With relatively less breaking policy news, Chinese new energy market last week has seen the collective releases of company Q1 results. Even though many leading firms (esp. in the wind market) reported highly positive results, more and more signs have emerged showing that the COVID-19 impacts on China’s new energy value chains are perhaps tougher than previously expected.
We shall review the pandemic’s impacts on the new energy industry again soon. (Here is our previous analysis: https://energyiceberg.com/coronavirus-impacts-renewable-in-china/)
Below are the highlights of the Chinese clean energy market that may be of your interest:
- WIND: Goldwind installed the country’s first 8MW prototype in the sea, while Dongfang Electric is approaching a similar milestone for its 10MW.
- HYDROGEN: SinoHytec is poised to become China’s first listed H2 fuel cell company with IPO green-lighted by the regulator; Dongfeng Motors successfully past -20 degree cold start testing for its fuel cell stake.
- EV&BATTERY: battery making leader CATL’s 2019 result suggests a strong momentum of the first despite a market downturn; China Mobile’s 2020 LFP battery tender heralds drastic market competition among storage suppliers; Lithium producers are suffering from oversea order slump.
- Clean Energy Related: China Electricity Council predicted electricity consumption in 2020 would climb by 2% -3% YoY.
Scroll down for our translation of 13 news update. I hope the news could bring you some inspiration for the coming week.
Enjoy your first week in May!
Chinese wind equipment market-leader Goldwind has installed its first 8MW prototype at the Xinghua Bay Phase II Offshore Wind Farm owned by China Three Gorges, in the nation’s largest sea-based deployment yet.
Energy Iceberg Note: background of Chinese OEMs https://energyiceberg.com/china-wind-oems-2010-2019/; OEM R&D Updates https://energyiceberg.com/chinese-oems-turbine-development/
Sinovel Wind Group (Sinovel) announced last week that Shanghai Stock Exchange decided to terminate the company’s listing status. Previously, Sinovel’s trading in shares was halted since 14 Apr after shares have been closed below face value for 20 days.
Sinovel, founded in 2006, was the former No.1 turbine manufacturer in China and once raised to top-2 for its wind share in the world. The firm unleashed an IPO in 2011 in Shanghai stock exchange main board at an issue price of ¥90/share, registering the 20-years highest price record of all IPOs in Shanghai stock exchange. However, business performance continues worsening ever since the IPO.
In 2010 the company registered an operating income of ¥20.3 bn and a net profit of ¥2.856bn. Earlier this year, Sinovel announced the 2019 expected result and a net loss of ¥236-247mn.
Energy Iceberg: product quality and series of safety-related incidents leave to the downturn of the firm’s fortune. And on top of that, multiple lawsuits with suppliers, shareholders, as well as AMSC over intellectual property theft issue add insult to injure.
China’s financial authorities decided to extend the term of tax relief measures targeting corporates in western China for another ten years, as a powerful prop to promote the development and opening-up of the region.
The decision, effective from 2021, will offer a lowered income tax rate of 15% for the designated firms in western regions, according to a recent circular jointly released by the Ministry of Finance, the State Tax Administration and the National Development and Reform Commission. The preferential policy will apply to regions including Inner Mongolia Autonomous Region, Guangxi Zhuang Autonomous Region, Tibet Autonomous Region and Ningxia Hui Autonomous Region, provinces of Sichuan, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, city of Chongqing, as well as Xinjiang Uygur Autonomous Region, and Xinjiang Production and Construction Corps. Wind companies in these provinces and areas would benefit from the plan.
Energy Iceberg: this is a good news to the wind developers, especially since the sunset of fixed feed-in tariff. Read More on China’s current renewable power pricing and subsidy setups. https://energyiceberg.com/china-renewable-power-price/
In 2020 Jan-Apr., Chinese wind market sees 96 projects setting off turbine tenders totalling 8644.8MW. Sixteen OEMs have taken a share in the pie. Among the 96, 12 tenders totaling 3GW are for offshore wind turbines. Shanghai Electric Remain the dominant offshore wind player, taking 1.28GW.
