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Clean and Renewable Energy

Industry Overview

Renewable energy – primarily hydro, solar, wind, tidal, geothermal and biofuels – accounts for about approximately 28% of China’s energy generation capacity, with hydropower accounting for around 80% of this total. However, the non-hydro proportion of renewable energy is expected to rise dramatically because of the government’s shift in emphasis towards alternative sources of energy, especially wind, solar and biofuels. Coal, oil, and nuclear still account for about 70% of the energy generation mix. Therefore, implementing new technologies, like carbon capture and sequestration, in these sectors is also critical to reducing overall emissions.

According to China’s 12th 5-year plan, the country plans to increase the proportion of renewables in its energy consumption (excluding hydro) to 11.4% by 2015. To achieve this, the government will focus on developing renewable energy sources, increasing the ratio of renewable energy in national energy construction plans, expediting technological progress, developing internationally advanced renewable energy technologies, promoting the change of energy construction in the countryside, implementing gradually more efficient fuel utilization, bringing power supply with renewable energy to remote areas, and solving the electricity supply problem in those areas. In addition, the government plans to develop 100 ‘model renewable energy’ cities and 200 ‘model green energy’ counties by 2015. Integrated city planning, design, and construction are needed to assist both cities and industrial parks in the use of solar, biofuel, and geothermal energy for electricity, central heating & cooling, and other energy purposes.

To this end the Chinese government is currently investing significant resources to achieve its ambitious targets, spending $52 billion in 2011 on renewable energy projects. This level of investment will continue to increase in the near term with analysts suggesting that China may spend as much as $473 billion on total clean energy investments between 2011 and 2015.

Market Opportunities

Hydro Power
China envisages hydropower as the most significant source of renewable energy into the foreseeable future. China has more than 200 GW of hydro generating capacity already installed from approximately 48,000 generating stations. By 2020 it aims to increase this figure to 348 GW through further construction. If it achieves these goals, China will have already exploited around 86% of its hydropower potential. Consequently, the viability of developing further hydro facilities may start to diminish, as the remaining potential capacity will be in more remote locations.

China is also planning to diversify and upgrade the capabilities of its hydropower system over the next decade. Small scale hydroelectric power stations will be used to meet the goal of replacing fuel by hydroelectricity as outlined in the New Village Project. Five provinces including Zhejiang, Jiangxi, Guizhou, Hubei and Guangxi are each working to increase small scale (3 GW) hydro power capacity by 2015. Furthermore, the construction of more pumped-storage hydro power stations aims to strengthen the flexibility and reliability of the state grid in the Eastern Coastal regions of China. In the East China Grid, Jiangsu will increase 2.05 GW, Zhejiang will increase 3.5 GW, Anhui will increase 1.8 GW, and Fujian will increase 1.4 GW installation capacities by 2015.

Wind Power
China is both one of the world’s leading wind power generators and one of the fastest installers of new wind generating capacity with projections indicating that the country constructed 15.9 GW of new capacity in 2012 alone. This figure accounted for 35% of all the new onshore wind capacity installed globally. Offshore wind power is also making strides with massive investment going towards technology advancement and creating a new high-end industry chain. In the short term, a batch of offshore pilot projects is planned for Jiangsu, Shandong, Hebei, Shanghai, Guangdong, and Zhejiang Provinces. In sum, financial investment on new wind projects came in at just over $27 billion in 2012.

As a result of this substantial growth, wind power’s share of China’s overall installed energy capacity is expected to increase significantly, rising to around 10%, or 200 GW, by 2020. Furthermore, wind power receives particularly privileged treatment under China’s Renewable Energy Law. Large-scale generation projects - those with a capacity of more than 100 megawatts - receive substantial central government support. Customs taxes and value-added taxes are waived on imported equipment, and operators have the right to agree to long-term power purchase agreements with their local power grid, thus guaranteeing them revenues. Furthermore, NDRC has enacted a Feed in Tariff (FiT) policy for wind projects providing incentives of between RMB 0.51-0.61 ($0.08 - $0.10) per kWh.

