Ivan Tong and Ben Warren, Ernst and Young
December 14, 2010 | 0 Comments
Developers, manufacturers, investors and other renewable energy industry stakeholders need to know where the next big market is going to be so that they can adjust their business decisions accordingly.
Since 2003, global consultancy Ernst & Young has released its Country Attractiveness Indices, which gives a numerical ranking to 30 global renewable energy markets by scoring renewable energy investment strategies and resource availability. The indices are updated on a quarterly basis and the most recent report can be found here.
Here is the firm’s assessment of China.
In September, a joint statement by the National Development and Reform Commission (NDRC) and State Electricity Regulatory Commission, reported that surcharges paid to low-emissions generators harnessing the wind, sun and biomass totaled CNY3.7b (EU €414m, US $555m) in the second half of 2009, almost double the CNY2b (EU €224m, US $300m) paid in the first half of the year, indicating a significant rise in RE installations.
It has also emerged that the cost of producing RE equipment, such as solar panels or wind turbines in China is on average 30% lower than more developed economies.
GWEC has confirmed that China now ranks as the world’s largest wind power market, and is likely to surpass the US as the leader in cumulative wind power capacity by the end of the year. A recent GWEC study forecasts that current installed capacity in China could increase tenfold by 2020, up from 25GW at the end of 2009.
The growth in China's installations is underpinned by record levels of investment, which in Q3 2010 represented just under half of all funds put into new wind projects globally. It is estimated that one in two wind turbines to go on line in 2010 will be in China.
Further, this substantial investment in China's wind sector looks likely to continue, with the Government announcing it may allocate 30% of its alternative-energy spending in the next decade to wind power, totaling a potential CNY1.5t (EU €168b, US $225b).
In September, China Power Investment Corp., the country's fifth largest power generator, obtained approval to develop a 300MW wind farm in the Inner Mongolia Autonomous Region, due to come on line by 2013 and attracting a power purchase price of CNY0.52 (EU €0.06, US $0.08) per kWh once connected.
China has opened bidding in the nation's first batch of offshore wind power projects under tender. The four offshore projects, located in the coastal areas of Jiangsu province with a total installed capacity of 1GW, are expected to attract a combined investment of over CNY20.8b (EU €2.33b, US $3.12b).
State-owned enterprises were leading actors in the public tender, although the low prices offered indicates the winning company could lose money on the projects.
In July, China officially started transmitting power from its largest offshore wind farm. The 102MW Donghai Bridge Wind Farm off Shanghai is the first major offshore wind farm outside of Europe, and could generate up to 267GWh of power each year. The municipal government of Shanghai is also planning to build another four offshore wind farms with a combined generating capacity of 1GW.
Construction of the world’s largest offshore wind farm began in late October. The 1-GW wind farm will be located in Bohai Bay, approximately three hours from Beijing, and is expected to be complete by 2020. The Chinese Government has invested US$2.2b (€1.6b) toward the project, which is being managed by the state-owned China National Offshore Oil Corporation (CNOOC). The world’s largest offshore wind farm is currently Thanet, in the North Sea, with a generating capacity of 300MW.
Chinese solar components manufacturer LDK Solar announced it has entered into a strategic financing agreement with the China Development Bank for up to CNY60b (€6.7b, US $9b) of credit facilities over a five-year period. It is the largest loan the state-owned bank has awarded this year to the country's integrated solar product makers, according to Bloomberg.
Hanergy Holding Group, a Chinese renewable-energy company, signed an agreement with the Hainan Government to invest CNY17.5b (€1.9b, US $2.6b) in the next five years to develop solar projects in Haikou City. The company plans to build a plant to produce 1GW of thin-film solar cells annually. Other projects include a 100MW solar power plant and a clean-energy research and development center.
In July, the NDRC announced that it would set national FITs for biomass power plants. Currently, biomass FITs can vary between CNY0.5-CNY0.7 (EU €0.05-€0.07, US $0.07-0.10) per kWh, with central and western provinces typically gaining a lower power offtake due to poor economic development. NDRC‘s national tariff will fix the tariff for electricity generated from biomass projects at CNY0.75 (€0.08, US $0.11) per kWh across the country.
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