Beijing’s top authority last week sent a clear–but unexpected–signal that the electricity reform would continue, after two years of limited progress. It seems that the regulator would still focus on the grid companies in the coming reform. State Grid, in particular, is required to spin off its critical manufacturing assets.
We remain cautious about the future trajectory of the reform. While asset unbundling would help to open up opportunities for private/foreign suppliers in the electricity market. But any near-term effect is doubtful. And Beijing’s short-term demand on the grid operators (such as cutting electricity price) conflicts with its long-term reform goal.
Besides the update on power policy, our takes of the vital market updates last week:
- Wind: nothing new but installation rush, which gave turbine makers Ming Yang, DEC and others major revenue boost and also led to the second offshore accident incident in Guangdong. The potential quality issues in China’s offshore wind market after the dash are concerning.
- Solar PV: yet another major production expansion news–from JA Solar again.
- Hydrogen: both China Huaneng and China Huadian have some update on their power-to-gas projects.
- Energy Storage: the country’s largest battery energy storage project kicks off–presented by State Grid, again.
Please scroll down for 12 updates of last week’s wind, solar, hydrogen, battery and the power markets.
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State Council’s executive meeting chaired by Premier Li Keqiang last week decided that China will take solid steps in implementing the three-year action plan for state-won enterprises reform.
The meeting conveys that energy infrastructure/system operators (oil&gas pipeline and power transmission companies) should continue to reform by providing open & equal third-party access.
Regarding the grid companies:
- Their assets falling in the “competitive market” scope–such as grid equipment manufacturing– should be unbundled.
China has two major grid operators (State Grid, CSG) and a critical regional grid operator. Of the trio, State Grid is the one with multiple equipment manufacturing companies, which currently dominate the market. These State Grid subsidiaries include NARI Group (南瑞), XJ Group (许继), Pinggao Group (平高), Shandong Electrician Electric Group (山东电工电气) and State Grid Information & Telecommunication Co.(国网信通).
Energy Iceberg Note: Industry sources suggest that the above five subsidiaries will be partially or completely unbundled soon. The unbundling plan is in the process of making.
A major incident during monopile installation was reported at CGN’s Shangwei Houhu project. The crane boom of installation vessel Yu Hang Qizhong 58 collapsed during piling, due to suspected damage to a key component of the lifting brake.
This is the second major vessel issue in China this summer; earlier in June new build jack-up Zhen Jiang suffered engine flooding when leg extraction failed and was subsequently scrapped.
Energy Iceberg’s Additional Info:
No casualty is reported so far. Causes of the incident are inconclusive. Vessel owner claimed that it is likely to be caused by “pile running” during installation. It denied the accident is due to equipment malfunction.
Dongfang Electric recently received a 200MW order for its double-digit offshore wind turbines. The order is from Fujian Energy Group for its Changle Outer Sea Zone C 200MW Project. It is the largest order for the firm’s market-leading 10MW turbine since it came off the production line.
The first order was 100MW from China Three Gorges (CTG), for its Changle Outer Sea Zone A project.
The prototype of the 10MW installed n CTG’s Xinghua Bay Phase 2 has been reportedly performing well.
Mingyang Smart Energy (MYSE) last week announced to expect a net profit of ¥800-900 mn from January to September this year, up 55.76-75.23% YoY. Amidst China’s offshore wind installation dash, orders in hand remain at a high level, the firm said.
Energy Iceberg Note: MYSE, Shanghai Electric, Envision and Goldwind are the clear winner of this year’s offshore wind installation dash.
JA Solar last week announced to invest ¥10.391b in expanding the integrated production capacity of silicon wafers, batteries, and modules. The announcement marks JA Solar’s second “10 billion-size” investment plan this year.
In Feb, JA Solar unleashed an ¥11b investment plan to build a new manufacturing complex and to ramp up capacity in an existing plant. The new complex, to be built at Yiwu Information Optoelectronic High-tech Industrial Park, will be of 10GW solar cell production and 10GW solar modules capacity. Construction of the complex is scheduled to carry out in two phases: the initial stage is to develop 5GW solar cell + 5GW modules by 2021. And the remaining 5GW + 5GW is set to start operation by the end of 2023.
