Daisy zhang


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Daisy zhang

  1. 1. China Renewable Energy – Growth for the Next Decade October 10, 2011 Daisy Zhang China Utility & Renewable Energy BNP Paribas Equities (Asia) Ltd Shanghai Representative Office +8621 6096 9025 [email_address]
  2. 2. Agenda October 10, 2011 Actions to stimulate renewable energy development Current energy structure in china Current development of renewable energy in china Concerns over the development and their solution
  3. 3. Currently, China is relying too much on coal October 10, 2011 <ul><ul><li>Over 70% of China primary energy consumption are supported by coal </li></ul></ul><ul><ul><li>74% of installed power generation capacity are thermal power </li></ul></ul><ul><ul><li>81% of electricity is generated from coal </li></ul></ul>Sources: China Electricity Council, BP Energy Review 2011, National Bureau of Statistics Installed capacity breakdown (end - 2010) Power generation breakdown (2010) Primary energy structure (2010) Downside: Environmental impact, GHG emission, Sustainability, etc …
  4. 4. … but appetite for energy will not stop October 10, 2011 <ul><ul><li>Power demand growth remain high, 12% y-y growth in 7M11 </li></ul></ul><ul><ul><ul><li>The continued growth of the energy intensive industry such as chemical, construction material, ferrous and non-ferrous metal processing is driving the total demand </li></ul></ul></ul><ul><ul><ul><li>Total power consumption for 7M11 has grew 12% y-y </li></ul></ul></ul><ul><ul><li>China is experiencing a sever power shortage partially due to the high demand growth </li></ul></ul><ul><ul><li>On the other hand, the government has start to put stringent control over future coal consumption for environment protection </li></ul></ul><ul><ul><ul><li>e.g., Beijing government has planned to REDUCE the coal consumption of city by 26% in the next five years </li></ul></ul></ul><ul><ul><ul><li>the Yangtze River Delta, Pearl River Delta, and other seven regions are likely to adopt similar environment protection plan </li></ul></ul></ul>The high reliance on coal power is NOT sustainable China must find new way to support the future growth
  5. 5. On the other hand, China has enormous potential for renewables October 10, 2011 Sources: Chinese Academy of Engineering , Energy Bureau, China Electricity Council Renewable resources and development Wind power resources Solar power resources Fuel type Developed (end-2010) Economical Resources Developed % Hydro 213 GW 402 GW 53% Wind (onshore) 44 GW 297 GW 15% Wind (offshore) 0.1 GW 180 GW 0.06% Solar 0.24 GW 1-7 trillion ton standard coal equiv. sunlight Minimal Biomass 5.5 GW 1.17 bn ton standard coal equiv. Minimal
  6. 6. The nation is determined to promote renewable energy <ul><ul><li>In September 2007, the NDRC first released its Medium- and Long-Term Development Plan for Renewable Energy . This sets out targets for renewable energy up to 2020, with a 10% contribution to total energy consumption by 2010 and 15% by 2020. </li></ul></ul><ul><ul><ul><li>To meet its targets, the PRC government has announced its intention to invest about RMB 2 trillion in the development of renewable energy. </li></ul></ul></ul><ul><ul><ul><li>In addition, this plan also includes a “ Mandated Market Share ” policy, It sets targets that the market share of power generated from non-hydro renewable sources shall reach 1% by 2010 and 3% by 2020. </li></ul></ul></ul><ul><ul><li>In August 2009, the NDRC announced that the “New Energy Industry Promotion Plan” would be issued. </li></ul></ul><ul><ul><ul><li>According to a draft of the plan, China plans to invest RMB 5 trillion in new energy infrastructure development (including nuclear, wind, solar, and biomass power generation) by 2020, upgrading traditional energy, and industrializing the clean coal, smart grid and electric car industries. </li></ul></ul></ul>October 10, 2011
  7. 7. A bundle of policies to benefit the renewable players are issued October 10, 2011 <ul><ul><li>Favourable policy to cultivate the renewable energy sector </li></ul></ul><ul><ul><ul><li>Differentiated on-grid tariff – to benefit the renewable energy operators </li></ul></ul></ul><ul><ul><ul><li>Priority to sell on grid – energy from the renewable sources has been granted the priority to be sold on grid among all categories </li></ul></ul></ul><ul><ul><ul><li>Tax cut – 50% VAT tax rebate to wind power operators </li></ul></ul></ul><ul><ul><ul><li>Favourable policies towards lending and R&D investments </li></ul></ul></ul>On grid tariff by power category Sources: NDRC, BNP Paribas
  8. 8. Renewable share will be increased significantly in next decade October 10, 2011 Power Installed Capacity Breakdown Source: China Electricity Council, NDRC; BNP Paribas Global wind power capacity ranking <ul><ul><li>By 2010, wind and solar only account for only 3.3% in total installed capacity </li></ul></ul><ul><ul><li>By 2015 and 2020, the share of renewables is estimated to reach 7.0% and 10.1%. </li></ul></ul>Fuel type 20 10 (MW) 2015E (MW) 2020E (MW) 2010-2020 CAGR (%) Thermal 706,634 917,000 1,150,000 5.0 Hydro 213,397 284,000 330,000 4.5 Nuclear 10,824 43,000 80,000 22.1 Wind (on grid) 31,070 90,000 150,000 17.1 Solar 240 10,000 40,000 66.8 Biomass 5,500 13,000 T o t a l 962,190 1,437,000 1,885,000 7.0
