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Energy Storage – Samsung and Sungrow Power announce JV plans: On Sunday, representatives from Samsung SDI and Sungrow Power signed a preliminary MOU in Hubei, declaring their intention to form a JV for the production of ESS in China. Samsung, as the world’s largest lithium ion battery manufacturer with proven ESS systems, and Sungrow, as China’s largest inverter manufacturer with impressive recent growth, have a number of technology, market, and corporate culture synergies. (Korea Times EN)This is a great achievement for Samsung SDI and Sungrow, in which Azure International played an important role. In the early stages of Samsung SDI's China business development work, Azure helped Samsung identify the most promising segments of the China ESS market as well as shortlist and contact the best fit strategic partners. Sungrow was at the top of our list of recommended partners, and we are glad to see that SDI and Sungrow have made good progress towards a partnership.
Regulation – Beijing to ban coal use in urban districts: The Beijing government announced plans to end the use of coal within urban Beijing by 2020 (Beijing EPB, in Chinese). This is the latest in a series of anti-pollution measures; Guangdong, and Dongguan in particular, have made moves in a similar direction.
Solar – Continued government support for PV: The Chinese government initially rolled out guidelines allowing for an additional 14 GW of centrally subsidized PV installations in 2014. In the first half of the year, only 2.3 GW of large-scale PV projects and .99 GW of distributed PV projects were added in China (NEA, in Chinese). However, there is new support from the Beijing government (ChinaPower, in Chinese), the potential for further local subsidies of distributed generation, and positive sounds from the NEA supporting a goal of 13 GW of new PV capacity in 2014 (Caixin, in Chinese).
Concentrated Solar Power – Demonstration zone FiT announced: Price range for generation in thermal solar demonstration zones expected to be set around RMB 1.2/kWh (BJX, in Chinese).
Natural Gas – 2020 Shale Gas production target halved: Difficultes developing shale gas resources led the NEA to cut 2020 production targets from 60-80 billion cubic meters to 30 bcm per year (Caixin, in Chinese).
Coal-to-Gas – Enthusiasm for clean coal option waning: Before recent government plans called for a more measured approach in developing coal gasification plants (NEA, in Chinese), significant problems surfaced with Datang’s coal-to-gas plant (Platts, in English).
New Energy Vehicles – Incentives for private purchase of NEVs: Private vehicles will avoid certain taxes (MOF, in Chinese).
Solar – CDB and Macquarie to invest US$ 225 million in Jinko downstream business: Jinko Solar announced that it will receive US$ 225 million from China Development Bank, Macquarie Greater China Infrastructure Fund and New Horizon Capital for downstream solar investing. Financing has been one of the main roadblocks to solar over the past year. (SeekingAlpha, in English)
Solar – Beijing DRC publishes new order encouraging distributed solar: Beijing’s new order specifies that the grid company has 30 working days to connect and inspect small distributed solar systems, and urges large coal consuming companies and government agencies to install distributed solar. (Chinapower, in Chinese)
Solar – Guandong publishes list of 610 MW of distributed solar for installation in 2014: The province expects to install 150 MW in Guangzhou, 110 MW in Shenzhen, and 80 MW in Zhuhai. (BJX, in Chinese)
Solar – China announces new standard solar PPA: The new template should enable faster approvals and financing for large-scale solar projects. (PV-Tech, in English)
Wind – 1H operational hours figures released by province: The National Energy Agency has released operational hours data by province for main energy sources for the first half of 2014. Total grid-connected wind reached 82.75 GW. (China connected 6.32 GW to the grid in the 1H according to Windpower Monthly, in English. Xinjiang installed 1.39 GW and Shanxi and Shandong both added 600 MW.) Wind plant average operational hours fell to 986, down 114 hours from the same period the prior year. Among major wind provinces, Jilin experienced the worst operational hours situation, with only 727 hours on average, down 110 hours from the same period the prior year. Curtailment fell 35.8% versus 2013. (Chinapower, in Chinese)
Coal-to-gas: NEA strengthens rules against over-building coal-to-gas: NEA has released a new notice forbidding construction of coal-to-gas plants under 2 billion cubic meters of annual capacity and under a certain efficiency level and restricting coal-to-gas in places with water restrictions. Xinjiang and Inner Mongolia have been constructing coal-to-gas plants at a high rate, causing severe concerns about water pollution and carbon emissions. (BJX, in Chinese)
