Renewable Hybrid “Great Leap Forward”

The Chinese renewable market is lurching into new territory. 

In the past months, enthusiasm is rising high to develop centralized renewable power complexes that are bundled with various energy storage solutions.

At least a dozen of juggernaut-size “wind power plus X” projects have taken place. 

Unlike their predecessors in 2010-2015, these GW-size wind power complexes all incorporate with various energy storage applications—either battery or hydrogen power-to-gas units.

A new hype has come into being to build such “generation-grid-storage-load-following” hybrid renewable projects. 

Most notably, these projects are highly concentrated in several wind-rich northwestern and southwestern provinces, which have been struggling with severe renewal curtailment issues for years. 

With the new construction momentum, we may soon run into yet another RE curtailment period. 

It is difficult to believe the existing energy storage units could completely solve that looming scenario. 

China’s Renewable Hybrid “Plus” Projects

In just a month, tens of gigawatt size “renewable plus” hybrid complexes have announced updates, some of which have broken ground or confirmed investment decision. 

These projects are typically located at the wind-rich northern provinces such as Inner Mongolia, Hebei, and Xinjiang. However, some emerging production regions like Yunnan and Guangxi also entered the stage with some ambitious plans.

What are the “hybrid” combinations? The below project list provide a snapshot of the current hybrid movement: 

  • Wind+CSP+Heat Storage:  China National Nuclear Corp (CNEC Huineng) and Shanghai Electric joined forces and announced to start building a 2GW “Wind-Solar-Heat-Storage” hybrid project in Alasa of Inner Mongolia province. The total investment cost is estimated at ¥16.7B. 
  • Wind+Solar+Battery: CNEEC cemented a deal totalling ¥1.2B with Guangxi government to build a 2GW “Wind-Solar-Storage” hybrid integrated plant at Guigang city. The plant consists of 20MW wind, 1.8GW solar as well as 200MW/40MWh battery storage unit. Total investment  
  • Wind+Solar+Thermal+Battery: in Liaoning, State Power Investment Corp (SPIC) concluded a business contract with the local government to build a “Wind-Solar-Thermal-Storage” demonstration project. 
  • Largest” Wind+Solar+Battery: China Three Gorges begins to build the phase 1 of a “world’s largest” “generation-grid-storage” hybrid complex, which will eventually host 2.7GW wind, 300MW solar PV, and 880MW battery storage units. The project is located at Ulanqab of Inner Mongolia. Ulanqab is already China’s largest wind power production hub, where the world’s largest single wind power plant (8GW) is also under construction.  
  • Wind+Solar+Hydrogen: Windey, a local turbine OEM, announced to invest in Baicheng for yet another “Wind-Solar-Hydrogen-Storage” integrated complex. The exact size of the project is unclear yet. Notably, Baihcneg, a city in Jilin province, is keen on power-to-gas development, already approving four other such projects initiated by Sungrow, CGN, Huaneng, and SPIC. The city aims at achieving 20GW wind, 15GW solar, and over 1mt hydrogen production capacity by 2035. 
  • Wind+Solar+Battery+Manufacturing: another turbine supplier Ming Yang Smart Energy kicked off its “Thermal-Wind-Solar-Storage-Manufacturing” integrated demo at Tongliao, Inner Mongolia province. The plan would build 1.7GW wind, 300MW solar, as well as a 320MW/960MWh battery storage unit. 
  • Wind+Solar+Hydrogen: Guohua (a CEIC subsidiary) release an equipment tender for a “Wind-Solar-Hydrogen-Storage” plant (phase 1). The project appears to be located at Chicheng of Zhangjiakou, Hebei province. 
  • Wind+Solar+Pumped Hydro: CTG is also in talks with Shanxi government to build a 2GW hybrid plan consist of the turbine, PV as well as pumped hydrogen storage unit—a more traditional combination. 
  • Coal+Power+Wind+Solar+Oil+Petrochemical 2020.06: separately, Hami of Xinjiang autonomous region is planning a national demo project that combines coal mining, renewable power production, oil&gas production as well as petrochemical (or coal-to-chemical) production units. 

Clearly, these are only the projects that we knew. More of such mega hybrid projects are under development. 

We are witnessing a “great leap forward” of the renewable hybrid movement. 

China’s Renewable Hybrid Hype: Features

There are four distinct features of the current renewable hybrid construction moves: 

  • Wind Construction the Mainstream: most developers opt for wind construction as the “basis” for such hybrid projects.
  • Green Hydrogen Agenda Speeding Up: green hydrogen is likely to take a front-row seat of the movement. Renewable developers show collective interest in investing in green hydrogen applications. Commercialized green H2 projects—previously expected to come after 2025—will arrive much earlier.  [READ MORE: our analyses of Chinese Green Hydrogen Perspectives & Project Reviews]
  • Another Round of Project Grabbing: power developers are under pressure to grab projects in the current movement. That means investment returns of such projects may be compromised. After this round of wind project grabbing, however, it would be challenging for the wind industry to find new growth momentum. 
  • Local Government and Leading Power Developers the key Players: all of the five major power utilities and the key wind power players (such as CGN and CTG) are taking actions in the movement. Most of the development is expected to take place in the traditional renewable production regions such as Inner Mongolia, Jilin, Hebei, Xinjiang, and Qinghai.

Policy Dynamics behind Renewable Hybrid 

A policy issued by China’s energy regulators this August sets the stage of the mega hybrid movement. 

The policy, entitled Guideline on “Wind-Solar-Hydro-Thermal Integration” and “Generation-Grid-Load-Storage Integration” Development, was issued by the National Development & Reform Commission (NDRC) and National Energy Administration as feedback investing draft. 

The “Two Integrations” concept—sounds like a handful—point to is Beijing’s current power policy priority. 

That is to develop flexible generation sources backed by adequate storage capacity or local power demands. 

Ultimately, the “Two Integrations” is meant to address three policy targets: 

The policy seems to offer a perfect solution for all three targets, by bundling renewable power development with new clean-tech applications. 

Conclusion

LFP & Electrolysis to Benefit

The “Two Integrations” policy is, especially, good news for the nascent energy storage and green hydrogen suppliers. Battery manufacturers in China (especially LFP-based players) and electrolysis equipment & technology leaders.

An Opportunity for International Hydrogen Players

While the growth of the battery demand would mostly lead to financial gains of Chinese battery suppliers. The nascent green hydrogen market is a land of opportunity for international players. We have already seen that Siemens, Shell, and others taking speedy actions.

The Next RE Curtailment Struggle Brewing

However, the new policy also triggers local governments to revamp their mega renewable construction plans. 

The heated investment enthusiasm could easily lead to yet another national renewable curtailment struggle. It is highly questionable whether the existing battery storage and green hydrogen capability could cope with such renewable expansion. 

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