The impact of the global coronavirus pandemic on the rate of construction of offshore windfarms in China is ‘limited’ and the industry is less affected than onshore wind in the country, according to China specialists at the Global Wind Energy Council
Responding to questions following a GWEC webinar on offshore wind, GWEC China director Wangliang Liang said market research suggested that some onshore projects have experienced delays of 2-3 months or more, but the impact of Covid-19 on offshore projects has been limited, to 1-2 months in most cases.
Mr Wangliang put this down to the nature of offshore wind projects, where they take place and that they are not taking place close to large centres of population.
“The result of our survey was quite clear,” he said, noting that, with the spread of the virus in China now coming under control, projects of all types are less likely to be affected.
“The major impact of the virus was onshore, not in the offshore industry,” he said. “The effect of the virus on the labour force was more pronounced onshore.”
Recent days have seen predictions that the coronavirus crisis will cause global wind energy projects in 2020 to decline significantly. According to Wood Mackenzie, the potential impact on global installations remains most significant in China, and in the US, where wind-focused policy deadlines were expected to deliver record volumes. Wood Mackenzie said Covid-19 would affect many countries and slow installation rates but noted that “the rapid recovery envisioned for China’s wind energy supply chain” would help the situation in the country.
However, as highlighted recently by OWJ, GWEC confirms that even as the industry recovers, China still faces stiff challenges if extremely ambitious targets for offshore wind and onshore wind are to be met.
A policy-driven ‘installation rush’ continues with developers needing to ensure that projects are connected to the grid by the end of 2021, if they are to secure the relatively generous feed-in tariffs for projects approved before the end of 2018, or secure auction prices agreed for projects approved in 2019 and in 2020.
GWEC said more than 10 GW of offshore wind is currently under construction in China and more than 40 GW has been approved.
The very high level of demand for turbines and other materials means that Chinese turbine manufacturers and installation contractors will probably not meet the ambitious targets for offshore wind capacity, and there is a growing gap – accentuated by the Covid-19 outbreak – between demand and the industry’s ability to fulfil targets.
Taken together, OEM’s ability to build turbines and constructors’ ability to install them mean there is what some sources describe as “a huge gap” between the targets and actual delivery capacity. Chinese OEMs cannot produce enough turbines quickly enough and there is a dearth of installation vessels.
Concerns about the ability of the supply chain to meet ambitious targets have been expressed by several large Chinese wind turbine suppliers. Manufacturing of components such as blades, main bearings and related products such as offshore cables are all said to be becoming bottlenecks that will limit the rate at which new volume is connected to the grid.
Mr Wangliang reiterated concerns expressed to OWJ that capex needs to come down, primarily via design optimisation and by reducing the time it takes to install turbines, and that operation and maintenance costs are too high. “The industry needs to invest more in technology innovation and process optimisation,” he explained. “There are big strains on the supply chain, and the average size of Chinese offshore turbines is small compared with Europe.”
In January 2020, the National Development and Reform Commission (NDRC), China’s state planner, and Ministry of Finance confirmed that there will be no subsidy for offshore wind projects from 2022 onwards. However, subsidies from local governments in key provinces will remain in place.
In a March 2020 announcement, the NDRC said the number of projects approved in 2020 would be limited to keep a lid on the installation rush.
Mr Wangliang said it was possible that, after 2021, there would be a slowdown in the rate of installation in China, although provinces such as Guangdong and Jiangsu – that have huge offshore wind targets – are mindful of the economic benefits of offshore wind and of its ability to create jobs and GDP, and would continue to provide support for projects.
Key provinces for offshore development include Guangdong, Jiangsu, Fujian and Zhejiang. Key developers include Key China Three Gorges (with a pipeline of 10.2 GW), China General Nuclear (9.9 GW), State Power Investment Company (5.9 GW), Huaneng Group (3.9 GW), China Energy (Longyuan, 2.5 GW) and Yuedian (Guangdong Energy, 2.2 GW).
“In 2020, the focus will be on completing existing projects in time, not on starting news one,” Mr Wangliang concluded.