State Council’s policy decision addressing China’s current energy crisis–made in last week’s council meeting–demands a lot of attention. The decision has significant implications on China’s energy policies (at least for electricity) in the next years to come. Some of the previous priorities–i.e. electricity price reduction, coal phase-out–might see some changes in the 14th FYP due to the looming energy shortage scenario.
The impacts of the crisis and the policy decision will be immense to many sectors: coal, renewable, hydrogen, storage…We will provide our take on the future in this week’s EI Analytical.
Some other critical updates of the Chinese clean energy market last week:
- Net-Zero: Digitalization for Renewable is Trending in Investment, as Envision winning a 12GW order tells us.
- Renewables: The World’s First Aquaculture+ Floating Offshore Wind Demonstration Enters into Test Stage
- Hydrogen: China Achieves Major Breakthrough of Fuel Cell Metal Bipolar Plates–the new innovation is free from precious metal and a major milestone for cutting fuel cell costs
Please scroll down to check out the seven updates that we considered noteworthy last week.
For those who do not know us: China Clean Energy Syndicate is a weekly news update project developed by Energy Iceberg. We also offer free analysis on China’s renewable, electricity market, hydrogen, and energy storage. The analytical articles are shared every fortnight. Check out our website to subscribe:
We have mentioned in last week’s syndicate that some provinces have begun to allow raising electricity price (generation-side/wholesale price) amidst the historical power shortage in China. Last week State Council made a new policy decision addressing the regional power pricing new methods during the State Council regular meeting. It also announced key measures to ensure energy supply:
- Coal Resumption: “to encourage coal mines with the capacity-expansion potential to ramp up production as soon as possible; accelerate the commissioning of approved and semi-completed open-pit coal mines, and promote the technical modification and rectification of coal mines that have stopped production according to rules and regulations”
- Coal Power as the Grid Stabilizer: “coal-fired power to fully connected to the electricity grid”
- Confirm the Price Rise & Set the Conditions: price raising is allowed “on the premise of maintaining stable electricity prices for residents, agriculture, and public welfare sectors;” meanwhile, the electricity-trading power prices are now allowed to fluctuate up to 20%–previously the allowed fluctuation (from the benchmark prices) is +10% and -15%
- Higher Prices for High Energy-Consuming Users: Higher-than-20% price raises is possible for high energy-consuming industries, which are not subject to the 20% cap
- Speed up Larget Renewable & Peak-ers Construction: to accelerate the construction of large-scale wind power and photovoltaic bases in the Gobi Desert area and accelerate the construction of emergency backup and power peakers.
- Reconfirm Carbon Capping Measures: curbing the high-energy consumption and heavy-emission projects–an existing policy–is reconfirmed. Nevertheless, projects using renewable power can be somewhat exempt from the capping rule.
Energy Iceberg Note: previous we have an introductory piece on China’s coal-fired benchmark pricing and its development to “benchmark+flutuation” pricng. https://energyiceberg.com/china-coal-power-pricing/
Net-Zero Investment Trend
Envision Digital, a subsidiary of the front-runner of the Chinese turbine market——Envision Group, has successfully won the bid for the annual key project “Digital Production Centralized Operation Management System” of Guohua Energy Investment, the renewable energy investing arm of China Energy Investment Corp (CEIC).
The project covers digitalization IT systems for a total of approximately 12GW wind and photovoltaic capacity. Envision Digital has previously won orders from many leading renewable developers.
Energy Iceberg’s Note: previously, renewable was not required to take part in the electricity trading, and the profit model is relatively simple. However, soon more and more renewable producers would be required to join electricity trading and to take part in providing auxiliary services to the grid. The renewable plants, thus, face the challenge of improving management in terms of data and digitalization.
Digitization is the key for most of China’s renewable assets to improve efficiency and profitability in the next phase. Envision’s strategy indicates the opportunity and investment trend in the market.
Wind & Solar
In the first week of October, China has more than 10GW renewable projects announced results for their competitive allocations.
