (CEIC) and France’s EDF, is the first offshore wind project in China with foreign stakeholder.

Energy Iceberg Note: the two companies secured initial agreement in early 2019, with the final commercial contract of the project sealed this year. EDF Renewables and EDF China own 37.5% of the project, while two Shenhua Guohua subsidiaries are controlling the rest and the majority.

Separately, EDF has also chipped in the 200MW Dongtai V project, of which commercial operational date is at 2021.

Another Chinese Turbine Maker, TYHI, Revealed Ambition in Large Offshore Wind Turbine R&D

Taiyuan Heavy Industry Co. (TYHI) recently released its 2019 annual report stating that the firm has been developing an 8MW offshore wind turbine. The design has been certified.

Energy Iceberg Note: the move indicates the drastic competition among Chinese OEMs in the offshore wind market. Currently, there are only 7-8 Offshore Wind Suppliers in China, including TYHI. However, TYHI has not yet obtained any significant order. 

In the past three years, the revenue of TYHI’s wind power equipment has continued to slide. Subsequently, the company reduced investment and effort on wind power equipment manufacturing. In hindsight, that decision perhaps is unwise. From 2017 to 2019, TYHI’s turbine production decreased accordingly and, as a result, missed out on the heated offshore wind market. 

The annual report shows that in 2019, TYHI’s operating income was ¥7.038 bn with a net loss of ¥896m. Amid financial uncertainty, TYHI appears to put the last hope in developing a larger-size turbine, while its previous offshore turbine installed is only 5.5MW. But the new R&D commitment is not without risk. 

Currently, China already has five OEMs that introduced 8MW or larger turbine. The five are Goldwind (offshore installed 8MW), Shanghai Electric (onshore installed 8MW), Dongfang Electric (10MW prototype, to be installed offshore), Ming Yang (8-10MW prototype launched), CSIC Haizhuang (10MW design certified). 

More info on wind OEMs’ R&D in China: https://energyiceberg.com/chinese-oems-turbine-development/

Shanghai Electric Wind's IPO Application Has Moved Forward

Shanghai Electric last week announced that the initial public offering (IPO) of its wind turbine subsidy, Shanghai Electric Wind Corp (SEWC), was accepted by Shanghai Stock Exchange. 

Solar

China Increased Budget for Renewable Power Subsidies To ¥92.3 Bn, 7.5% More Than 2019 Spending
China Increased Budget for Renewable Power Subsidies To ¥92.3 Bn, 7.5% More Than 2019 Spendingwww.hydropower.org.cn

Ministry of Finance last week released the government budget of 2020. The document revealed that 2020’s renewable subsidy income (by renewable surcharge collected from electricity consumers) would be ¥88.352 b, up 1.8% YoY.

Spending on renewable subsidy payout, on the other hand, is estimated to be ¥92.355b, increased ¥6.437 bn and by 7.5% from that in 2019.

Energy Iceberg Note: 2020’s renewable spending remains higher than the surcharge collection. Notably, subsidy payment to wind projects decreased, only 96.8% of the wind subsidy payment in 2019, while solar and biomass subsidy payment increased compared to 2019 figures. The numbers suggest that the wind sector is facing a more massive reduction of the subsidy payout. 

Panda Green to Develop 1-GW Hybrid Solar Thermal & Green Plan in China's Xinjiang

Panda Green Energy Group announced recently that the company plans to develop a 1GW hybrid project in China that combines solar photovoltaic, solar thermal power generation with energy storage and hydrogen production.

The company has entered into a memorandum of cooperation for the ¥10b project with the local government of Manasi County, Xinjiang Uyghur Autonomous Region. The minimum installed capacity of the facility is agreed to be 1,000 MW, but its final scale is yet to be determined based on factors such as local energy policies, land availability and on-grid energy consumption. In any case, the installed capacity in the first phase will not be less than 500 MW.

Energy Iceberg Note: the firm was reported with an alarming +80% debt to asset ratio last year, which followed by a jaw-dropping asset sales to Beijing Energy. More info on Chinese renewable companies’ asset sales wave: https://energyiceberg.com/china-renewable-asset-sales/

Hydrogen Storage & Fuel Cells

China Released Draft Standards for Hydrogen Fueling Stations
China Released Draft Standards for Hydrogen Fueling Stationswww.itdcw.com

The Ministry of Housing and Urban-Rural Development (MoHURD) last week released a draft version of standards for hydrogen fueling stations. The Housing Ministry added ten revisions in the document, including renewed technical requirements regarding liquified hydrogen. 

