MARKET OPPORTUNITY PROFILE | EAST CHINA INTRODUCTION This report provides an overview of the alternative energy sector in East China, which includes industries involved in the production of wind, solar, run-of-river, tidal and biomass power. It begins with an overview of the market for the various industries in renewable energy in East China and then examines the suppliers, consumers, competitive situation and supporting laws. At the end, it discusses the latest research in China and the sector’s relevance to British Columbia industries. As defined by the government of the People’s Republic of China, East China includes the provinces of Anhui, Fujian, Jiangsu, Jiangxi, Shandong, Zhejiang and the municipality of Shanghai. The demand for electricity in China increases by more than eight per cent annually. China’s reliance on fossil fuels, as demonstrated by the graph on the following page, has generated problems including heavy environmental damages, periodic power shortages and exposure to the fluctuation of global oil prices. The Chinese government has put significant effort into expanding the renewable energy sector. In the Renewable Energy Development Plan for the 11th Five Year Period, published by China’s National MARKET OVERVIEW ALTERNATIVE ENERGY JUNE 2011-05-25
Transcript
MARKET OPPORTUNIT Y PROFILE | EAST CHINA
INTRODUCTIONThis report provides an overview of the alternative energy sector in East China, which includes industries involved in the production of wind, solar, run-of-river, tidal and biomass power. It begins with an overview of the market for the various industries in renewable energy in East China and then examines the suppliers, consumers, competitive situation and supporting laws. At the end, it discusses the latest research in China and the sector’s relevance to British Columbia industries. As defined by the government of the People’s Republic of China, East China includes the provinces of Anhui, Fujian, Jiangsu, Jiangxi, Shandong, Zhejiang and the municipality of Shanghai.
The demand for electricity in China increases by more than eight per cent annually. China’s reliance on fossil fuels, as demonstrated by the graph on the following page, has generated problems including heavy environmental damages, periodic power shortages and exposure to the fluctuation of global oil prices. The Chinese government has put significant effort into expanding the renewable energy sector. In the Renewable Energy Development Plan for the 11th Five Year Period, published by China’s National
M A R K E T OV E RV I E W
ALTERNATIVE ENERGY
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Development and Reform Commission in 2008, China’s alternative energy consumption was set to account for 10 per cent of the total energy consumption by 2010, 2.5 per cent more than that of 2005. China had already met that goal. The new goal for 2020 is to develop 120,000 MW’s of renewable energy, which will account for 12 per cent of China’s total installed energy producing capacity and will require an investment of 800 billion Yuan (about US$100 billion). Traditionally, due to the abundant resources for the production of both non-renewable energy and alternative energy in West China, one of China’s major electricity policies is to deliver electricity generated in the west to the east. However, East China, being the centre of economic development and with its unique resources, has developed a prosperous alternative energy sector of its own.
Wind PowerChina’s wind power capacity has doubled for five years in a row. At the beginning of 2008, the capacity was 5.9 GW. By February 2009, it had increased to 12.2 GW. At the end of 2009, this figure had risen to 25.1 GW with the installation of 21,544 sets of wind turbines in the year, placing China second among the world’s largest producers of wind power, after the United States. It also became the world’s largest maker of wind turbines, surpassing competitors in Denmark, Germany, Spain and the United States.
East China’s coastal location makes it more suitable for the development of offshore wind power rather than onshore, since offshore wind power makes use of coastal areas below the average high tide marks and uninhabited islands in sea areas. According to the China Meteorological Administration, China’s offshore wind power potential is estimated at more than 750 million kilowatts exploitable at the height of 10 metres and is
three times its exploitable land-based wind power potential, which is estimated at 253 million kilowatts. The potential is highest along the coastline of Guangdong and Fujian provinces, which are China’s manufacturing centres and have the largest population and the highest demand for electricity. The development of offshore wind power in East China is therefore practical and can avoid the construction of long transmission lines to bring elesctricity from the north and the west where most onshore wind facilities are located.
Due to complicated operating environments for offshore turbines, China’s offshore wind power sector is still in the developmental stage and offshore wind power accounts for a small part of China’s wind power capacity. Durable equipment is required in order to withstand the fluctuating temperatures at sea. Moreover, China still lags behind foreign countries in advanced offshore manufacturing and engineering technologies. Therefore, the construction of an offshore plant often results in double the cost of an onshore plant with the same capacity. However, offshore wind power remains the orientation of future wind power development in East China.
