Skeptics may dismiss small news like this, but a data point in China Ming Yang Wind Power Group’s third-quarter briefing speaks of something significant: Beijing’s latest five-year plan—its 13th, if you’re keeping score—includes 44 new offshore wind projects totaling 10 gigawatts of new capacity by 2020.
It’s a point worth flagging.
In the scheme of China’s total power grid of 1,360 gigawatts, 10 is a tiny number. But it’s a 10-fold increase over the offshore wind-farm capacity installed under the government’s 12th five-year-plan, which is winding down. China means business. It has already announced a very expensive U.S. $140/MWh feed-in tariff (0.85 renminbi per kilowatt hour) to subsidize the development of renewables and to accelerate the country’s broader energy-cost-reduction program (feed-in tariffs are policy tools used in many countries to encourage deployment of renewable energy).
It’s an example of learning by doing as China continues to learn—and do—everything it can to accelerate its transition from coal-fired electricity generation.
Ming Yang is no lightweight, incidentally. It is a Chinese company whose partners include Aerodyn Energiesysteme, the German wind-turbine design firm, and it is one of the world’s 10 largest wind-turbine manufacturers (now being in the top 3 in China). It has nine turbine and rotor-blade production facilities in China and has joint alternative-energy ventures that are global.
Beyond 2020, our research sees China installing 5 to 10 gigawatts of offshore wind farms annually. That will happen as wind-energy development costs drop by 40 percent over current levels and as the technology in 5- to 8-megawatt turbines is firmed up commercially (increasing current onshore turbine sizes by three to four times relative to current onshore models, and operating at utilization rates of 40 to 45 percent versus 20-30 for those onshore).
China has deliberately gone slow on offshore wind over the past five years in light of mechanical issues experienced by wind-turbine technology in Northern Europe. Those challenges will be overcome, and wind-powered electricity will gain momentum. We expect Europe and Japan to install 5 gigawatts annually of offshore wind after 2020, India and Korea will follow.
The trend supports yet another area of energy-sector competition as technology continues to bring to market many new initiatives that will cement the structural decline in demand for seaborne thermal coal.
Tim Buckley is IEEFA’s director of energy finance studies, Australasia.
