The hydrogen fuel cell market continues to see exciting news popping up every single week–both on the central and regional government levels. But hydrogen is not alone–overall, the cleantech market in China shows great momentum, empowered by the nation’s 2060 carbon neutrality target.
H2 Fuel Cell: The State Council hinted new subsidy plans to promote infrastructure investment for both EVs and FCVs–substances for the FCVs are unclear yet. Meanwhile, the Sichuan NEV development plan last week provides a perfect example of how regional governments would subsidize the local fuel-cell industry development–in order to secure the national subsidy.
Solar: China Energy Investment Corp’s new corporate strategy is worth noticing. The largest wind developer is bullish on solar PV construction now, a reflection of the market trend, which is shifting from wind to solar.
EV & Battery: more signs show that LFP battery is making a come-back to compete with NCM in the EV sectors.
Renewable: State Council’s 14th FYP research shows 530GW and 550GW installed wind and solar capacity to be reached by 2025. We also provide you with the recent data of China’s solar LCOE.
Please scroll down for 10 updates of last week’s wind, solar, hydrogen, battery and the power markets.
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State Council last week approved a Planning for the Development of the New Energy Automobile Industry in its standard executive meeting. The plan includes three key messages:
- The Chinese government will continue promoting infrastructure construction for EVs and FCVs. Financial incentives would be established for building charging piles and battery swapping business model.
- The Planning encourages international cooperation with global partners in New Energy Vehicles (NEVs).
- Starting in 2021, NEVs should account for >80% of the new vehicles in public transportation, taxi and logistics sectors in China’s ecological preservation and pollution-combat special zones.
A draft amendment of the Electric Power Law was recently open for comments. The amendment sets to coordinate clauses in the Renewable Energy Law and the Electric Power Law, to ensure the “guarantee purchase” mechanism for RE power (可再生能源保障性收购制度).
The amendment plans to add new clauses to require grid companies to:
- Timely connect renewable power to the grid and ensure connection operation, under the premise of safe operation of the power grids.
- Provide non-discriminatory, barrier-free grid connection services.
Energy Iceberg’s Comment: Guarantee purchase and prioritized purchase of renewable power have been two fundamental principles set by China’s RE Energy Law. However, these mechanisms were somewhat conflicting the rules set by the current Electric Power Law, which emphasized on power grid’s obligations/priority in system security. As a result, in practices, the “guarantee RE purchase” was not strictly followed.
The change in Electric Power Law reflects changes already taken place in the industry in the past two years. And it would provide stronger support for the RE operators.
A research affiliate of State Grid, Global Energy Interconnection Development and Cooperation Organization (GEIDCO), recently released a forecast on wind and solar installed capacity during the 14th Five-Year Plan period:
- 2025 onshore wind: 506GW
- 2025 offshore wind: 30GW
- 2025 mounted PV: 371.47GW
- 2025 distributed PV: 180GW
- 2025 CSP: 5.36GW
Norway-based OIM Wind, together with its financial partners, has signed an EPC contract with the CIMC Yantai Raffles Offshore shipyard in China for the construction of an installation vessel capable of installing giant next-generation offshore wind turbines. The vessel, currently referred to as BT-220IU Wind Installation Unit, will enter into service by the end of 2022 and will be operated by Norwegian company OSM Maritime.
LNG-powered, battery-backed up, and made for 15+ MW wind turbines
The new vessel will be among the largest of its kind in the industry, according to OIM Wind, with a capacity to transport and install four complete sets of the future “XXL” wind turbines, including full height towers that reach more than 130 metres.“These may be larger than the upcoming GE 13MW and Siemens 15MW turbines, which will be operation from 2023 onwards”, OIM Wind said.
China Energy Investment Corp (CEIC) published its new corporate strategy last week, which eyes on adding 25-30GW PV capacity in the coming five years (2020-2025). By 2025, the firm sets to see PV account 7%-8% of the group’s total power capacity mix.
As of 2019, the power mix of the group is as followed:
- Thermal: 184.65 GW, accounting for 15.5% of China’s total thermal capacity.
