News Summary:

  • NEA publishes Q1 solar curtailment rates
  • Jiangsu province to add 900MW wind in 2016
  • NEA publishes Q1 power generation utilization hours 
  • NDRC and NEA release coal production capacity metrics
  • Chongqing government releases guidance on electricity price reform


 
Solar: NEA Publishes Q1 2016 Solar Curtailment Rates
First quarter solar installed capacity and curtailment figures were published last week, and levels are high for some provinces. Nationally, 7.2GW of new solar was installed, raising the total installed solar installed capacity to 50.3GW by the end of the quarter. In the first quarter, total solar power generated was 11.8 TWh, and 1.9TWh of solar power was curtailed, or about 14%. Provinces with the worst curtailments are:

  • Gansu, 0.84TWh curtailed, 39% of total
  • Xingjiang, 0.76TWh curtailed, 52% of total
  • Ningxia, 0.21 TWh curtailed, 20% of total. (NEA CN)

Severe wind curtailment has been a known risk for years, but investors in solar were hoping that integration of PV would be easier, given lower penetration levels and a good match between resource and energy demand patterns. Last year, Azure started to warn that our models also predicted the emergence of PV curtailment in certain regions, which is now being confirmed on the ground. We advise investors to assess PV curtailment risk as part of normal due diligence, as curtailment is set to become the most significant factor in off-take risk for PV projects going forward.
 

Source: Gansu PV
 
 


 
Wind: Jiangsu Province Adding 900MW Wind Power in 2016
The Jiangsu provincial government announced that it has approved 900MW of wind power this year. The government hopes for wind power to achieve 2,000 utilization hours this year, up from 1,753 hours in 2015.  (Jiangsu Gov CN)
 
Jiangsu has a unique incentive structure to foster cooperation. The number of project planned in a given year is dependent on the number of projects approved the previous year. Completion rate of project approval therefore impacts capacity planning, as follows:

  • Completion rate: 100% − Prioritize new wind power project in next year.
  • Completion rate: 70% to 80% − Reduce new wind power project in next year.
  • Completion rate: <70% −Do not arrange new wind power project in next year.

 
Table: Planned 2016 Wind Power Projects for Jiangsu Province

Item Project Capacity (MW) Developer Location Planned approval time Planned operating time
1 Baoying Low-speed wind project 100 Fuxin Baoxin New Energy Ltd Boaying, Yangzhou Dec, 2016 Dec, 2017
2 Yineng Jiangsu Yizheng wind project 100 Yineng Wind Power (Yizheng) Ltd Yizheng, Yangzhou Dec, 2016 Dec, 2017
3 Huadian Xinghua Shagou Low-speed wind project 50 Huadian Xinghua PV Power Generation Ltd Xinghua, Taizhou Dec, 2016 Dec, 2017
4 Huaneng Taicang Gangfeng wind project 50 Huadian international Electric Ltd Taicang, Suzhou Dec, 2016 Dec, 2017
5 Huaian Guohe new energy wind project 100 Huaian Guohe New Energy Ltd Huaiyin, Huaiyang Sep, 2016 Dec, 2017
6 Lianshui Gaozhuan Guhuaihe wind project 100 Lianshui Gaocuan Wind Power Ltd Lianshui, Huaian Aug, 2016 Dec, 2017
7 CGN Hongze wind project 50 CGN (Hongze) Ltd Hongze, Huaian Dec, 2016 Mar, 2017
8 Huaian Gaochuan Guhuaihe wind project 50 Nanjing Gaochuan Electric Ltd Huaian, Huaian Dec, 2016 Dec, 2017
9 Huaiyin 100MW wind project 100 Huaian Lepusetec Ltd Huaiyin, Huaian Dec, 2016 Dec, 2017
10 Dalian Shangneng Haizhou Punan wind project 50 Dalian Shangneng Tech & Development Ltd Haizhou, Lianyungang Jul, 2016 Dec, 2017
11 Guohua Wutuhe wind project 100 Guohua New Energy Investment Ltd Guanyun, Lianyungang Jun, 2016 Dec, 2017
12 Yangchenghu Low-speed wind project Ⅱ 49.5 Suzhou Kangsheng Wind Power Ltd Xiangcheng, Suzhou Dec, 2016 Dec, 2017
Total   899.5        
  Approximately 2,000 hours forecast          

Source: Jiangsu Provincial Government
 
 
 
Statistics: NEA Publishes Q1 Power Generation Utilization Hours
The NEA released its Q1 2016 national power generation utilization hours data. Out of a possible 2,184 hours for the first quarter, the statistics are shown below. Keep in mind these are weighted averages:

  • Thermal: 1,006 hours, down 108 hour from 2015
  • Hydro: 691 hours, up 68 hours from 2015
  • Nuclear: 1,646 hours, up 7 hours from 2015
  • Wind: 422 hours, down 61 hours from 2015

While the averages may seem low, some provinces have significantly higher utilization hours. Fujian and Yunnan had 755 and 753 hours for wind utilization, respectively, whereas Gansu, Ningxia, Jilin, and Xinjiang were lower at 294, 264, 224, and 198 hours, respectively. (NEA CN)
 
 
 
Coal: NDRC and NEA Release Revised Production Capacity of Coal
The NEA has noted a rapid rise in thermal generation installed capacity, citing a planned 50GW of new thermal power coming online in the next few years. The NEA is hoping to eliminate the high-pollution, low-performance installed capacity of coal. Pollution emission levels are still not meeting environmental requirements, and many coal units require an upgrade, especially 300MW and below plants. Plants with old condensing units (20+ years) and condensate pumping thermal units (25+ years) also require upgrades. If these plants cannot upgrade to modern standards, they will be shut down indefinitely. (NEA CN)
 
With more coal coming online, 28 provinces will go to red alert levels in 2019 with coal overproduction, and utilization hours decreasing, it is a welcomed sign that the NDRC and NEA are finally taking notice and beginning to place enforcement mechanisms on overgrowth of installed capacity. These red alerts include the lowering rate of return on investment, the rising reserve levels, pollution levels, water consumption levels, and coal transportation and consumption levels. The problem needs to shift to power generation asset utilization and grid stability. 
 
 
 
Policy: Chongqing Government Releases Guidance on Electricity Price Reform
The Chongqing city government released its guidance on electricity price reforms. The reforms revolve around a restricted use of electricity based on the total value of assets owned by the company. The levels are:

  • Assets between 20-100 million RMB, electricity consumption should fall between 600GWh -3TWh
  • Assets between 100-200 million RMB, electricity consumption should fall between 3TWh -6TWh
  • Assets of 200 million RMB or larger, electricity consumption has no limit.

These electricity sales are direct from the generation company to the customer, thereby opening up the market on some level. (BJX CN)