New Threats to RE Investment–China Clean Energy Syndicate

Several first-of-this-kind renewable, hydrogen and storage projects were announced to reach critical milestones. Our picks of what happened in the China clean energy market last week include:

  • RE Regulation: a critical renewable pricing policy is unleashed by NDRC, possibly putting assault to the injures of China’s renewable developers. The “833” policy marks the renewable market entering a new phase, in our view.
  • Policy & Energy Storage: meanwhile, Hubei province announced a new renewable policy that set precedence. The policy publically announced to exchange (renewable project) resource for (manufacturing) investment–noteworthy.
  • Hydrogen: solar PV company LONGi continues its aggressive approach investing in green hydrogen, with another project launched; State Grid and Envision are working towards an interesting fuel cell CHP project for a fruit farm in Zhejiang;

Please scroll down for the 9 updates from last week.


RE Policy

Renewable power Enters the “Post Grid-Parity” Phrase, as NDRC’s new Policy Delivers a Crushing Blow

China’s National Development and Reform Commission (NDRC) last week announced a new pricing policy regarding wind and solar projects. The “No. 833” policy reinstates measures regarding zero-subsidy for onshore projects and delivered new measures regarding offshore wind and others:

  • Subsidy Sunset for all onshore wind, onshore photovoltaic (both mounted and commercial rooftop) approved from 2021this decision was already made back in 2018
  • Subsidy Sunset but local subsidy allowed for offshore wind and CSP: local government determines the wholesale (on-grid) price, but grid companies will (only) pay for the grid-parity price.
  • Market competitive pricing for all new renewable starting from 2021: on-grid prices for all renewable projects will be equal to that of the local coal-fired power benchmark prices (meaning: grid-parity). Still, wind and solar are encouraged to take part in electricity market trading.

The policy will enter effect on August 1.

Energy Iceberg Note: these measures are not totally surprising and were hinted at by the regulator previously. Still, China’s renewable developers face the harsh reality now, with the inevitable price drop (on top of subsidy sunset) and the increased material/equipment prices. 

The measure marks a full stop to China’s renewable subsidy period and the transition to the full market competition era. 

China’s renewable investors and developers are in a challenging time: on the one hand, the “2030/2060” decarbonized roadmap promised a rosy future, but on the other, the price premium for renewable has long gone. 

Still confused by the new measure? We will provide a detailed read of the policy this week in our analytical newsletter. Stay tuned.

Wind

The First Semi-Submersible Floating Offshore Wind Foundation Launched

China’s first semi-submersible floating offshore wind turbine foundation was launched last week in Zhoushan, Zhejiang Province.

The floating foundation platform is developed and constructed by Three Gorges and undertaken by Wison Engineering. The overall width of the platform is 91 meters, the depth is 32 meters, the design draft is 13.5 meters, and the displacement of the wind farm is more than 13,000 tons. It can withstand the complex and severe extreme sea conditions in the south China Sea. The single unit capacity of the floating wind power test prototype is 5.5MW, the rotor diameter is 158m, and the full power generation per hour can reach 5,500 kWh, which can provide green and clean energy for 30,000 families every year.

Energy Iceberg’s Note: the floater is for CTG & Ming Yang’s 5.5MW floating turbine prototype to be installed this year in Yangjiang. The launch marks a key milestone made by the project. It looks like the two will achieve China’s floating turbine indeed. 

Shandong to Develop 10GW Offshore Wind and 20GW Renewable Hybrids by 2025

Shandong Province finally sets the tone for their offshore wind development with a policy announced last week. According to the notice:

  • The province will strive to develop 10GW of offshore wind power during the 14th Five-Year Plan period.
  • The province will build an energy base integrating wind, solar and energy storage. It will make full use of the saline-alkali tidal flats in northern Shandong and coal mining subsidence in southwestern Shandong, develop photovoltaic power generation, wind power and other renewable energy sources according to local conditions.
  • The province strives to build an operational capacity of about 20GW of energy base integrating wind, photovoltaic, and energy storage by 2025.

Guangdong Confirms Local Subsidy for Offshore Wind

Guangdong province released local financial incentive measures for offshore wind projects. According to the document, the province will:

  • Facilitating and striving for connecting as many OW projects to the grid as possible before the end of 2021 [note: deadline for national subsidy].
  • Provide appropriate financial subsidies for projects in provincial-managed sea areas that will not enjoy national subsidy and actively reduce electricity prices.
  • By the end of 2021, the accumulative installed wind capacity of the province would reach 4 GW; strive to reach an accumulative installed wind capacity of 18GW and be the first province to achieve wind power subsidy-free in the country by 2025.