Notably, Inner Mongolia last week announced the results of guaranteed grid-connected centralized wind power and photovoltaic power generation projects in 2021, including 6.8 GW of wind power and 3.85 GW of photovoltaic power. The projects are all required to be equipped with 15-30%/2h of energy storage capacity.
Previously, Zhangye City of Gansu announced 9 projects totaling 2.4GW of capacity while Shaanxi province has identified 32 projects with a total capacity of 3.9 GW, which will be exported from the region via Shaanxi-Wuhan point-to-point direct-current ultra-high-voltage power grid.
The demo project combining artificial reef aquaculture and floating offshore wind turbine by Longyuan Power, a subsidiary of the state-owned China Energy Investment Corp. (CEIC), recently was officially launched in the State Key Laboratory of Ocean Engineering of Shanghai Jiaotong University
This move signifies the world’s first offshore+acquaculture demo project official enters into the model test stage, the firm claimed.
Energy Icerberg’s Note: Read more about our previous introduction of this project.
The world’s largest solar power developer, State Power Investment Corporation (SPIC), sets an ambitious photovoltaic target—achieving 80+GW cumulative installed PV capacity by 2025— for its 14th FYP.
As of the end of 2020, SPIC has :
- A total power generation capacity of 176 GW, of which 56.09% is from clean energy (up 5.52% from the beginning of 2020)
- Renewable energy installed capacity of 60.49 GW–30.88 GW of wind and 29.61 GW of photovoltaic.
That means SPIC needs to add 50+GW PV capacity during the 14th FYP period.
Previously, Deputy chairman of China Photovoltaic Industry Association, WANG Bohuo, predicts that 70 GW of new PV capacity will be added annually from 2021-2025; a more positive scenario is 90 GW each year (which is seemingly too conservative).
The installed capacity of SPIC’s PV generation has increased six times in five years and currently exceeds 35 GW, ranking first in the world. SPIC is now investing in perovskite/crystalline silicon tandem cell technology, with the goal of reaching the world’s leading level by 2025.
Hydrogen & Fuel Cells
Shanghai Zhizhen New Energy (Shanghai Zhizhen) announced the launch of a new type of carbon-coated metal plate product, which would reduce the cost of the plate by 40%-50% while increasing the expected life span of the fuel cell metal bipolar plate engine to 20,000+ hours. The new product will be capable of mass production with an annual output of one million pieces soon.
The price of metal bipolar plates accounts for about 10%-15% of the cost of most high-power fuel cell engines. For metal bipolar plates, the cost of coating accounts for about 50% of the cost of the entire metal bipolar plate, and the coating determines the key to the life of the metal bipolar plate. Unlike the precious metal coatings that are commonly used in similar products, the carbon coating route by Shanghai Zhiahen is a non-precious metal one. It took Shanghai Zhizhen 5 years of R&D and practice before it steadily mastered this new technology.
The municipal government of the Foshan City of Guangdong Province recently issued a new policy to support the operation of fuel cell freight vehicles (FCFVs) in urban distribution (feedback invitation draft). The policy set financial incentives as follow:
- The maximum annual subsidy for fuel cell trucks is ¥125,000/vehicle.
- Subsidies for light-duty FCFVs (total mass less than 4.5 tons), medium-sized FCFVs (total mass 4.5 tons and above, less than 12 tons), heavy-duty FCFVs (total mass 12 tons and above), and hydrogen fuel cell refrigerated truck are set to ¥1.5/km, ¥2.0/km, ¥2.5/km, and ¥2.3/km, respectively.
Chinese battery giant CATL held a 34% market share in the global electric vehicle (EV) battery market from January to August, according to SNE Research.
South Korean rival LG Energy Solution controlled 21.5% during the same time period, while Japan’s Panasonic held 11.1%.In terms of capacity, LG Energy Solution moved 39.7GWh during the time period, up 154% from the same time period a year ago.
SK Innovation shipped 8.8GWh, ranking fifth, while Samsung SDI moved 7.9GWh, ranking seventh. In August alone, a total of 25.2GWh of batteries were used in EVs, up by 2.2 times year-on-year.
Total battery usage from January to August this year was 162GWh, an increase of 2.4 times from the same time a year ago.