- Jiangsu Longyuan Dafeng H4: 300MW, won by Goldwind
- Jiangsu Longyuan Dafeng H6: 300MW, won by Goldwind
- Fujian Changle Outer Sea Zone C First Patch: 200MW, won by Shanghai Electric
- Jiangsu Rudong H4: 400MW, won by Shanghai Electric
- Jiangsu Rudong H7: 400MW, won by Shanghai Electric
- Zhejiang Guodian Xiangshan 1#: 252MW, won by CSIC Haizhuang
- Zhejiang CGN Chengsi 4&5#: 282MW, won by Shanghai Electric
- Jiangsu Rudong H2 (Tender-1): 200MW, won by CSIC Haizhuang
- Jiangsu Ruddong H2 (Tender-2): 150MW, won by CSIC Haizhaung
- Shanghai Fengxian (Tender-1): 100MW, won by Goldwind
- Shanghai Fengxian (Tender-2): 100MW, won by MYSE
- CGN Huizhou Harbor: 400MW, won by MYSE
Series of solar PV companies reported net losses in 2020Q, while leading players also announced profit drops, amid demand slowdown triggered by COVID-19.
- Tongwei–China’s leading solar cell maker: 2019 net profit was at ¥2.64bn (+30.5% YoY), while 2020Q1 net profit was only at ¥340mn (-29.8% YoY)
- China S.C Technology–a leading automation equipment provider for the solar sector: 2019 net profit at ¥382mn (+24.7% YoY), while 2020Q1 net profit was at ¥86mn （－7.62%）
Hydrogen Storage & Fuel Cells
National Development and Reform Commission (NDRC) and the Ministry of Transportation last week jointly issued a plan for the “high-quality and integrated development” of the transportation sector in Yangtze River Delta region.
The plan proposed measures to promote green and low-carbon transportation by promoting new and clean energy automobiles and ships. The plan also set to spur the region’s replacing its conventional city buses, logistics distribution vehicles to new energy vehicles.
Shanghai Stock Exchange last week green-lighted the initial public offering (IPO) plan of Beijing SinoHytec Co. (SinoHytec), a pioneer of China’s hydrogen energy industry.
SinoHytec intends to raise funds of ¥1.2 bn by the IPO, part of which was intended for building a production facility to manufacture fuel cell engine and develop new products to be embarked in Beijing’s Winter Olympics. SinoHytec estimated to be capable of producing 8000 sets of 30kW and 60kW series fuel cell engines annually by the production base.
SinoHytec was formerly Beijing Qingneng Huatong Technology Development Co. which was founded in 2004 and transformed to the current entity in 2012. The firm was founded upon the technical research team of Tsinghua University, a tech and research pioneer of the Chinese hydrogen industry. SinoHytec’s core products include hydrogen fuel cell engines and the matching DC/DC converter, vehicle controllers, hydrogen systems and so forth.
In 2019, SinoHytec ranked the second-highest for fuel cell system sales domestically.
Dongfeng Motor’s H2Core-50 claimed independently developed, has been successfully passed the startup test at a temperature of minus 20℃ without an auxiliary heat source.
The milestone means that Dongfeng Motor has successfully developed technology and solution for fuel cell cold start, the firm claims. The test was independently carried out by the R&D team of Dongfeng’s Foresight Technology Research Institute in the mid-term testing facility at its Wuhan-based New Energy Park.
The nominal output of the prototype was 55kW, and the volume power density was 3.1kW / L.
IIn response to Shenzhen Stock Exchange’s inquiry over its expansion plans, Shanxi Meijin Energy Co. (Meijin Energy) claimed that the firm has mastered “some of the of hydrogen fuel cell technology, and have made progress in several fuel cell projects” in China. Earlier in April, Meijin Energy unleashed a private placement to raise ¥6.6 bn from private investors.
Less than 1/10 of the capital raised, ¥600 mn, is intended to spend on hydrogen fuel cell stacks and systems production capacity building, while ¥1bn is to support cash flow and ¥5bn to expand its coal-to-chemical capacity.