Solar Power
Solar energy has enormous potential in China, but because the technology is still in its infancy compared to wind or hydro. It currently plays a relatively small part in energy generation, with less than 1GW of capacity installed in 2010. Indeed, despite China being one of the world’s largest PV cell manufacturers, approximately 95% of units are produced for export. Although the government has set ambitious targets for solar growth of 21GW by 2015 and 50GW by 2020 (some sources suggest that 2015 targets may be doubled to 40 GW), these figures are dwarfed by projections of coal, nuclear and hydro.

Distributed solar capacity is expected to grow rapidly in China, especially in remote areas that are difficult to connect to the main electricity grid. In the short term the government will encourage the use of solar thermal water heating units, solar thermal house units, and solar thermal cookers in an effort to expand the utilization of solar thermal throughout rural areas. In the city, the adoption of solar thermal equipment in will begin in low rent housing and affordable housing, both of which are subsidized and built by the local government. Every year, they plan to support integrated solar thermal utilization of 10 million square meters. In addition, solar power will be tested for potential use and application within desalination processes and city central heating & cooling systems.

In recent years China has created a series of incentives to promote distributed solar across the country. NDRC has enacted a national FiT policy for solar power projects, offering incentives of RMB 1 ($0.16) per kWh. Other regions have diverged from the national program by offering more generous incentives. Yet despite these subsidies, solar projects can struggle to produce significant profits for investors. Technology improvements and increased supply have pushed the cost of installation for solar down over 80% from 2007 levels to RMB 13,000 ($2,100) per kW. However, analysts have calculated that further price falls are required before solar projects can achieve a reasonable economic rate of return.

Biofuels
China has ambitious goals for its biofuels industry. It expects biofuels to meet 15% of its transportation energy needs by 2020 (up from 6.6% in 2011) and the government has set a target of 13 GW of total generation capacity by the end of the 12th Five-Year Plan. This represents a substantial increase from the 5.5 GW of capacity in 2010. China’s 2020 goal will call for a combined ethanol and biodiesel output of 12 million tons. Under its current biofuel program, as plants now under construction become operational, ethanol output is currently around 4 million tons, and biodiesel is around 2 million tons. Currently, more than 75% of China’s ethanol output is sourced from corn, with the remainder coming from wheat and sorghum. There are alternatives, among them rapeseed oil, which could be planted in the off-season across much of central China, as well as imports of fuel ethanol from other countries, particularly Brazil.

Best Prospects

Despite the absence of formal legal obligations with the international community, China offers good opportunities for clean and efficiency-increasing technology. The best opportunities are in areas where domestic technology is not adequate and foreign technology can significantly contribute to increased efficiency. Besides competition from domestically manufactured products, new entrants also face strong competition from other foreign importers that have a presence in China. The majority of foreign companies active in the market are already manufacturing here, or if not, they have at least a sales/technical center or office in China.

Regulatory Environment

China’s government has set targets and taken concrete measures to curb greenhouse gases and reduce energy intensity. The 2004 “Energy Conservation Plan” has become a guiding document for China’s mid- and long-term energy conservation projects. From 2005-2010 the government introduced steep emission reduction targets which it nearly met. This shows a good level of commitment to the development of cleaner energy in the country.

Developing its own technologies and manufacturing capabilities is critical for China. The government has formulated a series of preferential policies, fund support, and tariff breaks to encourage domestic production. For all upcoming energy projects, the government strongly encourages prospective buyers to first consider domestic equipment. For equipment which domestic companies cannot produce or for which they lack key technologies, joint ventures are encouraged, as they bring in foreign technology and know-how. There are high import tariffs for complete-set equipment to deter imports; on the other hand, there are lower import tariffs for imports of key components that are used for domestic assembly or the production of complete-set equipment.

