China’s rapidly emerging floating wind power sector could supercharge the Asian nation’s already record-setting offshore plant roll-out while opening the until-now largely closed market to international players, according to a new report from Aegir Insights.
Investment in floating technology off China – current represented by a single-unit pilot installed earlier this year on China Three Gorges’ Yangxi West Shapa project off Yangjiang but with a 1TW-plus technical potential – is foreseen building on the pace-setting bottom-fixed turbines deployment off its coasts in 2021 that took its total installed capacity up by 17GW to a world-leading 26GW.
“China’s build-out [last year] was largely driven by the phase-out of the government’s subsidy scheme. The next phase will be on market terms, except in some provinces where transitional support regimes have been set up. Chinese LCOE levels are already among the lowest worldwide, and the phase-out could push cost levels [in offshore wind] down below what most considered realistic just a few years ago,” said Maria Holm Bohsen, head of research and analytics at Aegir, told Recharge.
“In the floating space, it is very possible that China makes a play to supply beyond its domestic borders [at the same time as delivering to in-country projects]. With floating costs having a long way to ‘catch up’ to its fixed-bottom sibling, some [future] markets will simply choose lowest cost over local content.
“Players in the Chinese offshore wind supply chain have gained valuable volume and experience with the massive build-out in recent yearers, and Chinese OEMs are increasingly engaging in activities outside China. This could significantly impact costs of European offshore wind projects and lead to lower LCOE [levellised cost of energy] levels,” Bohsen added.
By Aegir’s calculus, LCOE for offshore wind power off China by decade’s-end will come in at €30-40/MWh ($29-39/MWh) for fixed-bottom and €40-50/MWh for floating. Post-2030, the research house expects both fixed and floating project costs may fall below €30/MWh “given the right conditions”.
The first wave of commercial floating wind arrays coming online off China in the next five years are generally located in water depths between 60-100 metres and have LCOEs between €38-45/MWh
Cost- rather than subsidy-driven market development, Aegir reckoned, will make floating wind likely to be “key to unlocking” the Chinese market for international developers able to “leverage experience from projects in Europe, which is especially relevant for areas in Chinese waters with challenging seabed conditions”.
“The interest between China and Western offshore wind markets is two-way: while foreign developers are considering how to enter the Chinese market, Chinese supply chain players are increasing activities outside China.”
“[China’s] target for wind and solar has been set at 1200GW by 2030. As offshore projects are increasingly moving to deeper waters, further from shore and legislation is open to foreign investment, is now the time when we will see international developers entering the Chinese market?
Bohsen notes that China’s shift from heavy reliance on coal – which currently accounts for more than 60% of the country’s electricity demand – to clean energy source to meet its target of carbon emissions peaking before 2030 and net-zero by 2060, will required a “a large volume of generation capacity [being] replaced… the past few years have shown that China has the capacity for vast offshore wind build-out” to contribute.
For its latest China report, Aegir created 21 reference case projects across six ‘focus’ provinces, to estimate the LCOE levels of commercial-scale offshore wind arrays in the country, among which were, for fixed and floating respectively: Shandong – from €31-48/MWh and €45/MWh; Jiangsu – €37-41/MWh and €58/MWh; Zhejiang – €30-33/MWh and €38-44/MWh; Fujian – €26-33/MWh and €30/MWh; Guangdong – €31-36/MWh and €43/MWh; and Hainan – €30-35/MWh and €42-52/MWh.
The Global Wind Energy Council last year said it expected 16.5GW of floating turbines to be in the water by 2030 worldwide, a dramatic increase from the 6.5GW it was anticipating only a year ago, with most of that growth coming in the second half of the decade when the sector ramps up its industrialisation.