Azure China Energy Transition Update-October 17th

Azure International

2022-10-17

导读：Mid-way into the 14th FYP, can China’s FCEV sales meet its 2025 target?

Hainan’s offshore wind pipeline is making progress as Shenergy’s 1.2 GW project in Danzhou city, has been approved by the Hainan DRC. Tangshan city, Hebei, joins Chinese cities that have released large scale offshore wind development plans. The city expects to develop 17 GW offshore wind projects by 2035.

Inner Mongolia’s first project combining green hydrogen production and refueling stations was put into operation. While China’s hydrogen is mostly carbon-based, green hydrogen projects have been gaining traction in the last years. Green hydrogen production will be essential to power China’s fuel cell electric vehicle fleet. It has set the ambitious plan to reach 50,000 vehicles by 2025, but as we will see in our Corporate Net Zero Pathways column, time is running short, and sales are struggling to take off.

The Azure Research

and Strategy team

- -News Summary- -

Shenergy Hainan CZ2# 1.2GW offshore wind project approved by local DRC
Tangshan city releases 17GW offshore wind plan
Inner Mongolia's first green hydrogen production + refuelling station was put into operation
China’s SASAC orders all state-owned enterprises to formulate a carbon peak action plan before the end of 2022
Corporate Net Zero pathways: Mid-way into the 14^th FYP, can China’s FCEV sales meet its 2025 target?

Shenergy Hainan CZ2# 1.2GW offshore wind project approved by local DRC

The Shenergy group announced that the Shenergy Hainan CZ2# offshore wind project has been approved by Hainan’s local DRC.

The offshore wind farm is in the northwestern sea area of Danzhou City, Hainan province, with a total installed capacity of 1.2GW. The total investment is about CNY 15 billion (USD 2.09 billion).

(Shenergy)

Tangshan city releases 17GW offshore wind plan

The Tangshan city offshore wind development plan (2022-2035) was released by city’s local government.

According to the document, 100m altitude winds speeds exceed 7.0 m/s along the coast and exceed 7.4 m/s 10 km from the coastline. The annual utilization hours of offshore wind power projects in these areas are expected to reach about 3,200 hours.

There is a total 17.15GW offshore wind projects pipeline listed in the document, including 3 zones with a total 1.65GW capacity which belong to the provincial sea area, and 13 zones with 15.5GW capacity which belong to the national sea area.

(Tangshan GOV)

Inner Mongolia's first green hydrogen production + refuelling station was put into operation

The Shengyuan Energy Hydrogen Production and Hydrogenation Integration Project, which has total investment of CNY 1.24 billion (USD 170 million), was launched last month.

The first phase of the project has a hydrogen production capacity of 2,000m³/h. The total production capacity of phase 1 and 2 will reach 12,000m³/h. The hydrogen is used to feed a 35 MPa hydrogen refueling station with 2,000 kg / day capacity. The hydrogen will be carbon free as it will be produced by water electrolysis using electricity generated by nearby distributed photovoltaic projects.

(BJX)

China’s SASAC orders all state-owned enterprises to formulate a carbon peak action plan before the end of 2022

Recently, the State-owned Assets Supervision and Administration Commission (SASAC) convened a meeting to discuss ‘State Owned Enterprises Carbon Peak and Carbon Neutrality’. State Owned Enterprises (SOE) will have up to the end of 2022 to formulate an action plan to peak their carbon emissions. All central enterprises should formulate action plans for carbon peaking in a scientific and reasonable manner, following a "one enterprise, one policy" policy. 20 SOEs have already formulated their actions plans, but challenges still need to be overcome:

Lack of carbon emissions data
Poor understanding of industrial layout and scientific basis for targets
Peak emissions lack ambition due to resistance to industrial transformation
Poor research concerning emissions reduction paths and unpractical measures

SOEs are main carbon emitters and investors in renewable energy. Such policy should further stimulate investment in new energy projects and technologies and demand for low carbon solutions on carbon and power markets.

(BJX)

Corporate Net Zero Pathways

Mid-way into the 14^th FYP, can China’s FCEV sales meet its 2025 target?

According to the latest vehicle sales data announced by the China Association of Automobile Manufacturers, in September 2022, the production and sales of fuel cell electric vehicles (FCEV) both reached 200 units, a 18.1% and 16.8% increase year-on-year, respectively. From January to September this year, the production and sales of FCEVs totalled 2400 units and 2100 units, a 170.7% and 130.7% increase YoY, respectively.

Source: China Association of Automobile Manufacturers; BEV: Battery Electric Vehicle, PHEV: Plugin hybrid electric vehicle

In August 2021, five ministries and commissions including NDRC jointly issued the "Notice on Launching the Demonstration Application of Fuel Cell Vehicles 关于启动燃料电池汽车示范应用工作的通知", making Beijing, Shanghai and Guangdong the first three FCEV city clusters. Henan and Hebei clusters entered the club on December 2021, bringing the total number of city cluster to five.

Here is a snapshot of the targets in the five clusters:

The Mid-long-term Plan for the Development of the Hydrogen Energy Industry (2021-2035) 氢能产业发展中长期规划（2021-2035年） proposes that by 2025, the core technologies and manufacturing processes of FCEVs will be well developed, and the total number of FCEVs will reach about 50,000 units. However, as of today, China has ‘only’ sold around 10,000 FCEVs according to MERICS. It thus remains uncertain that China’s FCEV industry will be able to meet the 50,000 units target by the end of 2025 unless sales pick up rapidly.

(BJX)

END

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