Welcome to Azure International

Azure International is a leading investment and advisory company focused on China's cleantech energy sector. Founded in 2003, we have a team of 20+ local and international professionals based in China with backgrounds in engineering, marketing, manufacturing, consulting, policy, government relations and finance. In addition to deep advisory capabilities in renewable energy, energy efficiency, carbon management, and energy finance, we have proven capability to invest in and accelerate the development of clean energy companies.  Our portfolio and partner companies have achieved both significant commercial success and returns to investors. Azure provides the necessary expertise and execution capabilities in China to lead relationship development with government and strategic partners, project execution, sourcing, sales and technology development – all with deep understanding of Chinese and international requirements.

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Azure International

Tel: +86 10 8447 7053

Fax: +86 10 8447 7058

E-mail: info@azure-international.com

Renewable Energy – Leaked NEA document plans to address owed subsidies: In a document released on March 9, the National Energy Administration has requested that companies submit documentation showing owed subsidy payments from 2012-2014. Reporters from China Securities Report estimate that as much as RMB 14 billion in subsidy payments is owed to wind, solar and biomass generation owners. In order to address the significant backlog of subisidies owed to generation companies, the NEA will need to cooperate with the Ministry of Finance, which manages the subsidy collection and redistribution system.
 
Azure believes that considerable arrears are still owed to projects primarily in Inner Mongolia, Gansu and Xinjiang from before the Surcharge and Redistribution administration mechanism moved to the current central collection system implemented in 2012. The payment for RE subsidy fund was last increased in September 2013, when the fee collected on commercial and electricity sales was raised to RMB 0.015/kWh, nearly double the previous amount.  Under original plans, this increase should have been sufficient through 2015, but analysis of the overall collections and obligations picture suggests the overall account is again trending to negative, and surcharges levied will again have to be increased in the coming months. The sufficiency of funding for the national fund, which is managed by the Ministry of Finance, depends on

coal tariffs, commercial and industrial electricity consumption growth, wind and solar generation, among other factors. Recently, lower than expected electricity consumption growth has decreased the amount of funds flowing into the national fund. While faster than expected growth of wind and solar as well as the lowering of coal-fired electricity tariffs has increased the amount of money flowing out of the fund. (Xinhua CN)
 
Renewable Energy – NEA releases notice for reporting renewable energy generation and utilization statistics: On March 8, the NEA provided new guidelines to solar, solar thermal, biomass and wind farm operators regarding how to report generation and curtailment statistics. This new notice requires grid companies to verify generation and curtailment statistics on a monthly basis. It also provides definitions for calculating key statistics, including power curtailment. Generation owners and grid companies have historically disagreed regarding power curtailment statistics. While this policy clearly cites existing wind curtailment estimation methods, it fails to provide a methodology for estimating solar curtailment. Continued disagreements are likely. (BJX CN)
 
Energy Efficiency – NDRC releases new suggestions for demand side management pilots in China: The National Development and Reform Commission’s latest policy release lays out a number of measures and deadlines for operators of DSM pilots in Beijing, Hebei, Jiangsu, Guangdong and Shanghai. Notably, the policy calls for other pilot cities to incorporate best practices from Shanghai’s demand response pilot, which is the first to provide an economic incentive for short term demand response services.  This seems like a first step towards national implementation of the Shanghai market mechanism. Among other guidance, the policy interestingly calls for the Shanghai pilot project to develop a mobile app that shares near real time electricity consumption data in order to encourage participants to better manage their peak consumption.  The call to openly share load data via a mobile app is quite surprising as the government has previously treated this data as highly sensitive. See  the report referenced at the bottom of this page to download Azure’s free report on China’s DSM market, which provides up-to-date information on the Shanghai pilot project. (NDRC CN)
 
Electric Vehicles – Government releases latest EV production numbers: In March 2015, China produced 6,986 pure electric vehicles and 3,288 plug-in hybrids for private use and 2,465 pure electric and 791 plug-in hybrid vehicles for public use, respectively, according to Ministry of Industry and Information Technology statistics.  Overall electric vehicle production was up nearly 116% from February, lead by a 248% jump in production of pure EVs for private use. Tax free electric vehicle purchases jumped 221% from February to March. Despite this, oversupply remains a concern production has exceeded sales (tax free sales tracked by the MIIT) by around 25% over the last several months, creating a growing inventory of unsold vehicles. (MIIT CN)
 
Electric Vehicles – Tesla to localize EV production in China within three years: In late March, Tesla CEO Elon Musk told Xinhua that the company plans to establish local manufacturing and engineering in China, possibly within the next three years. Despite the fact that China is the only place where Tesla has excess inventory, Musk said, “China is attractive right now, and in the long term.” (Xinhua EN)
 
Wind – Gamesa announces 198 MW in new turbine orders for China: On March 13 and 14, Gamesa released a series of order announcements for the Chinese market. Gamesa will supply Hebei Construction and Investment Group (HCIC) 25 G97-2.0 MW turbines for the Senjitu II wind farm in Hebei. Gamesa will supply Fujian Energy 24 G97-2.0 MW Class I turbines for the Dingyanshan wind farm in Fujian. Finally, Gamesa will supply CGN Wind Energy 50 G97-2.0 MW Class II turbines for the Yangchajie wind complex in Yunnan. The CGN Wind Energy also has the potential for another 100 MW order in 2015.  In 2015, GE, Gamesa and Vestas have had success selling turbines into regions with challenging environmental conditions, such as Yunnan’s high altitude, low wind speed conditions and Fujian’s strong coastal winds. (Gamesa EN)
 
Solar – Urban Green Energy International and Blue Sky Energy Efficiency establish China’s first major PPA: Urban Green Energy (UGE) recently announced that is has reached an agreement to fund US$ 10 million in solar projects over the next 18 months. While not the first instance of PPA use in China, this agreement marks a milestone in scaling this financing model in China.  (GTM EN)
 
Gas – Russian gas pipeline deal experiencing setbacks: Reporters from Radio Free International reported that Russia is considering revising the plan for a historic gas supply deal signed between Gazprom and China National Petroleum Corporation in May 2014. Instead of routing the gas through Eastern Siberia and transiting into Northeast China, Gazprom is considering a Western route that would intersect the Northwest province of Xinjiang. While there are many factors at play, Gazprom seems to be shifting the significant infrastructure costs of supplying gas to China’s Eastern load centers onto its Chinese counterparty. This latest release is a significant setback for an agreement that was decades in the making and comes at a time when competing LNG prices have dropped by nearly 50% since the agreement was originally announced. (RFA EN)
 
Coal – China to once again revise down wholesale price for coal-fired power generation: On April 8, Premier Li Keqiang announced that coal-fired generation tariffs will be revised down by RMB0.02/kWh on average. In addition, retail prices for commercial and industrial consumers will be revised down by RMB0.018/kWh. He did not provide a timeline for implementation. China has existing policies to benchmark coal generation tariff against coal prices, which in theory should be reviewed every 40 days. Lowering coal tariffs can actually exacerbate RE subsidy redistribution issues, as the subsidy top up is based on the difference between RE feed-in-tariffs and the local coal-fired generation prices. When coal prices go down, the subsidy top up increases and more money must be distributed by the Ministry of Finance. The benchmark coal-fired tariff was previously revised down in September 2014. (BJX CN)


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