Meijin expects the fuel cell production construction shall complete in mid-2020. Once done, the firm would have a production capacity of 5,000 sets of fuel cell and 500,000 KW fuel cell stacks annually. Meanwhile, it plans to launch a demonstrative H2 bus line in Qingdao in August.
EV & Battery
Contemporary Amperex Technology (CATL) released its 2019 annual report at the end of Apr, which show robust financial performance:
- it registered an operating income of ¥45.78 bn last year, climbed 54.63% YoY
- net profit attributable to shareholders was ¥4.56 bn, increased 34.64% YoY.
The strong business result is against a market downturn of China’s EV industry. Last year China’s new energy vehicle sales growth dropped for the first time in 10 years. However, CATL’s sales of power battery systems reached 40.25GWh, surging 90% YoY. The surge points to CATL’s rising market share. The sales contributed ¥38.58 bn for CATL last year, with a new-record growth rate of 57.38%.
According to the Ministry of Industry and Information Technology’s (MIIT’s) catalogue of new energy vehicles in 2019, there are more than 1900 EV models equipped with CATL batterie. The firm, thus, accounts for about 41.5% of the power systems of the official recognized EVs, making it the most compatible power battery manufacturer.
Meanwhile, CATL has established business units for storage battery system and lithium battery materials, of which revenues in 2019 increased by 221.95% and 11.5% YoY, respectively.
China Mobile announced the bidding results for its lithium iron phosphate (LFP) battery procurement for all of its 2020 telecommunication projects.
Eight companies won a share including Zhongtian Technology, Jiangsu Haisida, Shuangdeng, Eve Energy Co, Narada Power, Shenzhen Center Power, Coslight Power, and Power Long Battery (PLB).
According to the bidding announcement, China Mobile’s purchase demand for lithium iron phosphate exceeded 1.9GWh, and the price per Wh was about ¥1.2 based on the highest bid price of ¥2.508 bn.
Energy Iceberg Note: as China’s construction of 5G base stations accelerates, demands for new batteries and tiered batteries (recycled batteries) are set to increase substantially. Demands for new batteries could exceed that for tiered products.
Market analysts previously predict the 5G construction will bring 155GWh battery demand. And as the telecommunication market has a relatively lower battery technology requirements, a large group of producers are poised to participate in the market, which has the potential to become a red-ocean competition market.
Background analysis of us on battery supply for the telecommunication sector: https://energyiceberg.com/china-battery-energy-storage-new-momentum/
China’s top lithium producers, Tianqi Lithium and Jiangxi Ganfeng Lithium, both reported net losses in 2020Q1:
- Tianqi Lithium realized revenue of ¥968 mn, fell 27.57% YoY; reported a ¥500.3 mn loss, compared to a profit of ¥111.3 mn in 2019Q1.
- Jiangxi Ganfeng Lithium’s revenue in Q1 was ¥1.079 bn, decreased 18.88% YoY; net profit attributable to shareholders dropped 97% (compared to 2019Q1) to just ¥7.746 mn.
The weak performance reflects the plunge of overseas orders amid COVID-19 outbreak. As of Apr., lithium stockpile in China remains at a high point, but it is likely to rise further in May, analyst Wang Yangwen of Bloomberg said in an interview.
Analysts commonly expected further lowering oversea orders for lithium in May, which will be a stumbling block for the Chinese lithium producers to resume works and lead to the overall weak performance among different companies.
Clean Energy Related
China Electricity Council (CEC) adjusted 2020 power consumption production recently and now expects whole-year power consumption to rise 2-3% compared to 2019, albeit the economy effect by the coronavirus outbreak has yet to exhibit fully.
CEC predicted that:
- Electricity consumption growth in 2020Q2 would rise by about 9% compared with Q1;
- Across 2020H1, electricity consumption growth would bounce from -6.5% in Q1 to -1.5% to -2.5%;
- Whole-year power consumption growth would climb by 2% -3% YoY.