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NEA issues new FIT guidelines for wind projects
On May 18, 2018, NEA issued the “Circular on the 2018 Annual Requirements for Wind Power Construction Management”, listing a number of management guidelines for deployment of wind farms such as how implementing of national targets and avoiding wind curtailment. The most important item is the sudden announcement that, as of the date on which the policy was issued, for all the new onshore wind farms in provinces which have not yet issued their 2018 wind construction plans, and all new offshore wind farms for which an investment entity is not yet identified, the feed-in-tariff (FIT) shall be established via a competitive mechanism. Other projects that already built or do not fit in above categories can continue to enjoy the regular wind FIT. It is also suggested that the wind farms eligible under the distributed wind policy (less than 50MW, 110kV or less grid connection) can still benefit from the original tariffs. (NEA)
There has been regular policy drafting and discussion around reduction of FIT for wind energy, but such a sudden change effective immediately was generally unexpected. Relying on historical events, one can imagine that FITs established via competitive bidding will be significantly lower than original FITs and might also create uncertainty on developer's capacity to retain their project. This can be very bad news for some investors, especially those with projects still in development and not yet announced in provincial plans. Azure is currently performing further research to understand the details of the policy, such as to which projects it applies, the definition of "investment entity", which "competitive mechanisms" will be put in place to establish future tariffs, and the potential impact on market players.
Shandong province announced 2.4 GW wind power projects in 2018
On May 17th, Shandong Province issued the 2018 annual wind power development plan. The province informed that, in 2017, a total of 3.34 GW of wind power projects have been developed, and announced that a total of 51 power projects have been arranged for 2018, with a total construction scale of 2.4 GW. (BJX)
Shandong will promote more than 50 new wind energy plants. Considering the relatively average low capacity of wind farms, we expect that several of them are decentralized projects, connecting at or below 110kV. The timing of the announcement is interesting, 1 day prior to the national FIT policy described above.
Dalian City announced 1.5 GW offshore wind farm project
Dalian City (Liaoning province) has recently approved 200 MW of onshore wind, 600 MW of offshore wind and 40 MW of photovoltaic power generation projects. Dalian Development and Reform Commission has also announced a plan to develop 1.5 GW of offshore wind power in Zhuanghe sea area. (BJX)
As the most Northern of the ten Chinese coastal provinces, Liaoning also has significant offshore wind ambitious, and its own technical challenges, such as low temperatures and ice conditions. Dalian city was home to Sinovel, once a leading Chinese wind turbine manufacturer. It is yet unknown whether the local manufacturer will get a chance to participate in said project.
EDP rejects €9.1 billion offer from Three Gorges Group
On May 14th, Portugal’s largest power company EDP (Energias de Portugal) rejected Three Gorges’ 9.1 billion € acquisition offer. Three Gorges Group became EDP’s shareholder in 2011, acquiring 21,35% of the company for 2.69 billion €. Currently, Three Gorges is the largest of EDP’s shareholder and just made an offer to requiring all remaining shares. According to Bloomberg, although the Portuguese government was satisfied by Three Gorges Group's offer, it has not received the support of EDP shareholders. (CHINAWINDNEWS)
Jilin: 35.5% wind curtailment rate drop in Q1
In the first quarter of 2018, wind curtailment in Jilin Province has decreased by 35.5%. During the same period last year, the province had the worst curtailmentin the country with a rate of 44%.Thanks to new UHV DC projects that came in operation in February 2018, in less than 2 months, Jilin has been able to export a total of 1.78 TWh of clean energy. In 2018, the province plans to control wind curtailment rate within 15%, and within 12% in 2019 and 10% in 2020. During the first quarter of this year, Heilongjiang Province also registered strong improvements, with a curtailment reduction of 27.8% compared to Q1 the previous year. (CHINA WIND NEWS)
The provinces in the north of China are focusing on reducing wind curtailment. In 2016, NEA added Jilin on the red alert zone list, suspending construction of new wind farms. The province is increasing power exportations in order to increase power plants utilization hours. If it can achieve its objectives, Jilin should be able to get off the red ban list within a few years, which would be great news for the developpers that have projects in standby in the area .
