Beijing’s new renewable policy this week throw a wet blanket over the ambitious wind industry, which just announced a vision to install “at least” 50GW turbine every year from now to 2025. Looking at the current progress, even 30GW new installation this year seems impossible.
The policy support on China’s hydrogen market stands in stark contrast to the situation in the wind sector. In the past weeks, three more cities released their hydrogen development plans and offered generous terms to H2 investors.
Such contrast indicates that the clean energy market is in transition. Some of the key updates last week:
WIND: new RE policy sets caps on renewable project’s total subsidy amount–offshore wind investment face negative impacts. Meanwhile, NEA data suggests that 30GW new installation this year would be challenging.
HYDROGEN: Changzhi of Shanxi, Baoding of Hebei, and Dalian of Liaoning all announced hydrogen development plans. Notably, Dalian would set up a 1 Billion fund to support H2 activities.
Battery: despite the US-China confrontation, Tesla announced a new investment plan in China’s “free-trade port” Hainan province to build charging installations and an R&D centre
Please scroll down for nine updates of last week’s wind, solar, hydrogen, battery and the power markets.
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Chinese regulators last week specified the exact amount of “reasonable utilization hours” for non-hydro renewables to cap financial subsidy demand.
The concept of “reasonable utilization hour” was introduced early this year as part of the solutions to solve China’s renewable subsidy deficit issue. According to the policy, the rewarded subsidy to each wind and solar projects will be based on a fixed amount of time set–“reasonable utilization hour”–by the regulator.
The policy last week detailed the exact amount of reasonable utilization hours for different projects in their 20-year life span:
- Wind projects: full life cycle (20 years)reasonable utilization hours in Type I, II, III and IV resource areas are 48,000, 44,000, 40,000, and 36,000 hours, respectively.
- Offshore wind projects: 52,000 hours.
- PV projects: reasonable utilization hours in Type I, II and III resource areas are 32,000, 26,000, and 22,000 hours, respectively. However, those for frontrunner projects and competitive pricing solar projects in 2019/2020 would be 10% higher.
- Biomass projects: 82,500 hours.
Energy Iceberg: on Tuesday we will provide a full review of the impacts. Overall, the policy would have a significant (and mostly negative) impact on the offshore wind projects. Those in Fujian, Guangdong, and Jiangsu previously expected to have higher than 52,000 production time in 20 years and, thus, a higher amount of subsidy receivable.
Statistics from the National Energy Administration shown that, from Jan to Sep 2020, the incremental installed wind capacity was 13.06 GW and cumulative installed capacity now hits 223.7 GW.
Energy Iceberg: the data suggest that China is unlikely to set a new wind installation record in 2020. The record-making year was 2015 when the industry put up 30GW. Notably, the incremental wind installation this year would also be LOWER than previous market expectations.
EDF’s first offshore wind project in the Asia Pacific–China’s first offshore wind power project with foreign investment–has been concluded.
Dongtai IV and V–300MW and 200MW, respectively– is jointly developed by the China Energy Investment Corporation (CEIC) and French EDF. The total investment is ¥8b.
According to CEIC and EDF’s agreement, construction of Dongtai IV is carried out solely by CEIC, while EDF will take part in the project operation. As of Dongtai V, EDF will involve in both the construction and operation.
This is EDF’s first foray into the Asian offshore wind power market, and the company has become the first foreign offshore wind power developer stationed in China. CEIC said that EDF has directly invested more than $160m in the joint venture project, registering a new record for its investment in China’s non-nuclear power market.
Hydrogen Storage & Fuel Cells
Changzhi City, the second-largest economics in Shanxi Province, issued a set of five hydrogen and fuel cell policies on 17 Oct.
The city envisions to:
- By 2025: Have a commercial hydrogen production and supply capacity of 100,000 tons annually; built more than 80 hydrogen refuelling stations and have more than 5,000 fuel cell heavy trucks in operation.
- By 2030: Have hydrogen energy industry as the pillar industry of the city, with an annual output value over ¥80 bn. And complete the strategic transformation from a “coal city” to a “characteristic hydrogen city”.
Sino Synergy Hydrogen Power Technology (Sino Synergy) last week launched a new fuel cell stack product, which is priced at of ¥2,999/kW and ¥1999/kW for strategic cooperation.
The cost of fuel cell stake has been steadily declining. Between 2018-2019, prices of fuel cell stake in China were around ¥5-10/W, leading to ¥10-20/W systems.
The new product of Sino Synergy means the cost of fuel cell has dropped significantly to around ¥2~3 /W.
Sino Synergy took up more than 70% of the Chinese market shares in 2018 and 2019. The production capacity of the firm currently is 500MW.
The plan includes:
- Policy target: to team with other cities in the Beijing-Tianjin-Hebei region and successfully apply for the hydrogen fuel cell demonstration region by the end of 2022.
- Industry target: to introduce more than >5 hydrogen-related enterprises by the end of 2020; to support >10 fuel cell and other related companies by the end of 2021; to successfully develop 5 domestically leading H2 companies by the end of 2022.
The Dalian Municipal Government stated that it had completed the first draft of a hydrogen energy industry development plan. The plan aims, by 2025:
- To cultivate 5 to 8 leading companies, with an annual production capacity of 1,000 fuel cell vehicles (FCVs).
- To promote more than 1,000 FCVs.
Notably, the plan proposes to set up a special fund of ¥1B for hydrogen energy development of ¥1 bn.
The special fund will be used to support the following activities:
- R&D of fuel cell equipment and core components.
- New investments in fuel cell vehicles, ships, locomotives, and distributed power station projects.
- Constructions of hydrogen refuelling stations, purchase of FCVs.
- Purchase of FCVs
Battery & EVs
Tesla has signed an agreement with the government of Hainan (the Free-Trade Port Administration) on 13 Oct to build a new energy innovation centre in the island province.
In the deal, Tesla sets to build up a centre for EV battery and energy storage R&D. It also plans to build up charging installations in the island.
SDIC Power Holdings (SDIC) last week announced that its Global Depositary Receipt (GDR) prospectus has been approved by the Financial Conduct Authority of the UK and would be listed on the London Stock Exchange on 22 Oct, London time.
By the GDR, SDIC has become the fourth Chinese firm and the second Chinese electricity firm, following China Yangtze Power, to be traded in Britain under the Stock Connect link with the Shanghai exchange.
SDIC Power’s international business mainly includes waste-to-energy projects in Thailand, the Banten thermal power projects in Indonesia, and the Red Rock Power Limited in the UK.
Red Rock Power’s key wind projects:
- 25% ownership of Beatrice Offshore Wind Farm (under construction) – an operational 664 MW development 15km off the Moray Firth in North of Scotland owned by Beatrice Offshore Wind Limited (BOWL)
- 100% ownership of Inch Cape Offshore Wind Farm (784 MW) – a proposed development 15km off the Angus Coast in East of Scotland via its subsidiary, Inch Cape Offshore Limited (ICOL)
- 100% ownership of Afton Wind Farm – an operational 50MW onshore development in East Ayrshire via its subsidiary, Afton Wind Farm Limited