Under the China National Offshore Oil Corporation (CNOOC), China’s first offshore wind power plant in Bohai, which had a total installed capacity of 1.5 megawatts, started operation in late 2007. In April 2009, China’s first large-scale offshore turbine was installed in the East China Sea at the Shanghai Donghai Bridge Offshore Wind Farm Project, which began operation in May 2010 during the Shanghai World Expo. The wind farm had a total installed capacity of 100 megawatts and would generate 260 million kilowatt hours of electricity annually – enough power for 200,000 homes. There are plans for six more wind farms in Shanghai, including the East China Sea farm, the Bridge wind farm in Yangshan, the Fengxian Bay wind farm and the Changxing Island wind power project. Additionally, Jiangsu province was chosen in April 2010 for the construction of the next batch of offshore wind projects.
Solar PowerThe China Solar Polysilicon Industry Report, 2009 values China’s photovoltaic (PV) export in 2008 at 150 million Yuan (about US$18.8 million), which means that 30 per cent of the world’s PV was produced in China exceeding that of Germany and Japan put together. More than 10 startups in China expanded their output rapidly and went public in 2009, while many listed companies began to invest in the PV market. Many of these companies are located in East China, where technology is the most advanced and capital the most available including easily accessible ports for the export of solar equipment.
In fact, 98 per cent of solar cells made in China are exported. Installed PV in China totalled only 140 MV, less than one per cent of the global market share. The domestic market is still under development as the current price is comparatively high. Solar cells are mainly used for rural electrification, communications and industrial purposes, as well as for road signs and lighting.
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The Chinese solar cells market suffers from overcapacity in total output scale and unreasonable distribution. The polysilicon production capacity slightly exceeded 80,000 tonnes in 2008, but the output capacity was approximately 20,000 tonnes, indicating overcapacity. Solar construction projects are concentrated in East and Central China, an area with neither rich solar resources nor low-price electricity suggesting unreasonable distribution. These problems are alleviated to a limited extent by the Chinese government’s announcement to raise the 2020 solar power capacity target from 1.8 GW to 20 GW, which is still much lower than that for nuclear and biomass energy. In order to promote solar power, the Chinese government has enacted a regional feed-in tariff and national subsidies for PV installations. In Jiangsu, where there are more than 160 Chinese PV manufacturers, an attractive feed-in tariff of 2.15 Yuan, 3.7 Yuan and 4.3 Yuan (US$0.31, $0.54 and $0.63) is provided for each kWh of electricity from PV solar farms, rooftop projects and BIPV projects respectively. As a result, a total of 400 MW of PV are going to be completed in the province by 2011, compared to less than 3 MW before the plan. Meanwhile, photovoltaic grid-connected systems are being developed in Chong Ming Island and Pudong of Shanghai.
Run-of-River
HEP resources
(MW)
Per cent of China HEP resources
Capacity of HEP power
plants
Per cent developed
Shanghai, Jiangsu
97.5 0.03 29.7 30.46
Zhejiang 4655.2 1.23 3829.1 82.25
Anhui 881.5 0.23 579 65.68
Fujian 7051.2 1.86 4758.2 67.48
Shanton-neg
108.2 0.03 66.2 61.18
From the table above, it is observed that most hydroelectric resources in East China were already developed 10 years ago. There are very few untapped resources left now. The opportunity in the current market is to develop peaking hydroelectric power plants to deal with the fluctuating electricity consumption in East China. There are three approaches to this development: developing pumped-storage electricity, bundling several new
hydroelectric plants to form cascade hydroelectric power stations, and reforming and enlarging the capacity of existing hydroelectric plants. Examples of pumped-storage plants are Tianhuangping (shown above, Source: http://www.industcards.com/ps-china.htm) and Tonnegbai in Zhejiang. Examples of cascade plants are Zhejiang’s JinShuiTan, ShiTang and Yuqi cascade and Fujian’s QinShan, Zhouning and Mindong cascade.
TidalThe Jiangxia tidal power station in Wenling, Zhejiang provided 7,310,000 MW in 2009 and is the largest tidal power station in China and the third largest in the world. China, with its long coastline, has a lot of undeveloped tidal potential. However, the development of tidal energy is slow. China only plans to build two tidal energy plants of capacities 50,000 kW and 300,000 kW respectively by 2020.