Electric vehicles – NDRC publishes detailed EV charging implementation plan: The plan lays out details on encouraging low residential charging rates and free fast charging prior to 2020. Currently, Beijing plans to have over 1000 charging stations by the end of this year, Shanghai plans to have 1800, and Guangzhou plans 105 by the end of 2015. (Chinapower, in Chinese)
Wind – 30 MW Sichuan project over half complete: 13 of 20 turbines are installed at the 30 MW Fangdiping plant being built by Datang. The project is slated for completion in October. (Windpower Intelligence, in English)
Wind – Yunnan project to proceed: The 49.5 MW Xiaohaizi project that had been delayed for over a year has passed one permitting hurdle and will proceed with permitting. The China Hydropower plant had been delayed due to financing issues. (Windpower Intelligence, in English)
Wind and solar – Investigation of Gansu renewable integration reports results: NEA officials have completed a thorough investigation of wind and solar integration in Gansu, and made public results of each area. Of areas within Gansu with the most severe integration issues, Wuwei Huangtai had the largest amount of excess capacity, with summer and winter having over 75% of capacity as facing limits on production hours. (Note: not the same as curtailment.) Jinchang district had the fewest limits at around 25% of capacity. In 2013, 20% of wind and 14% of solar output were curtailed despite new transmission capacity additions. (BJX, in Chinese)
Solar – NEA offers new solar subsidy deal: Distributed solar plants of a certain size will be able to opt for either the local feed-in tariff rate (RMB 0.9-1.0/kWh, depending on location) for power sent to the grid, or receiving the RMB 0.42/kWh subsidy for all power generated. In Azure’s view, for systems in locations where most power is self-consumed, receiving the fixed subsidy will make more sense, but for those with low self-consumption compared to PV output, the FIT offer would be more attractive. In addition, receiving FIT payments would reduce risk for third party systems where the customer may not be credit-worthy. (BJX, in Chinese) The new policy also urges regional governments to set up financing vehicles to guarantee solar bank loans, and encourages banks to offer attractive rates and longer-term financing for solar. (BJX, in Chinese)
Grid – NEA approves construction of new high-voltage AC line: The National Energy Agency has approved State Grid’s Wumeng-Shandong line, which forms part of State Grid’s plan to bring energy into the Beijing-Tianjin-Hebei (Jingjinji or JJJ) region. The 1000 kV line will connect coal and wind bases in Inner Mongolia to Shandong, running near Beijing and Tianjin. (China Power, in Chinese)Grid – Tianjin eco-city to be included in U.S.-China strategic economic dialogue: The Tianjin eco-city is a test bed for a variety of different technologies and includes 12 different smart grid capabilities, including smart metering and EV charging. (China Power, in Chinese)
Wind – Goldwind opens new blade material plant with Swancor: Goldwind has partnered with resin producer Swancor to build a new facility for blade coatings in Jiangsu. Goldwind has a 60% stake in the facility. (Windpower Monthly, in English)
Wind – Construction kicks off at two facilities: Huanghe Hydropower has started construction at the 49.5 MW Gayakou project in Qinghai, with plans for completion by year-end 2014. (Windpower Intelligence, in English) Similarly, SinhoHydro has started construction at its 50 MW Guanjiazui facility near Hengyang. (Windpower Intelligence, in English)
Wind and solar – Curtailment report released: The report, which is based on data from multiple sources, paints a bleak picture for curtailment in 2014, saying the large number of projects added in 2013 and the full pipeline of new projects approved for 2014 implies a worsening curtailment situation for this year. In the first quarter of this year, Liaoning, Heilongjiang and Inner Mongolia have all seen higher wind curtailment numbers. There is some good news: Gansu province has seen wind curtailment fall substantially from prior years due to the addition of new transmission lines. (BJX, in Chinese)
Wind and solar – State Grid figures show slow solar additions: State Grid connected only 2.33 GW of new PV in the first half of 2014, according to figures released at a conference this past week. The vast majority of PV connections are large, central power plants, leaving the government far from achieving its goals on distributed solar. (Solar of Week, in Chinese) State Grid also reported adding 5.6 GW of wind in the first half of 2014. (Chinapower, in Chinese) Note these figures account for most, but not all, additions, since they exclude China Southern Grid.