Henan province announces 5.5 GW of wind power construction in 2018
On May 8, Henan province issued the "2018 Wind Power Construction Scale Notice." This year,the province plans to develop 5,5 GW of wind powers projects, with a 50 MW minimum power unit size. (BJX)
Source: Azure International
Henan is seeing increasing investment in wind power. Almost 30 different projects have been approved, with an installed capacity varying between 50 MW and 350 MW..
Shandong, renewables account for 20% of new installed capacity
Shandong is speeding up the establishment of a clean energy supply system. On April 26th, State Grid Shandong Electric Power Co. announced that the province's renewable energy installed capacity has reached 26.04 GW, accounting for 20.7% of total installed capacity and, by the end of 2020, it is expected to reach 31 GW. Moreover, Shandong has recently actively promoted the construction of UHV transmission channels that,up to now, have guaranteed an incoming 400 GWhof energy,allowing to save the equivalent of 180 million tons of coal consumption. By 2019, the 1000 kV Shandong-Hebei UHV project will be completed and put into operation, andby 2020, Shandong’s grids expected to be more than 30 GW incoming power. (CEC)
Shandong is actively incentivizing clean-energy and cross-regional market transactions. Renewables capacity is expected to increase by 16% in less than 2 years. The province is currently promoting non-coal energy sources.The premium localization between Beijing and Shanghai offers huge potentialities for energy tradings. The development of UHV transmissions channels will generate high opportunities also for the neighboring provinces.
6.4 TWh nuclear power transmissions in Fujian province
During the first quarter of this year, Fujian province consumed 10.8 TWh of energy. Nuclear power delivered 6.4 TWh, two times the production registered during the same period of 2017. The total installed power capacity reached a 55.97 GW value, with clean energy accounting for 54.5%, and nuclear energy accounting for 8.71 GW, 15.6% of total, ranking second in the country. Moreover, the 1000-kV UHV T&D project between northern Zhejiang and Fuzhou has been put into operation, increasing power grids exchange capacity from 1.7 GW to 4.5 GW. (BJX)
Renewable energy is currently accounting for more than half of installed power capacity in Fujian. During the first quarter of 2018, nuclear power satisfied almost 60% of transactions in the province. Renewables are expected to represent a solution to support the continuous growth of demand in the area.Distribution networks development will support new power stations construction, offering the possibility to rely on other provinces demands and increasing power plants utilization hours.
Completion of the Fujian Xinhua Bay offshore wind demonstration project
The Xinghua Bay offshore test wind farm has been inaugurated in Fujian Province. The project has been completer with a total investment of 1.47 billion RMB and is composed of 14 wind turbines, produced by 7 manufactures, with a total 80 MW installed capacity. During the first 4 months of operation, the plant has performed with an average availability of 99.3%, 417 average monthly utilization hours and a cumulative power generation equal to 17.7 GWh. (IN-EN)
Results of the Three Gorges demonstration projects are well awaited by the whole industry as it features a few new turbines, all above 5MW and with a mix of well known domestic players (Goldwind, Mingyang, XEMC, CSIC), international players (GE and Siemens) as well as relatively new players (Taiyuan Heavy Industry). The CAPEX of 18,375 RMB per kW is high compared to other offshore wind farms but very reasonable for a demonstration project which is more complex and costly in nature.
The National Energy Administration promotes social capital investment in wind distribution
National Energy Administration issued the “Interim Management Measures for the Development and Construction of Distributed Wind Power Projects”, valid for the next 5 years. In order to be elligile as "distributed", a wind project must satisfy the following requirements:
All wind power projects that satisfy the requirements will have priority in securing subsidy payments. (NEA)
Currently, centralized (non-distributed) wind projects have to wait in line to be included on the NEA subsidy list, sometimes for many years. The new policy which simplifies the development process and offers bettter guarantees to project owners was greatly awaited by the whole industry, with hopes that it will help boost the installations in coming years, which was greatly expected by small developpers as well.
The first 7 MW wind turbines will be installed in Putian
On March 26, China Railway Fuchuan Co. won the bid for the installation of 10 sets of 7 MW wind turbines in the “Fujian Pingtan Offshore Wind Farm in Putian”, with a contract of 34 million RMB. (chinanews)
The 7MW machines to be supplied by ShangHai Electric under a license with Siemens are the largest wind turbines in China so far.
Source: Fujian Fuchuan Investment Co