BiomassBiomass energy resources in China include crop straw and stalk, which account for over 52 per cent of the total biomass energy produced, fuel wood, solid residue, human and animal excreta, urban residential refuse, agriculture and forestry processing residue and organic waste water from the processing of agriculture products. According to a study published in AMBIO: A Journal of the Human Environment, the biomass resources in China are sufficient to produce energy three times as much as the country is currently consuming, especially since many of China’s native species produce seeds rich in vegetable oils. Only less than one per cent of China’s grain yield is used for the production of ethanol, yet China is the third largest producer of ethanol in the world, after Brazil and the United States. Eighty per cent of biomass energy is rural, as 61 per cent of rural household energy comes from biomass energy. The Asian Development Bank reports that an investment of 413.5 billion Yuan (US$60.7 billion) is needed to utilize China’s biomass energy potential in rural areas over the next 10 years in order for China to meet its 2020 goal to produce 15 per cent of its energy from various waste-based sources.
In Jiangsu, China’s first demonstration crop stalk power plant began operation in 2006, providing an income of 5,000 Yuan (US$625) for farmers in the Suqian Economic Development Zone. In the same year, the 24 MW East China Sea Longyuan project, the first biomass investment by the State Power Longyuan Group and the 250 million Yuan (about US$31 million) Kaiyou Green Energy biomass power plant also began construction in Jiangsu. In Anhui, China Holdings began development of the second Biomass Renewable Energy Project in 2007. This project has an expected annual power generating capacity of 400 million kilowatt hours and annual revenues of 250 million Yuan. There are also a lot of private, state-owned and foreign-owned biodiesel plants in Shanghai, Fujian, Jiangsu and Anhui.
SuppliersThe following is a list of some of the major Chinese renewable energy companies that operate in East China. Most of them are ranked within the top 10 in their respective industries in China and are expanding rapidly.
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Wind
Zhejiang HeWind Ltd., Shanghai Electric, China Windey (Zhejiang), Shanghai Wande, Jiangxi Maide Wind Energy Co. Ltd., China Highspeed [gear], Zhejiang Tianma [wind bearings]
Solar
Trina Solar (Changzhou, Jiangsu), China Sunergy (Nanjing, Jiangsu), Shandong Sangle Solar Energy Co. Ltd., Shanghai Solar Energy Science & Technology Co. Ltd., Suntech Power Holdings Co., Ltd. (Wuxi, Jiangsu)
Run-of-River
Sinohydro Corporation, Zhejiang Hydropower Construction and Installation Co. Ltd., Zhejiang Zheng Bang Hydropower Construction Ltd.
BiogasNational Bio Energy Co., Ltd. (Beijing), Shanghai Zhongshenhua, Shantonneg Wenhe, Fujian Zhuoyue Bio Energy
Foreign companies are also major players in the market, especially in the wind industry. The tables below list the major wind technology companies in China and their market share in 2006. It can be observed that foreign companies hold a greater share of the market, which they are struggling to maintain since national energy policies favour Chinese companies.
Chinese Companies Foreign Companies
Producer Capacity (kW)
Per cent of market
Producer Capacity (kW)
Per cent of market
Golden Wind
442,200 33.19 Vestas 311,550 23.39
HuaYui 75,000 5.63 GE Wind 172,500 15.95
Hang-Tian WanYuan
49,500 3.72 Gamesa 212,500 12.95
Yunda 18,000 1.35 Nordex 27,300 2.05
Dongqi 9,000 0.68 Suzlon 12,500 0.92
Others 2,660 0.17 Total 736,350 55.26
Total 147,700 44.74
Source: China Renewable Energy Report 2009, http://www.docin.com/p-47827230.html
ConsumersIn addition to providing for the production of local electricity, many alternative energy companies in China export their products. This is best exemplified by the solar energy industry. As an example, of YingLi Solar’s 2007 total sales, exports to Germany, Spain, United States and Hong Kong represented 11.8 per cent,
58.6 per cent, 6.8 per cent and 18.6 per cent respectively. Only 3.5 per cent was sold in the domestic market. Hydroelectric technology was also exported. For example, Sino-Hydro undertook hydroelectric projects in Sudan and Budapest. It also had a deal with the government of Ecuador to construct the Codo Sinclair hydroelectric complex.
