Major turbine makers start building big

CHINA: China is pushing ahead in developing offshore wind power, despite obstacles that include high construction costs, uncertainty over turbine technology and conflicting government plans concerning the use of sea areas.

The East China Sea Bridge project, China's first foray into offhshore
The East China Sea Bridge project, China's first foray into offhshore

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The country may be in the early days of offshore wind power, but it has great ambition. The current national plan calls for China to boost offshore wind to 5GW by 2015 and to 30GW by 2020. Leading Chinese wind-farm developers - mainly large, state-owned power companies - have shown great interest in offshore wind power, since they have already carved up all the onshore areas that have rich wind resources.

According to the China Meteorological Administration, the country has 750GW of exploitable wind resource offshore - three times that on land.

The ideal sites for offshore wind farms are on the eastern and southern coastlines, near China's economic powerhouses.

By tapping offshore wind, power companies will avoid having to shut down turbines on windy days, as is happening in northern China when local towns cannot consume all the power generated. There are concerns that too much power from variable wind might damage the security of the grid. According to the China Wind Energy Association (CWEA), the grid rejected 10 billion kWh of energy generated in 2011, at a value of almost CNY 10 billion ($1.58 billion). But the large conurbations in the east and south of the country, near China's planned offshore locations, would consume as much power as offshore turbines are expected to generate.

Leading developers have shifted their attention from large-scale onshore bases in the north to offshore wind power in the east and south, as well as small-scale, so-called "distributed wind power" in central and southern land areas characterised by low wind speeds, high altitude and low temperatures.

So far, China has put only 138MW into operation offshore, less than 1% of the country's total potential. The country's first offshore wind turbine was erected in a pilot project in northern China's Bohai Bay in 2007, connected to the independent power grid of an offshore oilfield. A policy to promotte offshore wind power development was published in early 2010.

In June that year, China completed construction of its first large-scale offshore project, the 102MW wind farm near the East Sea bridge of Shanghai city. Comprising 34 Sinovel 3MW turbines, the project was the only offshore wind farm outside Europe. Three months later, the National Energy Bureau (NEB) announced a public tender for four offshore projects totaling 1GW in Binhai, Sheyang, Dongtai and Dafeng in east China's Jiangsu province, to be completed in four years.

At the same time, Longyuan Power, China's largest wind-farm developer, completed a 30MW intertidal pilot project in Rudong, also in Jiangsu - the first of its kind in the world. In June 2011, Longyuan Power started to construct a 150MW intertidal project in Rudong. This was seen as the launch of the country's large-scale development of offshore wind power.

Last July, NEB and the State Oceanic Administration (SOA) issued rules for offshore development. Under these regulations, offshore wind farms must be constructed no less than 10 kilometres from shore, and in waters no less than 10 metres deep. This will limit the development of inter-tidal projects - near-shore stations in waters less than five metres deep - which are taking place mainly in Jiangsu and Shangdong provinces.

In February this year, Sinovel announced it would supply 17 offshore turbines of 6MW for the first stage of Shanghai Lingang offshore pilot project. Industry officials say that China has launched pilot projects in order to gain experience for future large-scale offshore construction, provide a platform to test domestic offshore turbines and establish a feed-in tariff (FIT) policy and management mechanism.

Local governments and leading power companies have announced offshore wind plans larger than the national plan. Shanghai wants to construct 1GW offshore by 2015. Southern China's Guangdong province plans to construct 2-3GW offshore before 2015, and another 7-8GW from 2016 to 2020.

In March this year, Huadian signed an agreement with Xuwen county government in Guangdong province to develop a 300MW offshore wind farm. In the same month, Huaneng Renewables signed a contract with Dafeng county government in Jiangsu province to develop a 300MW offshore pilot, with an investment of CNY 6 billion. Meanwhile, Guodian Power signed a CNY 9 billion contract with the Zhoushan government for a 500MW offshore wind farm.

Delayed progress

But despite China's ambitions, its offshore wind plans have not progressed as smoothly as hoped. Each of the companies that won the first four offshore projects had to delay construction because the oceanic agency SOA disagreed with the sea areas designated by the energy agency NEB, which it said failed to conform to various environmental-protection plans. This meant the offshore projects had to be relocated, says Xie Changjun, general manager of Longyuan Power. There has been some progress though. In February, SOA examined and passed the environmental impact report for the four concession projects in their new locations.

Industry officials say that NEB has kicked off preparation for the public tender of a second batch of offshore concession projects, totalling 1.5-2GW. The tender was originally expected to finish in the first half of this year, but this has not happened.

Arguably the key obstacle to offshore wind is the high development cost. Xie Hongwen, a senior engineer at China Hydropower Planning and Design Institute, says the country's offshore wind farms are constructed at a cost of CNY 16,000-19,000/kW - two to three times more expensive than onshore.

But FITs for concession projects are too low for developers to make a profit. To win the first four offshore projects, Chinese power companies undercut each other's prices. The bid-winning FITs came in at CNY 0.6881-0.7779/kWh, far lower than the CNY 0.978/kWh for the Shanghai East Sea project.

Industry officials say that the winning companies, which are well funded, state-owned businesses, would sacrifice economic gains to win development rights, showing their determination to accumulate experience and develop their confidence in offshore wind power.

Liu Qi says that to improve efficiency, China should use turbines no smaller than 3MW and gradually move up to 5MW and beyond, while intertidal projects should use turbines no smaller than 2MW.

Only a few of China's 80-odd turbine manufacturers are capable of producing such large turbines. To take a slice of the CNY 80 billion offshore cake up to 2015, manufacturers are now competing to develop large-capacity machines. In May 2011, Sinovel announced a 6MW offshore prototype, and it has already won 150MW of orders. Then in December, Guodian United Power also produced a 6MW prototype. This was followed in March by XEMC, who installed a prototype 5MW direct-drive offshore turbine at an inshore test site near Fuqing, in south China's Fujian province. At the time of writing, Goldwind was expected shortly to roll a similar 6MW prototype off the production line, to be put into mass production in 2014.

Cold water

In the face of all the obstacles, leading developers remain positive. Zhang Yuan, deputy general manager of Longyuan Power, says China's 5GW offshore target for 2015 is conservative. It is highly likely to fulfill this objective ahead of time, with more companies eyeing offshore opportunities, he believes.

But industry officials have poured cold water on this optimism. A CWEA official says turbine makers cannot be criticised for developing offshore turbines, as this will have long-term benefits. But the slow progress of offshore construction means the schedule of purchasing and installing wind turbines will be hampered. This will be a big test for manufacturers, many of whom are already suffering cash-flow problems. "If turbine makers gamble on offshore wind turbines, they risk losing the capital they have invested," the CWEA official says.

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