- Wind: 41.16 GW, accounting for 19.6% of the country’s total.
- Photovoltaic: 1.339 GW.
Energy Iceberg Comment: as we previously predicted, Chinese energy SOEs are moving from wind investment to solar. See our report: PV market is the new battlefield.
Since Jan 2020, there are 22 companies/enterprises have signed clean energy investment agreements with a total value of ¥300b. Among these deals, more than 39GW are photovoltaic power plants. And SOEs are leading 32GW, or 83%, of these projects.
Previously, SOEs have been more interested in wind investment, instead of PV.
China Photovoltaic Industry Association recently releases an analysis on the LCOE (Levelized Cost of Electricity) of photovoltaic projects. According to the report:
- In 2019, the average annual utilization hours of photovoltaics nationwide were 1169 hours, and the construction cost of photovoltaic power plants is ¥4.5/W. Therefore, the PV LCOE is ¥0.44/kWh. [To Compared: The national average desulfurization coal-fired LCOE is ¥0.3624 /kWh.
- In 2019, PV projects (of 1800h, 1500h, 1200h, and 1000h annual utilization hours) were estimated at ¥0.28, ¥0.34, ¥0.42, and ¥0.51 per kWh, respectively.
- Conclusion: PV power is expected to reach grid-parity in most regions in China after 2021.
Hydrogen Storage & Fuel Cells
Southwest China’s Sichuan Province recently issued a development planning on NEVs and fuel cell vehicles (FCVs). The plan averred that the government would support the R&D of critical components in hydrogen fuel cell systems, electrolysis, and gas storage equipment.
The plan promised to provide fiscal incentives for fuel cell R&D and consumption:
- The province would provide a one-off reward (<¥5m) to fuel cell R&D companies in the region.
- A maximum of ¥5m will be rewarded to fuel-cell companies whose annual supply reaches 10MW (in the first year). A maximum of ¥1m will be rewarded to companies with +20% YoY production increase.
- The province encourages cities to carry out FCV demonstrations in public transportation and logistic sectors. The province sets to provide up to ¥40m to companies carrying out such pilot projects.
Energy Iceberg’s Note: this is one of the first examples of the regional subsidy to the fuel cell industry against the backdrop of China’s 2020 hydrogen subsidy policy. Our report of the policy: 2020 China Fuel Cell Subsidy Design.
Sinopec North Energy, a joint venture of Sinopec and Huayi Company of Dalian Free Trade Zone, last week began to build the country’s first “5-in-1” hybrid fueling station. The station will combine H2 fueling, gas and diesel fueling, EV charging, liquefied natural gas (LNG), and PV power. Construction is scheduled to end this year, and commercial operation is set to take place by the end of 2020.
The total investment of the project is ¥23m.
Investigation data from Gaogong Industry Institute (GGII) revealed that:
- As of May 2019, the price range of domestic hydrogen fuel cell stacks was ¥5000-6000/kW and ¥6000-8000 /kW–for purchase orders of >100 units and that of <100 units, respectively.
- That price range has dropped to ¥3000-4000/kW by Aug 2020, down 33%.
Energy Iceberg’s Note: if the +30% cost reduction speed continues, industry experts expect the domestic fuel cell manufacturers could be subsidy-free in 4 years.
EV & Battery
Tesla has updated the price of Model 3 in China (after government subsidies):
- Model 3 Standard Range Plus: now ¥ 249,900 down from ¥ 271,550
- Model 3 Long Range RWD: now ¥ 309,900 down from ¥ 344,050
The price adjustment of the Model 3 Standard Range Plus was mainly due to the replacement of nickel-manganese-cobalt (NMC) battery with cobalt-free lithium iron phosphate (LFP) batteries provided by Contemporary Amperex Technology (CATL).
According to calculations by industry organizations:
- At current prices, cobalt-free LFP can reduce costs by 65-72% compared to NMC.
- Considering the limit calculation of sharp drop in cobalt-free and NMC, the cost of using cobalt-free LFP is still significantly lower than that of NMC.