The Final Sprints to Subsidy–China Clean Energy Syndicate

The Chinese clean energy market this month is a hectic scene. Different developers, suppliers and government organizations are all in their final sprints to the end of 2020 when several policies “milestones” will be triggered, and critical subsidy schemes are soon to change. It is not surprising to see the overflow of new updates from the wind, hydrogen & battery market. Below are some of the major news last week:

  • WIND: NEA announced a policy preference for RE teaming with hydrogen & storage–for the first time; two turbine makers launched IPO plans.
  • HYDROGEN: European players Shell & Air Liquid cemented two landmark deals, while cities continue to announce new hydrogen demonstration plans and policy–this week were Shanghai and a five-city alliance of Baicheng and Yunfu
  • BATTERY: statistics show that renewable power plants’ demand for energy storage is the main driving force in China’s future battery demand

Please scroll down for 12 updates last week…Too much to catch up. Nevertheless, enjoy your week!

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Policy

China Increases RE Subsidy by Nearly 5% For 2021

Ministry of Finance last week announced that it had set the country’s renewable power subsidy for 2021 at ¥5.95B, up 4.9% from this year.

The subsidy will go to 14 Chinese regions in the following renewable projects:

  • Solar PV: Solar power subsidy at ¥3.38B; poverty-alleviation solar projects at ¥770M; residential distributed solar projects at ¥60M; and mounted solar & commercial distributed solar projects at 2.55B
  • Wind power:¥2.31B
  • Biomass power: 59.78M

Poverty-alleviation solar and residential distributed solar projects will enjoy priority of payment issuance. Also, solar RE projects with competitive pricing will enjoy priority of full amount subsidy payment as well.

NEA Emphasize "RE+Hydrogen+Storage" in the Drafting of 14th FYP

The national energy administration (NEA) last week called for public comments and advisory on the drafting of14th five-year renewable energy plan (14th FYP), a critical document that sets government policy direction for 2021-25.

The NEA lists six priorities/emphasis in its call for comments, of which one is to promote “integrated development of renewable energy.

The document stated that this topic aims to “promote the integrated development of renewable energy with agriculture, construction, ecology as well as energy storage and hydrogen energy industries.”

Energy Iceberg Note: the energy regulator is, clearly, changing the rhetoric or policy emphasis regarding the RE sector. Beijing increasingly preferred RE to team with H2 and battery sectors. Recently, several wind/solar+H2 projects have broken ground. 

Wind

Shanghai Electric Wind to list on "Nasdaq Equivalent" STAR Board; SANY is the Next

Shanghai Electric Wind Power (SEWP), holding subsidiary of Shanghai Electric Group, was approved to launch an initial public offering (IPO) on the STAR Board of Shanghai Stock Exchange. SEWP is currently the largest offshore wind turbine supplier in China.

The IPO aims at raising ¥3B, of which SEWP plans to invest:

  • some ¥1B (accounting 33%) in R&D projects for new products and technologies
  • ¥0.53B (15%) in building a Testing Facility at Haiyang of Shandong province
  • ¥0.9B (28%) in supporting working capital.

It is reported that another wind turbine OEM, SANY Heavy Energy, has signed a listing counselling contract with CITIC Securities for an IPO.

Wind Industry in Final Sprint for Turbine Installation before Subsidy Sunset

The National Energy Administration (NEA) last week released statistics on the national power industry from Jan-Oct. 2020. Two key messages of these data:

  • From Jan-Oct, the incremental grid-connected wind capacity was 18.29 GW, up 3.63 GW YoY. In Oct, 5.23 GW were added in a single month.
  • Wind power investment hits ¥183.5 bn, soared by 126.7% YoY. There are still a large number of projects that are hoping to connect to the grid in the last coming two months.

Meanwhile, NEA issued a policy to the three major power grid companies (State Grid, China Southern Power Grid, and Inner Mongolia Power Grid) recently. The regulator required the trip to take effective measures ensuring grid access for renewable projects “as much as possible.”

Energy Iceberg: there is still a chance for China to hit 30GW incremental wind capacity this year. 

All onshore wind projects and mounted solar must complete grid connection by the end of this year to secure their 20-year subsidy. From Jan 1 next year, all new builds and projects under construction would be zero-subsidy projects, which will sell at the grid-parity price (same as the regional coal-fired prices).

Hydrogen Storage & Fuel Cells

A Coalition Formed between the Northern Baicheng and the Southern Foshan Underlines the Drastic Competition for the H2 Subsidy

Baicheng city of the northeastern province Jilin is leading a five-city coalition to fight for the national fuel cell demonstration & subsidy status. The four other members of the alliance include Changchun, Jilin, and Yanbian of Jilin, as well as Foshan City of Guangdong–one of the most advanced regions for H2 development in China. The coalition calimed that policy-making for the fuel cell city demonstration has been completed.

The policy/strategy of this city coalition emphasizes on testing FCV reliability and develop economical green hydrogen.

For more policy content, please refer to our premium intelligence product: Hydrogen Policy Navigator.