Jiashan Strives to Build an Integrated Industrial Base for Hydrogen in the Yangtze River Delta

The municipal government of Jiashan County (of Zhejiang Province) issued a hydrogen industry development policy including subsidy measures. The financial incentives would cover the time spam from 2020/01/01 to 2021/12/31. Specific subsidy measures include:

  1. Financial funding will be granted to hydrogen programs built in the region. 20% of the actual investment on production equipment would be cover (with a cap of ¥3m per project).
  2. The government will provide funding to cover 20% of the actual equipment investment of hydrogen fueling stations.
  3. The government will give a 1:1 subsidy (compared to national FCV subsidy) to individuals or entities who purchase FCVs.

Battery & Energy Storage

State Grid Marks its Come-back on Energy Storage, via its "Digital New Infrastructure" Strategy

State Grid this week unleashed its grand “Digital New Infrastructure” strategy with a high-profiled cloud-based ceremony for signing multiple cooperation contracts. Based on the strategy, the grid operators plan to invest ¥24.7b on various digital (big data, IoT, 5G, A.I related) grid construction projects.

On energy storage, the firm signed a contract (again) with CATL to expand battery storage business. It also inked a new deal with Zhejiang province to develop PV and battery storage integrated EV charging stations.

Energy Iceberg Notes: it is clear now that State Grid has regained its power and ambition in expanding in the battery storage sector since Mao Weiming’s setting up as chairman. It is likely to become the largest investor in the field in China. More about State Grid’s politics: https://energyiceberg.com/chinese-grids-transformation-to-benefit-digital-tech-companies-globally/ 

https://energyiceberg.com/chinese-energy-companies-executive-changes/ 

NDRC Calls for New Investment in Energy Storage in 2020 Energy Security Plan

The National Development and Reform Commission (NDRC) issued 2020’s energy security guiding policy last week, which set out the essential tasks this year to secure energy supply.

Regarding renewable, the policy states the following:

  1. supporting clean energy power on the condition of “consumption security.”
  2. speeding up of renewable subsidy sunset and the construction of series of zero-subsidy wind/solar projects.
  3. Developing integrated hybrid energy projects, including wind & solar power hybrid generation bases, as well as coal-wind-solar-storage hybrid demonstrations.
  4. By the end of 2020, hydropower capacity will reach 340 GW, while wind and solar capacity together will exceed 240 GW.

Regarding energy storage, the policy also imposes new tasks:

  1. Peaker capacity of the country should be able to cover 10% of peak demand by the end of 2020
  2. Continuing coal power plan technical modification (as peaker units); supporting pumped hydro construction.
  3. Further improving auxiliary service pricing mechanism, speeding up auxiliary market construction.
  4. Exploring market/pricing mechanisms for the demand side to pay for auxiliary and peaker services
  5. Encourage storage applications among the generation side, grid side, as well as the demand side. 
  6. Encourage alternative investment in energy storage. 

Energy Iceberg Note:

The document is a comprehensive policy covering multiple dimensions of energy security. Besides renewable and energy storage, the policy also laid out task regarding oil&gas, coal mining, energy transportation and grid construction. Overall, it is still a security policy with a heavy focus on fossil fuel.

Our key takeaways in RE and storage:

Renewable is transforming into a more complex market, indicated by NDRC’s emphasis on hybrid projects with coal and storage elements

Energy storage has become a vital part of China’s energy security strategy, which is new

as Beijing becomes eager to push forward storage development, foreign investment and involvement into energy storage plants in the country becomes an interesting choice. The policy, in that sense, is in line with our analysis on the market last week https://energyiceberg.com/renewable-consumption-policy-impacts/

Yumen of Gansu Province Kicked off a China's Largest Zero-Subsdy Hybrid Renewable-Storage Project, Totalling 2.2GW

The city last week signed a contract with China Electric Power Engineering Consulting Group Corporation and Chongqing Jinke group to develop the country’s largest zero-subsidy wind-solar-storage hybrid project of 2200MW capacity. The project encompasses a 1.8GW wind farm, 200MW solar PV plant and a 200MW storage unit.

Meanwhile, the city also signed with State Grid and Shanghai Electric to jointly invest on and build the 100MW/200MWh storage unit.

Clean Energy Policy

China Will Explore The Utilization of Stranded Coal Mines' Sites for Renewable Projects

The National Development and Reform Commission (NDRC) last week released a 2020 clean coal production work plan. The state economy planner sets to raise further the production standards of the coal mining sector on multiple dimensions. The state planner also encourages the restoration of the coal mining subsidence areas, land reclamation of open-pit coal mines, and the utilization of stranded coal mine industrial sites to develop wind power, photovoltaic, modern agriculture and other industries.

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