Offshore wind power farm
Offshore wind power farm
Business Model Description
An offshore wind farm generates electricity utilizing offshore wind resources. Revenue includes the rates charged for incorporation into the power network, while costs include equipment, operation and maintenance, depreciation, and other expenses.
Expected Impact
Offshore power plants increase the use of clean energy and contribute to sustainable development, enhancing the surrounding population's well-being.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Guangdong
- China: Zhejiang
- China: Guizhou
- China: Shandong
- China: Jiangsu
Sector Classification
Renewable Resources and Alternative Energy
Development need
China's current energy structure dominated by fossil energy. Fossil energy resources are limited and can release large amounts of carbon dioxide when burt, accelerating global climate change and extreme weather events. Thus, renewable energy is crucial to China's green transformation and energy security.
Policy priority
The proportion of non-fossil energy in total energy consumption should be increased to about 20%. State Council's action plan for carbon peaking stated that wind and solar power generation, biomass power generation and heating should be developed. By 2030, the total installed generation capacity of wind and solar power will reach above 1200 gigawatts. (1)
Gender inequalities and marginalization issues
Renewable energy employs about 32% women, compared to 22% in the energy sector. (2)
Investment opportunities introduction
The IOAs in the renewable energy sector center around the utilization of solar energy, wind energy, and biomass energy.
Key bottlenecks introduction
The energy endowment and demand don't match. Hydropower generation is centralized in southwest China, while wind and solar energy are centralized in northern China, which is far away from the centers of consumption in the eastern and coastal areas. The instability of renewable energy poses a challenge to the consumption and stable operation of the grid.
Alternative Energy
Development need
Wind power is the second most crucial renewable energy for China and plays crucial role in achieving China's carbon targets. However, its further developent faces several challenges including: land-use limitation, wind curtailment. (3)
Policy priority
With increasing installed wind capacity, China's current policy focus has shift from giving subsidies to driving grid parity, promoting offshore wind power projects, as well as improving utilization rate and consumption. (4)
Gender inequalities and marginalization issues
Wind resources is unevenly distributed acorss China. Higher average wind speeds can be observed in the northeast, northwest, and southwest plateaus and coastal islands. (5)
Investment opportunities introduction
The IOAs in the wind power sector center around wind turbine manufacturing, and the operation of wind farms.
Key bottlenecks introduction
The intermittent nature of wind energy making it hard to be fully utilized. Most of China's rich wind resources are located in the north and west while the power demand is in economic centers in eastern and southern China, requiring long distance transmission. (6)
Wind Technology and Project Developers
Pipeline Opportunity
Offshore wind power farm
An offshore wind farm generates electricity utilizing offshore wind resources. Revenue includes the rates charged for incorporation into the power network, while costs include equipment, operation and maintenance, depreciation, and other expenses.
Business Case
Market Size and Environment
> 25%
Average growth rate before 2024: 18.6%. In 2025, additional 20GW offshore wind power plants will be installed.
By the end of 2021, the cumulative capacity of China's offshore wind power reached 26.39GW. An additional 73.6GW is estimated to be installed from 2022 to 2025, which corresponds to a CAGR of 40% from 2021 to 2025. (11)
Indicative Return
> 25%
In 2020: 1. Zhongmin Energy Co., Ltd.’s gross margin for the wind power business was 68%. (9) 2. Cecep Wind-power Corporation’s gross profit margin for the wind power business was 52%. (17) 3. Jiangsu New Energy Development Co., Ltd.’s gross margin for the wind power business was 59.48%. (18)
Investment Timeframe
Short Term (0–5 years)
An offshore wind farm requires significant investments in development costs and has long payback periods, and it takes a long time and review process for the project to be approved. For example, a 500MV offshore wind farm requires a total investment of 9 to 10 billion yuan and generally takes more than 10 years for investment recovery. (22)
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Market - Highly Regulated
Impact Case
Sustainable Development Need
The power sector is under pressure to meet the "20·60" carbon peaking and neutrality targets. Wind power plays a significant role in power transformation. China's current wind power market is dominated by onshore wind power, but it faces constraints such as power losses due to consumption, long-distance transmission, etc.
Gender & Marginalisation
The energy sector employs only about 22% women. Significant gender inequality exists.
Expected Development Outcome
Offshore wind power is critical for new energy development. It neither takes up land resources nor disturbs residents. It can be transmitted efficiently to coastal areas without long-distance transmission. The offshore wind fans are larger than onshore ones and can harness more wind energy. (19)
Gender & Marginalisation
Renewable energy employs about 32% women, compared to only 22% in the energy sector. Vigorous renewable energy development can enhance women's participation in the energy sector.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
The share of non-fossil energy in China's primary energy consumption reached 15.9% in 2020. (12)
The "14th Five-year Plan" stated that the share of non-fossil fuel in China's total energy consumption should be increased to around 20%.
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Offshore wind power’s maintenance is costly because of its location far from land and the complex operation and maintenance. Certain risks exist in cost control and return on investment.
Impact Risks
The operation and maintenance personnel are prone to personal injury or damage because they need to climb up high for the electric power operation in high- or ultra-high-voltage environments. (7)
Impact Classification
What
By constructing offshore wind power plants, companies can effectively increase the use of clean energy, reduce greenhouse gas emissions, and contribute to sustainable development.
