Late last week the 8-day Chinese national holiday has kicked off. But just before the holiday, a series of critical local renewable and new energy policies have been unleashed.
WIND: Three ground-breaking wind policies from Guangdong, Guangxi, and Yunan governments brings positive signals to the Chinese wind market. Guangdong has become the first among peers to announce 2025 OW target. As mentioned, experts are suspecting now that an installation dip after 2021–previously expected to take place due to zero subsidy–might not happen.
Energy Iceberg expects more pro-wind local policies would emerge in the coming months, as Beijing’s “carbon neutrality target” started to influence local policymaking regarding wind and solar.
HYDROGEN: Two signature policies are introduced by Datong city (of Shanxi province), and Zhoushan city (of Zhejiang province) outlines the vast opportunities in China’s hydrogen market. The former–a coal capital in China–hopes to develop green hydrogen as a cornerstone for its energy transition plan; the latter is one of the first in China to adopt hydrogen as an alternative fuel for its shipping industry.
As mentioned, the active local policymaking in hydrogen sector is a direct response to Beijing’s recent decision to kick off the fuel cell subsidy demonstration scheme. Check out our full review of the subsidy policy.
Besides active policy activities in the wind and H2 sectors:
STORAGE & BATTERY: a speech by a top official of MEE underlines the potential of recycled batteries in China’s 5G market. And Guangdong government also outlines an ambitious storage target for 2025.
Please scroll down for 11 updates of last week’s wind, solar, hydrogen, battery and the power markets.
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China’s Guangxi Autonomous Region has released an action plan to promote marine economy from 2020 to 2022.
The plan averred that:
- The province will focus on developing offshore wind power demo projects, offshore wind power and aquaculture integration pilot projects in the Tonkin Gulf (Beibu Bay), as well as offshore wind manufacturing base.
- The province also sets to achieve more than 500 MW of offshore wind installed capacity by 2022.
Energy Iceberg Comment: this is the first offshore wind target set by the province. Last week, CSSC and the provincial government cemented a deal to start to build a manufacturing facility to provide offshore wind subsea equipment. Power developers eyeing on Guangxi include Huaneng, CEIC, CNOOC, and SPIC.
After the target release, among all Chinese coastal provinces, Hainan has become the only province without a concrete offshore wind plan.
Guangdong Province last week release a five-year Action Plan for New Energy and Emerging Industries (2021-2025). The plan suggested that the province will：
- Introduce supporting policies for offshore wind power.
- Strive to achieve wind power subsidy-free by 2025.
- Strive to achieve 15GW installed (cumulative )offshore wind power by the end of 2025.
Energy Iceberg Note: Guangdong is the most likely province to offer an offshore wind local subsidy after the 2021 nation subsidy cut-off. The policy suggests that the provincial government is still considering to provide a financial support mechanism for the OW sector. However, we understand that decision making for the local subsidy is still challenging.
The highly-expected Yunnan province renewable construction plan had been introduced last week.
The southeastern province sets to build 11GW wind and solar capacity before 2021, of which almost 8GW would be wind turbines, and the rest 3GW would be PV.
Total investment for these projects is estimated at ¥70.7b. Upon full operation of these projects, green power (hydro included) will account 85% of the province’s total power capacity.
China General Nuclear Power New Energy Holdings (CGN New Energy), a Hong Kong-listed subsidiary of CGN Group, last week announced to suspend the privatization process. The stock price of the firm plummeted by 26% after the decision in HKSE.
Earlier March, the new energy firm announced a likely privatization bid from its mother company.
As of May, CGN New Energy’s renewable asset is valued at ¥194b as of now, mainly consist of wind and solar power plants totalling 20.54 GW. The firm expects to double the installed capacity to 40GW by the end of 2025.
Energy Iceberg’s Note: In the past years, due to growing policy risk, the market value of mainland China’s new energy stocks in HKSE is believed to be undervalued–especially when compared the market caps of HK-listed firms and those of the similar firm in Shanghai. As a result, state-owned power enterprises have set off a wave of privatization to leave the Hong Kong market. Currently, State Power Investment Corp, China Huaneng, and Huadian Group have completed or started the process of privatization of their renewable power subsidiaries.
Hydrogen Storage & Fuel Cells
Datong City of Shanxi Province last week released a ten-year hydrogen industry development plan. The plan set a target to promote 57,000 hydrogen vehicles in 10 years.
