Analysis - China unable to achieve 5GW offshore wind goal by 2015

CHINA: China is unlikely to achieve its goal of 5GW offshore wind installations by 2015, according to an engineer charged with overseeing the development of the country's offshore capacity.

The Offshore Wind China 2013 conference

Yi Yuechun, deputy chief engineer of HydroChina, an institution commissioned by the National Energy Administration (NEA) to map China's offshore wind power development, said that even installing the offshore wind projects already approved by the NEA by 2015 looked to be a challenge.

"Even if China could construct the 3.95GW approved by NEA for preliminary preparations by 2015, China is barely able to complete the 5GW goal by that time," Yi said at the Offshore Wind China 2013 conference.

Thwarted ambitions

Despite having a 5GW target for offshore wind in its current five-year plan (2011-2015), by the end of 2012, China had only installed 389.6MW offshore wind capacity, 127MW of which was installed last year. However, even though this is the third largest capacity in the world after the UK and Denmark, it is well short of the 2015 target and a 2030 target of 30GW — and much of it comes from inter-tidal projects rather than real offshore wind farm.

The relatively slow progress, when compared to its huge 71GW onshore capacity, is being blamed on a feed-in tariff (FiT) for offshore that developers say has been set too low.

In September 2010, the NEA organised a public bidding for four offshore wind projects, totalling 1GW, in Yancheng, in east China's Jiangsu province. However, construction of the four projects has not started. These delays have been blamed on rows between political departments over the use of the sea, but also on the level of the FIT.

The bid-winning FITs for the four concession projects in Yancheng range from CNY 0.62 to CNY 0.74 ($0.10-0.12) per kilowatt hour, approaching the highest benchmark FITs for onshore wind projects. But considering the high construction and maintenance costs for offshore projects, believed to be double those for onshore wind projects, wind developers claim they have no way to make profits.

"The bid-winning feed-in tariffs are too low," said Feng Xuepei, deputy general manager of the project development department of Shenhua Guohua Energy Investment.

"We are unsure whether and when to make profits. This partly explains why few companies are eager to develop offshore wind projects after the public tender."

Meanwhile, demonstration offshore wind projects, such as Longyuan Power's 150MW inter-tidal wind farm in Rudong, Jiangsu province, enjoy varying but slightly higher FITs.

In response to developers' concerns, NEA deputy minister Liu Qi said China is accelerating the pace of studying and establishing a benchmark FIT for offshore wind projects. However, he did not give an exact timetable.

Bai Jianhua, deputy chief engineer of the State Grid Energy Research Institute, said the FIT policy should set the tariff at a higher rate to stimulate faster development of offshore wind power in China. It is expected offshore wind developers will need a FIT of at least CNY 1.0/kwh to ensure profits.

Eastern China a priority

While developers await a higher FIT rate, the NEA has mapped scaled development plans of offshore wind power for the future, if the present demonstration offshore projects go well. Priority will be given to the eastern provinces of Shanghai, Jiangsu, Hebei and Shandong. The NEA also stipulated that eastern Zhejiang province, south-eastern Fujian province, southern Guangdong, Guangxi and Hainan provinces, and northern Liaoning province will also be given powers to speed up offshore wind planning and project construction.

To date, NEA has approved 17 offshore wind projects, totalling 3.95GW in Hebei, Jiangsu, Shanghai, Fujian, Guangdong and Zhejiang provinces. In addition, 28 offshore projects are under preparations to win NEA approval, totalling 8.5GW.

Offshore turbines

If these areas can speed up development, aided by a higher FIT rate, then offshore wind represents a potential CNY 100 billion ($16 billion) market for turbine manufacturers.

In China's existing offshore wind farms, turbines — each larger than 2MW — are largely supplied by Sinovel, Goldwind and Siemens. Sinovel and Siemens turbines are mainly installed in offshore projects, while Goldwind turbines are used in inter-tidal projects.

Looking ahead, Sinovel, Guodian United Power, Dongfang Electric, XEMC and CSIC Chongqing Haizhuang have all produced 5MW or 6MW prototypes.

Sinovel has also begun developing a 10MW turbine, which Sinovel chief engineer Chen Danghui said had reached the midway point in its development.