Our picks of China clean energy market updates from last week:
- WIND: Guangdong Province introduced the Country’s first local subsidies for offshore wind power, yet industry experts think it is “a drop in the bucket”; Dongfang Electric Wind Power’s floating turbine model completed a pool test.
- Hydrogen: SK, Geely, (and Baidu, allegedly) to form ties on hydrogen business; China National Offshore Oil Corp set up new energy subsidiary, focusing on hydrogen energy project development and hydrogen technology R&D.
- Battery: By the end of 2020, China has put 33.4GW of energy storage projects (including physical, electrochemical, and molten salt heat storage) to operation.
Please scroll down for the eight updates last week.
Contact Energy Iceberg to get to know our research services and information product launch for offshore wind, energy storage, and hydrogen:
Energy Iceberg: to serve as a Knowledge Base of Chinese Clean Energy Policy for Foreign Stakeholders
China National Offshore Oil Corporation (CNOOC) last week launched a subsidiary in Tianjin. The move is an essential step for the company’s transformation to green and low carbon development.
The affiliate has integrated the CNOOC Development Pipeline and the CNOOC new energy technology project team. The former has profound experience in marine engineering and has focused on offshore wind power operation and maintenance (O&M) in recent years; the latter is a research and development company with areas involving lithium battery materials and hydrogen fuel cells.
Last week, the National Development and Reform Commission (NDRC) released a revised 2020 catalogue of encouraged industries in the Western Regions.
The revised catalogue would come into effect since March 1, 2021. The policy clarified that from January 1, 2021, to December 31, 2030, corporate income tax (CIT) for enterprises in the encouraged industries located in the western regions (12 provinces) would be reduced to15%. Specifically,
- Wind and solar PV: Sichuan, Chongqing, Guizhou, Yunnan, Tibet, Gansu, Shaanxi, Qinghai, Xinjiang, and Inner Mongolia.
- Hydrogen energy: Shaanxi (hydrogen O&M), Inner Mongolia (equipment manufacturing, hydrogen processing and manufacturing, fuel cells, hydrogen pipelines, refuelling stations), and Guizhou (hydrogen processing and manufacturing, fuel cells, hydrogen pipeline, refuelling station)
- Energy storage: Shaanxi, Inner Mongolia, Gansu, Qinghai, and Xinjiang.
Guangdong province recently issued a new policy (feedback-inviting draft) to promote offshore wind investment. The southern province became the first region in China to introduce an offshore wind power subsidy after Beijing announced to shelf subsidies for new onshore wind power projects at the start of 2021.
To new policy seeks to ramp up offshore wind installation capacity. It aimed to:
- Have 4GW of offshore wind capacity into operation by the end of 2021, and 15GW by 2025.
- Achieve large-scale production of 8MW+ offshore wind turbines.
- Reach zero-subsidy by the end of 2024.
The local subsidy will be provided to a total 4.5GW projects to come online in 2022 and 2023:
- In 2022, the local government will provide an amount of ¥1500/KW to wind projects put into operation in the same year (for not more than 2.1GW projects).
- In 2023, the local government will provide an amount of ¥1000/KW to wind projects (for no more than 2.4GW).
- From 2024 onward, OW projects shall reach grid parity and sell at a price equal to local coal-fired electricity.
Energy Iceberg Note: it is good news that Guangdong has become the first local government to finally committed to local subsidies. However, the amount appears to be small. The profit margins of projects getting online between 2022-2023 would be much thinner compared to that of projects connected before the end of 2021.
Recently, the customized floating turbine model jointly developed by Dongfang Electric Wind Power and CIMC Raffles has successfully passed a pool test.
The test lasted for one week, with a 1:64 scaled-down model test in a pool of a water depth of 44 meters. Dongfang Electric Wind Power said it would accelerate the development of this floating turbine as planned.
Hydrogen Storage & Fuel Cells
Latest hydrogen fuel cell vehicle (FCEV) sales data showed that in 2020:
- In 2020, a total of 9006 FCVs were sold globally, down 9.1% YoY.
- FCEV sales in the US and China dropped to 937 units (decreased 55% YoY) and 1,177 units (down 57% YoY), respectively.
- Unlike the US market, which was deeply affected by the COVID-19 pandemic; decrease in FCEV sales in China was mainly due to subsidy policy shift and the development of demonstration city policy.
- FCEV sales in South Korea, being benefited from substantial government subsidies, reached 5823 units (up 39% YoY), contributing 65% of global sales in 2020.
SK Group will form a hydrogen business partnership with Geely Auto Group of China, which is thought to be related to projects for fuel-cell electric vehicles (FCEVs) using the gas, according to industry officials, Monday.SK Holdings, the group’s holding and investment company, said it was “in talks with Geely over a partnership in various businesses.”
Though SK did not clarify which businesses it will pursue with the Chinese automotive titan, sources said they are planning to raise a mutual fund of hundreds of billions of won, which will be used to invest in the development of eco-friendly vehicles such as hydrogen FCEVs. Also, establishing a joint venture between the two groups is being considered as an option, they said.
Battery & Storage
Statistics from the local report revealed that by the end of 2020, 33.4GW of China’s energy storage projects (including physical, electrochemical, and molten salt heat storage) had been put into operation. The newly commissioned capacity in 2020 2.7GW. Notably,
- The newly added operational capacity of chemical energy storage reached 1 GW for the first time, reaching 1083.3MW/2706.1MWh (preliminary statistics).
- In 2020, the installed capacity of electric energy storage projects increased 136% YoY, and the cost of electrochemical energy storage systems also broke through the key inflexion point of ¥1,500 /kWh.
Energy Iceberg Note: Check out our previous analysis on China’s energy storage policy
The provincial government of Qinghai last week issued a subsidy program stipulating that:
- Electricity generated by facilities with power production and energy storage capacity will enjoy a ¥0.10/kWh subsidy.
- If more than 60% of a project’s energy storage batteries come from a local supplier, the province will provide an additional ¥0.05 /kWh subsidy.