Energy Iceberg’s Note: The policy is the final version and the intention to provide local subsidy has been announced a few months ago. Since then, however, no other provnces follow Guangdong’s example yet. Read our previous analysis of Guangdong’s offshore wind goals.

Hydrogen Storage & Fuel Cells

Another Step of the PV Giant LONGi in Green Hydrogen Announced

Xi’an LONGi (LONGI), the world’s biggest solar company, last week signed a contract with Xi’an High-tech Zone. According to the agreement, LONGi will invest ¥300 m to establish a subsidiary in the high-tech zone as the headquarters of an electrolyzer equipment production project.

The project is expecting to have an initial annual production capacity of 100 units of 1000Nm3/h alkaline electrolyzer equipment and expand to 10,000 units through 5-10 years.

Energy Iceberg’s Note: This is another important movement after LONGI set up a new business unit centred around the nascent green hydrogen market in April this year. See our previous analysis of LONGI’s hydrogen moves

Shenzhen to Support Power-to-Gas, Solid-state Hydrogen Storage

Shenzhen City of Guangdong Province last week published the 14th FYP and the outline of the long-term goals for 2035. The plan promotes hydrogen energy and fuel cell development in three areas:

  1. Strategic emerging industries: The plan promises to develop the new energy vehicle industry; the fields of renewable energy, high-efficiency energy storage, hydrogen energy and fuel cells, smart grids, smart energy, and critical energy-efficiency technologies. And to support advanced and applicable environmental protection technologies, equipment R&D and industrialization.
  2. Frontier industry development: The plan promises to research key technologies such as power-to-gas, solid-state hydrogen storage, fuel cell stacks and powertrains, and to build an innovation system for the hydrogen energy industry actively.”
  3. Green lifestyle: The plan promises to promote the electrification of freight vehicles and construct clean transportation facilities such as battery charging and swapping, LNG and hydrogen refuelling stations.

Longest Hydrogen Pipeline Project in China to Begin soon

The Pipeline Research Institute of China National Petroleum Corporation (CNPC Pipeline Research Institute) last week announced that it had won a research tender to conduct a feasibility study for a hydrogen pipeline from Dingzhou (Hebei) to Gaobeidian (Bejing).

The 145 km hydrogen pipeline would be the of this kind currently planned for construction in the country. The project is said to serve as a solution to one of the hydrogen transportation problems in the Beijing-Tianjin-Hebei region.

Energy Iceberg Note: current longest H2 pipeline n China is the 42 km Baling-Changling project owned by Sinopec, which started operation in 2014. 

Fuel-cell CHP & Solar Hybrid to Support “Net-Zero” Agriculture in Zhejiang

State Grid recently signed a strategic cooperation agreement with Pinghu Agricultural Economic Development Zone to launch a first-of-this-kind hydrogen-PV-storage project for a fruit farm.

According to the agreement:

  • State Grid will focus on the actual energy utilization of the plant workshop of a fruit factory in the development zone.
  • Envision Energy will invest ¥18.87 m to construct and operate a smart energy station build integrating “hydrogen-solar-storage-and-charging”.

The project will construct a fuel-cell combined heat and power plant, a solar PV farm (integrated with battery storage units), as well as EV charging piles. The power generated by the fuel cell system will provide power and heat to the fruit farm to replace the gas boiler.

Energy Storage

Share Storage Model Set Precedence in Hubei Renewable Policy

Hubei province last week announced a policy regarding renewable project development in 2021. The policy sets precedence in several dimensions:

  1. Rooftop solar policy support: the policy encourage rooftop solar projects, which could start construction without generation planning
  2. Shared storage: the policy suggests renewable developers build, share or purchase (flexible) coal-fired units and pumped hydro projects for energy storage. The policy asks renewable plants to build storage units not less than 10% of their total capacity.
  3. Resouces-to-exchange-investment: the province sets to allocate 5GW new energy projects for investors/developers. Investors are required to invest in manufacturing facilities in the region to exchange for project development. The allocation will be based on the manufacturing investment plans proposed by the companies.
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