Building an offshore sector to rival Europe

Meteorological studies have shown that China has up to 500GW of exploitable resources in seas 5-50 metres deep, about half of the onshore wind resources.

Bigger turbines...XEMC's 2.5MW offshore prototype
Bigger turbines...XEMC's 2.5MW offshore prototype

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Along the coast, particularly Jiangsu in the east, are large economic centres with growing demands for power and a diminishing supply of fossil-energy resources. "Developing offshore wind farms in these areas will reduce local energy shortages and avoid long-distance transmission issues that beset China’s major land-based wind farms in the north," says Qin Haiyan, secretary general of the China Wind Energy Association (CWEA).

Shi Lishan, deputy director of new energy and renewables at the National Energy Bureau (NEB), says offshore will be a priority for China’s future wind-power development. The NEB first proposed offshore wind development in early 2009, but a public request for bids aimed at attracting international turbine makers was met with little interest. Qi Hesheng, secretary general of the wind-power equipment branch at the China Association of Agricultural Machinery Manufacturers, says foreign companies were worried their leading technologies might be stolen when introduced to China.

By the end of 2009, China had a few small inter-tidal projects. In 2010 the 102MW Shanghai East Sea Bridge wind farm with 34 Sinovel 3MW offshore turbines was up and running — the only offshore project outside Europe — although Qi claims this was built largely as a political gesture to provide green power for the 2010 Shanghai World Expo.

To date, China’s offshore capacity is a tiny proportion of its total installed wind-power capacity, but this is set to increase as contracts to construct 1GW of offshore and inter-tidal concession projects were awarded last year, with the public request for tender restricted to domestic wind-farm developers or joint ventures that are more than 50% Chinese-owned. Sinovel, Goldwind and Shanghai Electric will supply the turbines.

A second request for tenders for offshore concession projects is expected to be issued before the end of the year. The projects, totalling up to 2GW, will be sited across provinces from Jiangsu to Hebei, Shandong, Zhejiang and Guangdong.

In June, the NEB announced an ambitious plan to construct 5GW of offshore wind projects by 2015, while developing full technologies and setting up a complete industrial supply chain for offshore. According to the NEB, by 2015 China will enter into scaled development of offshore wind power and its technologies, and by 2020 will construct 30GW offshore projects, becoming the largest country for offshore wind-power development. This compares with Europe’s plans to have 44GW in offshore projects by 2020, and 10GW from the US.

Siting uncertainties

China’s ambitious dream for offshore wind power is overshadowed by many challenges and, one year on, the winners of the first tender round remain unable to start construction due to problems with the sites. This, say industry insiders, is through a lack of involvement from the State Oceanic Administration.

The sites allocated for the two 200MW inter-tidal wind farms at Dongtai and Dafeng were found to overlap with sites for ecological and aquacultural maritime projects and a nature reserve for birds. They must now move 10 kilometres further out to sea, making them more like offshore wind farms. This move increases the need for 220kV undersea cables to a level that Chinese firms cannot produce. Imported cables are too expensive considering the feed-in tariffs offered to win the tenders, says Xie Changjun, general manager at Longyuan Power, which won the Dafeng construction contract.

China Datang Renewables, developer of the 300MW Binhai offshore wind farm, has been given a location one third smaller than planned, and will have difficulty maintaining an acceptable yield in the reduced area.

The low feed-in tariffs offered to win public tenders mean it will be harder for the developers to make profits. At CNY 0.62-0.74/kWh ($0.010-0.012), the winning bids are low — close to the tariffs for onshore wind power in Jiangsu. In comparison, the tariff for Shanghai East Sea Bridge offshore wind farm is CNY 0.978/kWh.

Offshore wind-farm construction costs are two or three times those of onshore wind farms, says Shi Pengfei, vice-president of CWEA. While the project operators are certain to lose money with such prices, they are drawn to the projects in order to be in at the start.

"Do not enter the offshore wind sector if you want to make a fortune now, if you do not have much money yourself," says Xie. "We have entered the sector because we are a leading state-owned power company. We have social responsibilities."

Turbine quality concerns

Developers must abandon the cut-throat competition that forces down project bid prices and devours profit margins in the whole sector, say industry insiders. Such pressures may affect the quality and reputation of turbines, says Zhou Tong, Goldwind’s strategy and planning director. "Wind turbine makers will face big pressures in production costs when constructing large-capacity offshore turbines," she says. "We need major investment at this stage."

Turbine quality is a sore point for offshore wind developers. Guohua Wind Power, a subsidiary of state-owned mining and energy company Shenhua Group, has 134 domestic turbines installed at an inter-tidal wind farm in Dongtai, Jiangsu province. In the past three years, each turbine has had a problem on average once every two months, including major components in gearboxes, generators and transformers breaking down.

Xie agrees: "So far, I have found no fully satisfactory offshore wind turbines." In 2009, Longyuan set up a 30MW pilot inter-tidal wind farm in Rudong, Jiangsu province, to test 16 turbines from eight manufacturers. "The best turbines are from Envision Energy, a little-known turbine maker in Jiangsu province, with 98% availability ratio," Xie says, adding that he found turbines from leading manufacturers less satisfactory.

"On the surface, Chinese wind turbine makers have mastered core technologies," Xie adds. "Their turbine availability ratio is now close to that of international giants such as Vestas and GE, but their turbines require long-time regulations before going into operation. In this sense, it remains hard for them to compete with the big global players."

Earlier this year Xie offered to test turbines from Siemens, a newcomer to the Chinese offshore sector, at Longyuan’s 150MW pilot inter-tidal wind farm in Rudong, Jiangsu province. But the pressure of low feed-in tariffs means Chinese wind farms largely use cheaper domestic turbines.

The country needs around 6,000 offshore turbines with a 5MW capacity to meet the 30GW target for 2020, says Tao Gang, vice-president of Sinovel, and the country’s leading wind-turbine makers are vying to win a slice of that market. Last October, both Sinovel and Xiangtan Electric Manufacturing Corporation (XEMC) produced a 5MW offshore prototype, and this year, Sinovel produced China’s first 6MW wind turbine. Guodian United Power, Shanghai Electric, Goldwind, and Chongqing Haizhuang are also developing 5MW or 6MW turbines. .

Foreign turbine makers are also eyeing this lucrative market. Last year GE set up a joint venture with Harbin Electric Machinery Company to develop wind turbines for the Chinese market, including direct-drive turbines for inter-tidal and offshore projects.

Advance in small steps

According to Ole Hermansen, director of Siemens China’s offshore wind division, China and Europe differ most in the speed of wind-power development. "In Europe, an offshore wind farm is developed in five to six years, but it’s a totally different story in China," he says. "As I see it, Europe develops too slowly, and China advances too fast. I prefer a middle course."

Europe is developing offshore wind because it does not have much land left, says Xie. But China still has great potential onshore with low wind-speed areas. "The blowout-style development of China’s onshore wind power is unfit for offshore wind exploration," he says. "I think China’s objective of developing 5GW offshore wind power by 2015 is right. "

The NEB has recognised that the offshore industry is in its early stages, and the government’s five-year plan aims to increase offshore capacity by 1.5-2GW annually and improve technologies, says Liu Qi, deputy director at the NEB. Offshore development will focus on Jiangsu and Shandong provinces, which have high power use and are far from devastating typhoons, he says. It will also promote offshore wind development in Hebei, Shanghai, Zhejiang, Fujian, Guangdong, Guangxi and Hainan provinces.

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