Wednesday, June 29, 2022

‘Storming Ahead’ – China Surpassed All Of Europe In 2021 To Take Pole Position In Offshore Wind Power Race

China is making significant progress in producing renewable energy, installing a record amount of offshore wind last year and paving the way to triple global offshore wind power capacity, reported Asia Nikkei.

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In 2021, new offshore wind power capacity tripled globally, owing to China’s rapid expansion, which is reshaping the sector.

The report said that the world installed 21.1 GW of offshore wind generation last year, almost comparable to 21 nuclear reactors, citing the data from Global Wind Energy Council.

The expansion in 2021 alone will account for roughly 40% of the total 57.17 GW of offshore wind power installed, with China expanding the most. In 2021, the country installed 16.9 GW of offshore wind capacity, accounting for 80% of the total, more than quadrupling the volume in 2020.

On the other hand, Europe added 3.31 GW in 2021, a modest 13% increase eclipsed by Chinese investment. The Chinese renewable energy sector is gaining traction as the government strives to meet its declared target of generating at least 40% of its electricity from non-fossil fuels by 2030.

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According to the International Energy Agency (IEA), China will boost its renewable electricity capacity by almost 800 GW (an increase of 85%) between 2021 and 2026, accounting for approximately 43% of total worldwide renewable energy capacity growth during that period.

What’s Driving China’s Growth

Keeping up with China’s rapid deployment of offshore wind farms has become extremely difficult for other countries. The government’s feed-in tariffs appear to primarily drive Beijing’s growth in the sector.

In 2019, the National Development and Reform Commission of China informed operators that additional offshore wind capacity permitted the previous year must be connected to the grid by the end of 2021 to be eligible for discounted power pricing.

In addition, tariffs would be reduced year after year. As a result, offshore wind farms were built in large numbers by operators aiming to lock in the highest possible selling price. Beijing’s involvement in the wind industry also aided the industry’s growth.

This undated file photo shows the Yangjiang Nanpeng Island offshore wind farm. (PHOTO / CHINA GENERAL NUCLEAR POWER CORP)

Wang Jiayang, a senior research fellow at the Tokyo-based Renewable Energy Institute, told the Asia Nikkei, “In China, provincial governments select the maritime area to be developed, and the power provider and the central government grant the authorization.”

“Provinces are competing in a development race to build supply chains involving local companies,” Wang noted, adding that renewable energy is considered a cornerstone for economic success.

China currently boasts the world’s largest fleet of offshore wind turbines after adding 16.9 gigawatts in 2021, state-owned CCTV reported, citing National Energy Administration data.

China’s Expansion in Global Market

With such local success, Chinese wind turbine producers have garnered worldwide clout. According to data from BloombergNEF, “They captured first through fourth place in offshore wind turbine capacity last year.”

Shanghai Electric Wind Power Group, the top-ranked company in the world, was founded in 2006 as a subsidiary of Shanghai Electric Group. The company’s success comes from its diverse product line, including turbines with production capabilities spanning from roughly 1,250 kilowatts to over 8,000 kilowatts.

Last year’s runner-up was the Chinese company Mingyang, which started in 2006 as well, and last year it successfully ran a floating offshore wind turbine.

On the other hand, China’s neighbors are lagging; Japan only built 50,000 kW of offshore wind farms last year. Tokyo has set an objective of installing 10 GW of wind power by the decade’s end.

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File Image: Xi Jinping

Chinese firms are also beginning to enter Japan’s nascent wind market. Venti Japan intends to employ Mingyang turbines for a wind farm off the coast of Toyama Prefecture. Firms chose Mingyang because its turbines were more suitable for the project than Western competitors.

European players pioneered mass production and manufactured more giant turbines, lowering costs and increasing market dominance. Chinese competitors responded to their massive domestic demand by investing substantially in mass production and improving technology and performance.

Today, Chinese manufacturers are poised to break out of the domestic market and compete with European rivals for worldwide sales. Through a similar process, China overtook the global solar panel industry.

The worldwide offshore wind market is expected to increase rapidly this year. According to the Global Wind Energy Council, 5.9 GW of new offshore wind farms will be completed in China and the rest of Asia in 2022, while Europe will establish 2.8 GW of new offshore wind farms.

Even though China’s growth velocity is likely to slow, the country will continue to be the engine of global growth. European turbines are getting more expensive due to rising commodity prices. At the same time, Chinese manufacturers can gain a cost edge because they can locally manufacture most of the raw materials and fuel.

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