  9. 9. Energy structure will be much improved October 10, 2011 China Primary Energy Structure <ul><ul><li>By 2010, share of wind and other renewable is insignificant </li></ul></ul><ul><ul><li>By 2015 wind, solar and other renewable energy is expect to take 2.6% share </li></ul></ul><ul><ul><li>By 2050, China aims to lower the dependency on coal and oil to 50% and increase share of hydro, wind, solar and other renewables to 25% </li></ul></ul>Sources: NDRC, National Bureau of Statistics
  10. 10. Wind power has been growing robustly in the past years October 10, 2011 <ul><ul><li>Wind power installed capacity almost double each year in the past 5 years, thanks to the favourable policies and declining wind farm construction costs </li></ul></ul><ul><ul><li>By end 2010, China has become the largest country in the world in terms of both cumulative wind power installed capacity and annual installed capacity </li></ul></ul>Wind power installed capacity growth Global wind power capacity ranking Sources: CEC, GWEC
  11. 11. PV and Bio-mass will also experience phenomenal growth October 10, 2011 Source: BP Energy Review 2011, NDRC, China Securities Journal PV installed capacity growth 2000-2010-2020E Bio-mass capacity growth 2010-2015E <ul><ul><li>~20% grow p.a. </li></ul></ul><ul><ul><li>500 to 700 new plants to be built before 2015 </li></ul></ul>
  12. 12. However, there are some concerns October 10, 2011 Concerns Solution <ul><ul><li>Fluctuation of renewable power generation </li></ul></ul><ul><ul><ul><li>The output of wind farms and PV cells does not match the power consumption across time </li></ul></ul></ul><ul><ul><li>Distribution of renewable resources: </li></ul></ul><ul><ul><ul><li>Wind resources and sunlight resource are concentrated in Northwest, Inner Mongolia, and Northeast China </li></ul></ul></ul><ul><ul><ul><li>However, the main power load of China are located along the coast line and in central China </li></ul></ul></ul><ul><ul><ul><li>Thus grid connection becomes a major bottle neck for renewables </li></ul></ul></ul><ul><ul><li>Ultra High Voltage Power Grid </li></ul></ul><ul><ul><ul><li>3 horizontal, 3 vertical, 1 loop of UHVAC grid to integrate China’s renewable plant and power users in one inter-connected grid </li></ul></ul></ul><ul><ul><ul><li>Over 10 UHVDC line to deliver electricity over thousands of kilometres </li></ul></ul></ul><ul><ul><ul><li>Over RMB 500 bn will be invested </li></ul></ul></ul><ul><ul><li>Construction of Pump Storage Stations </li></ul></ul><ul><ul><ul><li>To store the energy from the renewable sources and release when needed </li></ul></ul></ul>
  13. 13. National Power Grid Upgrade Plan - UHVAC October 10, 2011 <ul><ul><li>UHVAC Will help connect the wind power from Inner Mongolia, Xinjiang and Gansu to the Central China and North China power Grid </li></ul></ul>Sources: State Grid, BNP Paribas Chongqing Urumqi Yongdeng Completed Planned/In construction Northwest China Grid (State Grid) Central China Grid (State Grid) East China Grid (State Grid) North China Grid (State Grid) Northeast China Grid (State Grid) South China Grid (South Grid) Shanghai Ximeng Beijing North Zhejiang Hefei Xuzhou Jinan Weifang Zhangbei Jingbian Central Shanxi North Hebei Zhumadian Nanyang Jingmeng Wuhan Changsha Nanchang Leshan Ya’an Nanjing West Inner Mongolia West Inner Mongolia Grid
  14. 14. National Power Grid Upgrade Plan - UHVDC October 10, 2011 <ul><ul><li>UHVDC Connect the wind power and PV plant from Inner Mongolia, Xinjiang, and north east to central and east China Connect the hydro power from Southwest China to south and east China </li></ul></ul>Sources: State Grid, South Grid, BNP Paribas Completed Planned/In construction Zhengzhou Chongqing Hami Zhundong Xiluodu Zhejiang Xiangjiaba Shanghai Nuozhadu Guangdong Jiuquani Zhuzhou Longdong Xinyu Xichang South Jiangsu Ningdong Qingdao Northwest China Grid (State Grid) Central China Grid (State Grid) East China Grid (State Grid) North China Grid (State Grid) Northeast China Grid (State Grid) South China Grid (South Grid) West Inner Mongolia Grid Hulunbeier Chifeng ±1100kV ±660kV ±1100kV Voltage, all non labeled lines are ±800kV
  15. 15. Development of pump storage station October 10, 2011 <ul><ul><li>Pump storage stations offers the possibility to store the excessive power generated from wind power/solar power, and output the energy to the power grid when required </li></ul></ul><ul><ul><li>China plans to quadruple the capacity of pump storage stations from 15GW in 2010, to 60GW by 2020 </li></ul></ul>Forecast of pump storage station capacity Configuration of a pump storage station Sources: NDRC Illustration from internet
  16. 16. Conclusion <ul><li>China has been relying on coal too much in the past. This has to be changed, in a green way </li></ul><ul><li>Favorable policy and investment are poured into the sector stimulating the growth </li></ul><ul><li>The share of renewable energy in China will be significantly increased in the next decade, benefiting China and the green energy players </li></ul><ul><li>There are headwinds, but we are confident that these issues can be solved with combined effort from government and market participants </li></ul>October 10, 2011
  17. 17. The end Thank you! October 10, 2011 Daisy Zhang China Utility & Renewable Energy BNP Paribas Equities (Asia) Ltd Shanghai Representative Office +8621 6096 9025 [email_address]