Known as one of the “coal capitals” in China, Datong has promising renewable power resources, already with 4.66 GW RE capacity built up. Renewable power currently contributes 35% of the city’s total installed capacity.
The city is eyeing on using the renewable power for hydrogen production (via electrolysis process). It has established a comprehensive plan for hydrogen-energy storage-hybrid development. In a two-step plan, it plans first to build up 6 distributed photovoltaic power stations (each has installed capacity of 25MW) and wind power stations with 100MW. Then the city plans to add electrolysis and high-pressured H2 storage systems in these renewable sites.
Once complete all the projects, the city would be able to produce 5000kg/D of high-purity H2, which can support the operation of 10 refuelling stations.
Energy Iceberg’s Comment: Datong’s policy is yet another local response to Beijing’s recent decision to kick off reward-based city H2 demonstrations. At least some 36 provincial or city governments have announced similar plans.
A leading 5,000 ton/year CO2-to-CH3OH plant based on carbon dioxide hydrogenation has finished construction in Jul. 2020 and recently passed a 72-hour technology review.
The project is dubbed as the largest of its kind in the world, developed by Shanghai Advanced Research Institute (高研院) and Offshore Oil Fudao Company and is supported–financially– by China National Offshore Oil Corporation (CNOOC).
China’s leading solar inverter manufacturer Sungrow has signed an agreement with Yuncheng City, Shanxi Province, to invest ¥10b on a hybrid project consist of 2GW photovoltaic power, power-to-H2, energy storage and EV charging stations. The project is set to start construction in 2021 and start operation by the end of 2025.
Two weeks ago, we mentioned that Zhoushan government, of Zhejiang, has sent out feedback inviting draft of hydrogen development policy. Last week the government sent out a new version.
The new policy draft now set up target all the way to 2035.
- 2022 Target: introduced 5 international or domestically leading hydrogen companies; 2 refuelling stations and 15 FCVs (public transportation)
- 2025 Target: to build up pilot a hydrogen marine demo project; 5 refuelling stations; 50 FCVs (public transportation)
- 2035 Target: to become China’s leading hydrogen marine demonstration city; hydrogen to contribute 10% of the city’s energy consumption;
Energy Storage & Battery
The chief engineer of the Ministry of Ecology and Environment (MEE) Hong Weilian recently disclosed that:
- The cumulative decommissioning lithium-ion batteries in China gas reached about 84,000 to 124,000 tons in 2019.
- That figure will rise to 200,000 tons by the end of 2020.
- By the end of 2025, the cumulative decommissioning batteries will exceed 730,000 tons, of which 70% can be used for battery recycling.
- The total market value of “Tiered/Recycled Battery” is expected to exceed ¥20b.
The chief engineer believes that the 5G Station market could be the solution for the recycled batteries.
Recent estimation believes that the annual batteries demand from the 5G market between 2020 to 2022 would be at 14.4GWh, 21.2GWh, and 27.6GWh respectively.
Suppose the country would utilize decommissioned batteries for the stations. The 5G market could fully utilize the decommissioned batteries.
The aforementioned Guangdong five-year Action Plan for New Energy and Emerging Industries also proposed to develop advanced energy storage application projects. It plans to build up an energy storage capacity of about 2 GW by 2025.
The province aimed to:
- Develop and promote chemical energy storage technologies such as flow batteries and sodium-ion batteries, practical technologies suitable for low-temperature cold storage that corresponding the weather in the South, and echelon utilization of lithium-ion power batteries, flywheel energy storage and hybrid energy storage technologies, etc.
- Promote new types of charging R&D of replacement technology and equipment.
The storage battery factory invested by Shanghai Electric and Guoxuan Guoxuan High-Tech–based in Nantong, Jiangsu–has set off commercial operation last week.
The plant started construction last year with a total planned annual production capacity of 10 GWh. The first-phase project currently put into production has an annual production capacity of 5 GWh.
Besides the Nantong plant, Shanghai Electric and Guoxuan’s joint venture (Shanghai Electric Guoxuan) has another storage-focused lithium battery production base (300MWh) built up in Kunshan, of Jiangsu.
In 2017, Shanghai Electric and Guoxuan High-Tech jointly established Shanghai Electric Guoxuan with the focus of storage batteries. The two hold 47.4% and 45.4% of the shares, respectively.