To fund the country’s ambitious renewable energy targets, the Ministry of Finance (MOF), the NDRC and the National Energy Administration (NEA) have enacted a surcharge on thermal power companies. This rate was doubled in 2012 to RMB 0.008 ($0.001) per kWh, with collected revenues helping fund increased Feed in Tariff (FiT) rates. In addition, 2012 saw the introduction of new national standards regulating the ways in which solar and wind projects are connected to the national grid. China suffers from one of the lowest wind capacity factors (ratio of actual output compared to optimum potential output) of any major economy at 21.6%, with a significant portion of newly installed renewable projects lacking grid connection. It is hoped the release of these new standards will facilitate the faster incorporation of these already constructed sites into China’s power system.

Reports and Statistics

Renewable Energy Top Markets for U.S. Exports 2014-2015

This Top Markets report is provided as a resource for U.S. exporters by the International Trade Administration.

China Greentech Initiative Reports
This is an open source commercial collaboration of over 80 of the world's leading technology companies, services firms, entrepreneurs, investors, NGOs and policy advisors, united to contribute to a sustainable China and world.

Major Shows & Exhibitions

This section provides a listing of upcoming clean and renewable energy-related events in China, including industry shows and trade missions. While FCS China is directly involved with some of these events, the others listed here have no direct relationship with the FCS and are listed solely as a convenience to our users.

For more information, please contact the organizing group as listed in the event description. Verify the information before making any commitments - we are not responsible for accuracy of information or changes in events' schedules.

Solarcon China 2014

Dates: March 18-20, 2014

Venue: Shanghai

Website: http://www.solarconchina.org/en/

Inter Solar China 2014

Dates: March 26-28, 2014

Venue: Beijing

Website: http://www.intersolarchina.com/en/intersolar-china.html

Clean Energy Expo 2014

Dates: March 26-28, 2014

Venue: Beijing

Website: http://www.cleanenergyexpochina.com/

SNEC 8th (2014) International Photovoltaic Power Generation Conference & Exhibition

Dates: May 20-22, 2014

Venue: Shanghai

Website: http://www.snec.org.cn/indexe.asp

Energy Storage in China 2014

Dates: June

Venue: Beijing

Website: http://www.escexpo.cn/

Offshore Wind China 2014

Dates: July 2-4, 2014

Venue: Shanghai

Website: www.offshorewindchina.com

China Wind Power2014

Dates: October 22-24, 2014

Venue: Beijing

Website: http://www.chinawind.org.cn/cwp2013/2014en.html

Useful Websites

Links to non-Commercial Service organizations are provided solely as a convenience to our users. The Commercial Service makes no representations about the accuracy or suitability of the information provided on the following web sites. The FCS is not responsible for the content of the individual organization webpages found through these links, and their inclusion here should not be understood as an endorsement of these organizations.

National Development and Reform Commission (NDRC)

China Clean Energy Network (CCEN)

China Renewable Energy Industry Association

China New Energy

China New Energy Chamber of Commerce

China Renewable Energy Information Net

China Wind Energy Association

China Energy Net

China Sustainable Energy Program

China Solar Energy Information Net

Guangzhou Institute of Energy Conversion

Useful Links

ACORE – the US-China Program: http://www.acoreuscp.org/?utm_source=SilverpopMailing&utm_medium=email&utm_campaign=China%20Update%2012.06.13%20(1)&utm_content=

SEIA – Solar Energy Industry Association: http://www.seia.org/

U.S. Commercial Service Specialists

The U.S. Commercial Service offers a broad array of market entry services to U.S. companies in the renewable energy industry. Please refer to the following relevant contacts for additional information on how we can help you expand your business in China.

Beijing Office:
Tel: (86-10)8531-3000
Fax: (86-10)8531-3701
Sherry Cai

Shanghai Office:
Tel: (86-21)6279-7630
Fax: (86-21)6279-7639
Sophia Chen

Guangzhou Office:
Tel: (86-20)3814-5000
Fax: (86-20)3814-5310
Lena Yang

Chengdu Office:
Tel: (86-28)8558-3992
Fax: (86-28)8558-3991
Shiyang Cui

Shenyang Office:
Tel: (86-24)2322-1198
Fax: (86-24)2322-2206
Yang Liu

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