Solar – FirstSolar officially cancels 2 GW Ordos project: The project, announced with fanfair in 2009, had been on ice for years while FirstSolar’s JV partners (most recently, Guangdong Nuclear) dithered on price and other issues. (PV-Tech, in English)
Energy storage – CNESA calls for new policies to promote storage: CNESA notes that energy storage can promote government goals for distributed solar, as well as help areas with weak local grids. (BJX, in Chinese)Electric vehicles – The central government wants governments to purchase 30% EVs by 2016: EVs should make up at least 30% of new government vehicle purchases by 2016, and the proportion may be raised if that target can be met. (Daily Energy Report, in English)
In May 2014, Barclays downgraded its rating on U.S. electric utilities, citing fears that growth in the PV and energy storage market will drive grid defection. The Barclays credit strategy team wrote:
"Over the next few years, however, we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo. Based on our analysis, the cost of solar + storage for residential consumers of electricity is already competitive with the price of utility grid power in Hawaii. Of the other major markets, California could follow in 2017, New York and Arizona in 2018, and many other states soon after… We see near-term risks to credit from regulators and utilities falling behind the solar + storage adoption curve and long-term risks from a comprehensive re-imagining of the role utilities play in providing electric power."
Barclays paints a dire picture for utilities and a rosy one for PV and energy storage developers. But Barclays' analysis uses a market valuation technique that doesn’t currently apply in most markets under present policies.
Case in point, Hawaii uses net metering, which provides a strong disincentive for energy storage. On one hand, Energy storage developers like SolarCity (NASDAQ: SCTY) and ZBB (NYSE: ZBB) should do more research before entering this market. On the other hand, the situation for American utilities in general (NYSEArca: XLU) may not be as dire as Barclays analysis leads one to believe—at least not due to the adoption of PV and ES.
This short analysis highlights the danger of using the wrong PV and ES valuation approach to draw conclusions concerning the near term business case for PV and ES. (See the full article here.)
Regulation – China kicks of energy 13th Five-Year Plan meeting: The official communique listed a number of green related high-level themes for the 13th Five-Year Plan, including low carbon, energy saving, sustainability, and clean energy. Market-oriented reforms weren't mentioned prominently. (China Power, in Chinese)
Regulation – WSJ reports on anti-corruption drive’s relation with power reform: The removal of energy officials could be related to overcoming stubborn resistance to energy reform, especially at the local level and at State Grid. (WSJ, in English)
Solar – West China expected to vastly exceed 2014 solar plan targets: Total solar installations in West China (Xinjiang, Qinghai, Gansu, Inner Mongolia) could reach 8 GW, over three times the announced plans of the central government. Qinghai has approved projects of 1.2 GW for 2014, over double the theoretical limit of feed-in tariff subsidy for 2014. (BJX, in Chinese)
Wind – XEMC begins offshore wind turbin installation in Fujian: XEMC, which has a manufacturing base in Fujian, has begun installation of 10 units of 5 MW turbines in Pinghaiwan, Fujian. The 50 MW project is budgeted for RMB 1.22 billion. (Windpower Monthly, in English)
Wind – 300 MW Heilongjiang project approved: Ruihao Group has received approval for a 300 MW project at Ladanpao in Heilongjiang. (Windpower Intelligence, in English)
Efficiency – China LED firm snags US$ 80 million in VC funding: Lattice Power claims that it has a high-efficiency, low cost LED. GSR and KPCB joined the round. (Dow Jones, in English)