As many companies released their half-year results and consultancies unleashed mid-term reviews, this week’s Clean Energy Syndicate is data-rich. We have summarized:
- PwC’s review on the power sector M&As in China
- China Wind Energy Association’s offshore wind data 2020
- WFO’s offshore wind report (& comparison to NEA’s official data)
- Hydrogen investment 2019/2020 data
- MIIT’s battery production statistics
- Woodmac’s battery report’s key findings
Numbers aside, we found two signature deals in the hydrogen market last week worth of noticing:
- China’s offshore hydrocarbon producer CNOOC shows interest in offshore wind power-to-gas: the NOC’s Shanghai subsidiary is in charge of offshore wind development. And recently this affiliate announced an offshore power-to-gas research
- China Datang kicked off a solar-based power-to-gas project: this appears to be the first green hydrogen project initiated by China’s power utilities
Both projects suggest a raising interest from the “major energy players” on green hydrogen. While just a year ago, there is barely any actions in that sector.
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PwC last week released a report regarding China’s power industry mergers and acquisitions deals of H1 2020. Regarding the top-10 M&A transactions:
- Six are renewables related assets
- Top-4 deals are all related to new energy sectors, including new energy vehicle batteries, offshore wind and onshore wind.
- All but two are domestic transactions, of which the total value is at ¥39.1bn–the highest record since 2016
The top-3 M&A deals are:
- 2020/05/29: Volkswagen invested in Guoxuan Hi-Tech, ¥8.712bn (EV & battery related).
- 2020/02/26: China Energy Investment Corporation (CEIC) and Électricité de France (EDF) invested in Dongtai Wind Power Project, ¥7.928B (Offshore wind related).
- 2020/06/01: Huadian Corp. acquired Hong Kong-listed new energy subsidiary Huadian Fuxin (Renewable listed company privatization).
Chinese Wind Energy Association (CWEA), Global Wind Energy Council (GWEC), and Shanghai Electric Wind Power Group (SEWPG) last week jointly released a China’s offshore wind market review.
The following is a summary of data regarding China’s provincial-level offshore wind power installed capacity, OEMs and developers installed capacity.
- Globally, 2,535 MW of offshore wind was put into operation during the first half of the year, according to World Forum Offshore (WFO).
- Some 57 per cent of the global offshore wind capacity currently under construction is in China, where offshore wind farms totaling 4.6 GW are now being built.
- China currently ranks third globally for cumulative installed offshore wind capacity. But 2020H1 China added 1.4GW new OW capacity. Current cumulative totals at 6.4GW.
Energy Iceberg Note：WFO’s data concerning China’s offshore wind market is slightly different from the data released by Chinese authorities. According to grid-connected capacity data released by National Energy Administration:
China’s cumulative installed (grid-connected) offshore wind power capacity has achieved 5.93 GW by the end of 2019.
The incremental installed capacity of offshore wind reached 1.06 GW in H1 2020.
The total installed capacity of offshore wind nationwide has reached 6.99 GW by the end of Jun. 2020. That means China has already more than 7GW of offshore wind installed capacity.
Hydrogen Storage & Fuel Cells
China National Offshore Oil Corporation (CNOOC) recently kicked off a tender to seek a contractor to conduct technical and economic research of offshore wind power-to-gas, a strong signal of the firm’s intention to step into the green hydrogen sector.
The research project will be carried out from Sep. 2020 to Jun. 2021, with the following scopes:
- offshore power-to-gas technical solution research
- offshore wind and hydrogen production matching research
- offshore hydrogen storage and transportation research
Statistics revealed that as of July there were more than 50 public investment events in the hydrogen energy industry in 2020, with a total nominal investment of more than ¥130 bn, up YoY more than 30%. To break it down:
- Types: industrial parks and direct investment are still the main destinations for funds, accounting for 53% and 36%, respectively.
- Distribution: Inner Mongolia, Guangdong and Shanxi and other provinces that rely on large-scale hydrogen production projects ranked the top-three regarding investment amount.
- Sectors: The increase in investment amount mainly focused on upstream hydrogen production equipment and downstream hydrogen fuel cell vehicle sectors.
A subsidy of China Datang, one of the five largest power conglomerates, announced that it would build a 6MW Solar-based hydrogen production demo project in Datong City of Shanxi Province.
Energy Iceberg Note: Data shows that currently there are at least 18 solar-based hydrogen production projects under construction in China. The number of solar-based hydrogen production projects have been soaring since last year.
Huajiu Hydrogen Energy Co. (Huajiu Hydrogen) recently announced to secure a hydrogen energy integration project. The project is claimed to be “the first industrial-scale hydrogen energy integration project in China that equipped with liquid hydrogen technology.”
The project plans to build up high-pressure hydrogen and liquid hydrogen facilities in the petrochemical industry cluster in Jili District of Luoyang City (Henan province). Jiangsu Guofu Hydrogen Energy Technology Equipment Co. is the supplier of liquid hydrogen technology to the project. The H2 gas is supplied by Luoyang Lianhua Hongda Industry Co.
- The total investment amount is estimated at ¥280m.
- The first phase of the project is designed with 20 ton/d high-pressure hydrogen and 8.5 ton/d liquid hydrogen.
- The first phase of the project, including both high-pressure H2 production and liquid H2 production, is expected to start operation by Dec. 2021.
Energy Iceberg Note: China used to have no industrial/commercial liquid hydrogen project. But in 2020, at least three of such projects have been announced in 2020, including:
Hongda Xingye 30,000 ton/y project, Inner Mongolia
SPIC Hunan Nuclear 60 ton/d project, Yueyang of Hunan
Zhejiang Energy Co. and Jiahua Energy Chemical Co 1.5ton/d project
EV & Battery
Ministry of Industry and Information Technology (MIIT) last week released data regarding the battery production from Jan. to Jul. 2020:
- The output of lithium-ion batteries registered ¥8.84 bn, dropped 0.5% YoY.
- The output of lead-acid batteries registered 117.758 million kVA, up 9.1% YoY.
- The operating income of battery manufacturing enterprises was ¥379.15 bn, down 8.7% YoY, and the total profit realized was ¥15.62 bn, decreased 4.6% YoY.
A recent report by Wood Mackenzie stated that:
- Global lithium-ion cell manufacturing capacity would rise fourfold to 1.3 TWh in 2030 (compared to 2019).
- The Asia Pacific accounts for 80% of the global manufacturing capacity. The dominance of Asian players is likely to continue in the next 10 years, as LG Chem, CATL, Samsung SDI and SK Innovation continue to expand.
- Production capacity in China is expected to double from 345 GWh in 2020 to more than 800 GWh by 2030.
- China’s battery subsidy scheme would benefit not only the local producers but also international manufacturers such as LG Chem, Samsung SDI and SK Innovation.
- European market currently accounts for only 7% of global capacity. But Asian manufacturers are investing heavily here–for example, CATL’s Erfurt Plant, LG Chem’s Wroclaw Plant, and Samsung SDI’s Goed Plant.
The two power grid companies and the “Big Five” power generation companies released their H1 report in the past week. Impacted by Covid-19 outbreak, unsurprisingly, all reported year-on-year revenue drops. But the single-digit income drops were milder than the market expected.
State Grid, China Southern Power Grid and China Guodian (of China Energy Investment Corp)reported massive profit drops, impacted heavily by Beijing’s decision to cut electricity price.
Energy Iceberg Note: Guodian is the only among the listed firms of the “Big Five” reported a profit drop. The relatively high percentage of coal-fired asset is likely the reason.