Shanghai Releases FCV Innovation and Development Plan

The Shanghai Municipal Economic and Information Technology Commission, the Municipal Development and other four municipal departments last week jointly released the Shanghai Fuel Cell Vehicle Industry Innovation and Development Implementation Plan (2020-2023).

For detailed of the policy, please refer to our premium intelligence product: Hydrogen Policy Navigator.

Shell Made China Green-Hydrogen Debut by JV with Zhangjiakou

Shell will tap renewable power to produce green hydrogen in a first foray into the sector in China that will help fuel infrastructure for the 2022 Beijing Winter Olympics. The oil supermajor formed a joint venture with ZJK JT, a company of Zhangjiakou City, to build a 20MW hydrogen electrolyser that will produce green hydrogen from abundant wind and solar resources in Hebei province.

China Huaneng to Build the First Hydro Based Power-to-Gas Demonstration

China Huaneng Group (China Huaneng), revealed last week that, the group would build a green hydrogen industrial park and the first large-scale hydro based power-to-gas demo project in the western province.

The group’s general manager, DENG Jianling, revealed a plan to establish the project in capital city Chengdu. The project is against a backdrop of Chengdu’s application to become one of the first fuel cell demonstration regions in China.

The scale of the hydro based power-to-gas demo project is 6000Nm3/h, which will be built in two stages. When completed, the project will produce 4286t of hydrogen and 34286t of oxygen annually with 252 GWh of electricity.

Air Liquid Cemented Cooperation Deal with China's Hongda Xingye

Hongda Xingye announced that the company signed a letter of intent with Air Liquide (Hangzhou) Co., Ltd., a French subsidiary of Air Liquide. Both sides will cooperate in the field of hydrogen liquefaction. Hongda Xingye Co., Ltd. will build a liquid hydrogen unit, and Air Liquide (Hangzhou) Co., Ltd. will assist Hongda Xingye in the technical and economic analysis of the liquid hydrogen device, and make relevant technical suggestions To cooperate.

Founded in 1902, Air Liquide is one of the world’s largest suppliers of industrial and medical gases and related services.

Battery

Research Report Projects China’s Shipments of Lithium-Ion Batteries for Energy Storage Would Reach 60GWh

Research institute EVTank released a report on China’s energy storage industry. Report statistics show that in 2019, China’s shipments of lithium-ion batteries for energy storage reached 8.6GWh, up 22.9% YoY. The report predicted that by 2025, the Chinese market shipments might reach 60GWh, and the CIGAR would exceed 33%.

CNESA Q3 Energy Storage Market Analysis: the Key Battery Storage Application is for Renewable Generation

Statistics from CNESA’s Q3 Global Storage market report revealed that:

  • In the first three quarters of 2020 (Jan– Sep), the world adds 1,381.9MW operational electrochemical energy storage capacity, up 42% compared to the same period in 2019.
  • Of this global capacity, China launched 533.3MW of newly electrochemical storage projects, with a 157% YoY growth rate.
  • In a global comparison, China led the world in new energy storage capacity, comprising 38% of new growth.
  • Technologies: Li-ion batteries projects account for over 99% of the new capacity both in the case of global and Chinese markets.
  • Applications: grid-side energy storage was most prevalent globally, comprising over 1/3 of new capacity, while in China, renewable energy generation-side projects were the mainstream, accounting for 2/3 of the total new capacity.
  • As of the end of September 2020, global operational energy storage project capacity (including physical, electrochemical, and molten salt thermal energy storage) totalled at 186.1GW, a growth of 2.2% compared to Q3 of 2019. Of this global total, China’s operational energy storage project capacity comprised 33.1GW, a gain of 5.1% compared to Q3 of 2019.

China’s Storage Capacity (based on Technology Types)

Global Storage Capacity (based on Technology Types)

Power Grid

China’s State Grid Push Into Latin America With Chile Assets From Naturgy

State Grid Corp. of China will pay 2.57 billion euros ($3 billion) for an electricity network company in Chile, its first overseas deal in almost a year and a move that resumes its expansion abroad.

The Spanish natural gas and power company Naturgy Energy Group SA said it agreed to sell its 96% stake in Chilean electricity networks unit Compania General de Electricidad SA. The deal, reported earlier by Bloomberg News, will give the Chilean assets an enterprise value of 4.3 billion euros and Naturgy a 400 million-euro gain.

Energy Iceberg’s Note: so far, State Grid has successfully invested in 12 power network projects in 9 countries/regions, including the Philippines, Brazil, Portugal, Australia, Hong Kong, Italy, Greece, Oman, and Chile.

Notably, the trajectory of China’s wind power exportation and that of State Grid’s investment expansion are highly corresponding. For example, in 2013, State Grid acquired a 19.9% stake in AusNet Services, which created a lot of convenience for subsequent Chinese wind power companies such as China Power Construction to participate in the construction of wind power projects in Australia. Similar patterns also applied to Brazil, Portugal and other countries.

The new deal is beneficial for the Chinese RE companies to increase influence in the South American markets. 

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