The Renewable Energy Law was passed by the Standing Committee of the National People’s Congress in February 2005. It states that grid companies have to meet a certain alternative energy quota; technical standards for relevant alternative technology and the need for product standardization; grid power price of alternative energy power generation projects shall be determined by the price authorities of the State Council; and preferential loan and tax benefits shall be given to alternative energy projects. It was renewed in December 2009 and the new law went into effect on April 1, 2010. The new Renewable Energy Law adds that the central government has full powers over the acquisition of alternative energy power generation programs and the finance department is to set up an alternative energy development fund. These new regulations add incentives for the development of alternative energy.
Latest research in ChinaHuazhong University of Science and Technology, in an alternative energy development competition organized by Beijing University of Science and Technology in August 2010 that attracted 1,868 teams and over 15,000 competitors, developed a solar race car that could travel 60 kilometres after being in the sun for five to six hours. The cost for the car was only 40,000 Yuan (US$5,000).
Next, Liluo Group Holding Co., Ltd. and Tsinghua University invented the medium-heat vacuum solar energy collectors and collector tubes, which passed the evaluation tests in July 2010. These inventions involved the development of more than 10 new technologies that are now patented, including a titanium and aluminum double-target sputtering technique that raises solar energy absorption of the selective absorption coating. They filled in the technological gap of all-glass vacuum collector tubes in the 150 medium-heat range and started the world’s first smart collector tube production line.
Moreover, the successful development of the metallization process of solar grade silicon, presented in June 2010, decreased the high cost of the production of silicon by 60 per cent. Furthermore, the development of the transparent conductive glass coating in 2009 revolutionized solar batteries production in China. The non-silicon transparent conductive coating invented by Bluestar Silicones in Hangzhou costs 20 to 30 per cent less than imported ones.
There were also breakthroughs in biomass energy research recently. In August 2010, researchers in TsingHua University
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R E G U L ATO RY / CO M P E T I T I V E E N V I RO N M E N T
genetically mutated colibacillus so that it produces a long-chain alcohol that is required in the production of ethanol. In June 2010, Fudan University published research that makes use of “green tides” caused by marine Enteromorpha prolifera to produce biomass energy.
Coal and oil electricity still accounts for more than 90 per cent of China’s electricity and is more stable than some forms of alternative energy, including wind and solar energy. Nuclear energy is also a rapidly developing sector. Another substitute to alternative energy produced in the east is energy produced in the west, where many of the largest run-of-river, onshore wind and solar plants are located. Many foreign companies, many from Denmark, Germany, Spain and the United States, compete with local companies. The major complements of alternative energy, in particular solar energy, include solar battery and solar heater. Solar battery is becoming more popular since the cost has decreased from 45 Yuan per kWh in 2000 to the regular electricity cost of 1 Yuan per kWh in 2009. Mainland’s solar battery production was 3 MW in 2000 and 4,000 MW in 2009. BYD Co Ltd, a Chinese car and battery maker, will invest 22.5 billion Yuan (US$3.3 billion) over the next five years to build China’s largest solar battery plant. Solar heaters are very popular too. The annual production of solar water heaters is approximately five billion. However, since the standardized requirements for solar heaters are set too low, more than 90 per cent of the heaters are produced by small brands and as a result the functionality and the price of heaters vary a lot with no guarantees.
The development of alternative energy in China may redefine the “energy bridge” between British Columbia and China. Every month in 2010 a vessel carrying 600,000 barrels of crude oil travelled from Vancouver to China. Kinder Morgan and Enbridge are competing to ship more crude to China. However, public opposition due to fears of an oil spill in B.C. similar to the recent disaster in the Gulf of Mexico as well as China’s renewable energy strategy must be taken into consideration.
Instead, alternative energy will play an increasingly significant role in this “energy bridge” between the two countries. The British Columbia Energy Plan promotes the development of alternative energy and will benefit greatly from exports of technologies and equipment from China. On the other hand, British Columbia’s investment in its own alternative energy sector can also mean better technologies and equipment for the world and a potential to build synergies between Canada and China.
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DISCLAIMER:This report has been prepared for the Government of British Columbia, Canada based on primary and secondary sources of information. Readers should take note that neither the author nor the Government of British Columbia guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations mentioned within. Readers should independently verify the accuracy and reliability of the information before making any decisions related to their business.
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