Hydrogen Storage & Fuel Cells
A senior official of Shanghai city last week revealed that Shanghai is soon to release an innovative development plan for FCV at the International Hydrogen Fuel Cell Vehicle Congress (FCVC). The city envisions to:
- build up nearly 100 hydrogen refuelling stations, 30 of which will be completed and put into operation by 2023.
- have 10,000 hydrogens FCVs in operation by 2023.
China Huadian Corporation (Huadian) and Weichai Power last week entered into a cooperation agreement on hydrogen energy development.
Besides the deal with Weichai, the power generation company revealed that it had concluded a strategic cooperation deal with Shenzhen Kaihaoda Group earlier in Jun. The duo will jointly invest in building a photovoltaic based power-to-gas project in Weifang, of Shandong province.
Energy Iceberg Note: This is Huadian’s first PtG project. Currently, there is some 10 wind power based electrolysis PtG project ongoing in China, all of which kicked off since late last year.
Dongfang Electric Hydrogen Fuel Cell Technology (Dongfang Hydrogen)–currently 100% owned by Dongfang Electric Group– last week announced to issue new shares to investors to raise funding.
The move is set to introduce new capital, by teaming up with Three Gorges Capital Holdings, Zhongtian Bishui Capital Holdings, and Dongfang Hydrogen Fund. Exact raising target has not been announced. The funding raised will be spent on fuel cell stake technology R&D.
Energy Iceberg Note: this is a critical move of Dongfang Electric in the hydrogen fuel cell sector.
TÜV SÜD, a global testing, certification, inspection and training provider, recently provided China Hunaneng Clean Energy Research Institute (CERI) with a test report of a wind power dynamic electrolysis hydrogen production system. This is the first time that TÜV SÜD has issued a test report on a renewable energy electrolysis hydrogen production facility in China.
This test verified the energy consumption, energy efficiency value, gas purity, and stability of the system’s dynamic operation of the wind power dynamic electrolysis hydrogen production system of CERI, laying the foundation for the system to be commercialized.
SAIC Motor Corporation, a major Chinese automaker, earlier this month released SAIC MAXUS MAXUS EUNIQ7–claimed as the world’s first fuel cell MPV.
The firm also becomes the first automotive company in China that set up a hydrogen strategy.
In the five-year strategy, the company eyes on, by the end of 2025:
- Launching at least ten models of hydrogen-fueled vehicle.
- Producing and selling 10,000 fuel cell cars, with a team set up for FCV R&D.
- Securing 10% of the Chinese FCV market share.
Battery & Energy Storage
The local government of Xiapu County of Fujian Province recently issued an announcement to initiate land acquisition for the gigawatt-level Ningde Xiapu Energy Storage Project by Neo Lithium Co.
Neo Lithium is a joint venture established this Apr by Contemporary Amperex Technology (CATL) and State Grid Integrated Energy Service Group Co., a wholly-owned subsidiary of State Grid with register capital of ¥40 mn. Neo Lithium is set to be a battery storage developer. The company is currently promoting three energy storage projects in Fujian:
- The gigawatt-level Xiapu Energy Storage Project in Ningde City: This project is the largest energy storage project in China.
- The gigawatt-level Zhangpu Energy Storage Project in Zhangzhou City: 150MW/300MWh.
- The gigawatt-level Fuqing Energy Storage Project in Fuzhou City: 150MW/300MWh.
Contemporary Amperex Technology (CATL), China’s top electric vehicle battery maker, is poise to establish a perovskite research team to set foot in the photovoltaic sector. Industry sources revealed that CATL had been trying to recruit perovskite researchers from competitor GCL Poly’s Nano team. However, the effort so far has yet to yield result.
Perovskite is becoming a hotly-pursued area in the photovoltaic market, with growing interests from both the scientific research and commercial sectors. The following companies have set up special teams for the material R&D:
Microquanta Semiconductor (杭州纤纳光电), GCL Poly Nano (协鑫纳米), Oxford PV (牛津光伏), Wuxi Jidian Optoelectronics Technology (无锡极电光能), Perovs (杭州众能光电), Zhijing Technology (致晶科技), Ly-Solar (上海黎元新能源) and Hunaneng Clean Energy Research Institute (华能清洁能源技术研究院).