Who
Can bring clean, affordable energy to domestic residents while reducing the global impact of climate change.
Risk
The operation and maintenance personnel are prone to personal injury or damage because they need to climb up high for the electric power operation in high- or ultra-high-voltage environments.
Impact Thesis
Offshore power plants increase the use of clean energy and contribute to sustainable development, enhancing the surrounding population's well-being.
Enabling Environment
Policy Environment
The "The Outline for the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the Year 2035" stated that the country should promote energy reform, build a clean, low-carbon, safe and efficient energy system, and vigorously promote wind power generation. (13)
In 2021, wind power and photovoltaic power generation: around 11% of the total electricity consumption; by 2030, non-fossil energy: around 25% of primary energy consumption; the total installed capacity of wind and solar power generation: over 1.2 billion kWh. (14)
National Development and Reform Commission and the National Energy Administration stated that offshore wind power plants and the construction of offshore wind power in deep-water areas should be promoted, especially in Guangdong, Fujian, Zhejiang, Jiangsu, and Shandong provinces. (23)
Financial Environment
The CDB's work plan sets up a special loan of 500 billion yuan in total for "carbon peaking and carbon neutral" in the energy sector during the 14th Five-Year Plan period, of which 100 billion yuan would be issued in 2021 to help build a clean, low-carbon, safe and efficient energy system.
From July 1, 2015, taxpayers selling self-produced electrical products produced using wind power should be subject to the value-added tax policy of immediately refunding 50% upon payment. (24)
People's Bank of China designed a structural monetary policy tool that supports clean energy, energy conservation and environmental protection, and carbon emission reduction technologies while levering more social funds to realize carbon reduction.
Regulatory Environment
In 2019, the National Development and Reform Commission published a notice regarding the On-Grid Wind Power Prices which stated the offshore on-grid wind power prices should be changed into guidance prices, and the prices for all newly approved offshore wind power projects should be decided through competition. (15)
In 2016, the National Energy Administration and the State Oceanic Administration published the "Notice on issuing the Measures for the Administration of the Development and Construction of Offshore Wind Power". (16)
Marketplace Participants
Private Sector
Zhongmin Energy Co., Ltd., Fujian Funeng Co.,Ltd., China Three Gorges Renewables (Group) Co., Ltd., Cecep Wind-power Corporation, etc. Public funds like prudential Brokerage Ltd., UBS SDIC Fund Management Co., Ltd, Yinhua Fund Management Co., Ltd., Cinda Fund Management Co., Ltd., and China Guangfa Bank.
Government
In 2021, the Development and Reform Commission of Zhejiang claims to financially support offshore wind power for the steady realization of grid parity. Guangdong government will provide subsidies to projects in the local waters that do not enjoy state subsidies.
Multilaterals
The New Development Bank invested 2 billion yuan in the 250MW offshore wind power project in Fujian Province and another 2 billion RMB in the 300WM offshore wind power project in Guangdong Province (25)
Public-Private Partnership
Public-Private Partnership: Public-Private Partnership: A subsidiary of Jiangsu Zhongtian Technology Co., Ltd. proposed to establish an offshore wind power joint venture with Xinjiang Goldwind Science & Technology Co., Ltd. (10)
Target Locations
China: Guangdong
China: Zhejiang
China: Guizhou
China: Shandong
China: Jiangsu
References
- (1) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030
- (2) IRENA, 2019, Renewable energy: a gender perspective. https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective
- (3) Forward Intelligence, Market Foresight and Investment Strategy Report of China's Wind Power Industry, https://bg.qianzhan.com/report/detail/f7fa9c50850a4f16.html?v=footer2"
- (4) Guiding Opinions of the State Council on Accelerating the Establishment of a Sound Economic System with Green, Low-carbon and Circular Development (No. 4 [2021] of the State Council), http://www.gov.cn/zhengce/content/2021-02/22/content_5588274.htm
- (5) XNY365, http://www.xny365.com/zhuanjia/article-53293.html
- (6) Zhu Linzhi, Chen Ning, Han Hualing. Keys Problems and Solutions of Wind Power Accommodation [J]. Automation of Electric Power Systems, 2011, 035(022):29-34.
- (7) Prospectus: China Three Gorges Renewables (Group) Co., Ltd.: http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=9900016549&stockCode=600905&announcementId=1209936204&announcementTime=2021-05-07
- (8) 2020 Annual Report: Zhongmin Energy Co., Ltd.， http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gssh0600163&stockCode=600163&announcementId=1209841202&announcementTime=2021-04-28
- (9) Announcement: Fujian Funeng Co.,Ltd., http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gssh0600483&stockCode=600483&announcementId=1210483496&announcementTime=2021-07-15
- (10) Announcement: Jiangsu Zhongtian Technology Co., Ltd., https://ggjd.cnstock.com/company/scp_ggjd/tjd_ggkx/202112/4797467.htm
- (11) Securities Daily，2022，The "14th five year plan" installed capacity is expected to exceed expectations and the offshore wind power industry boom is high，http://www.zqrb.cn/finance/hangyedongtai/2022-11-16/A1668550698416.html
- (12) National Energy Administration, http://www.nea.gov.cn/2021-03/30/c_139846095.htm
- (13) State Council, 2020, The Outline for the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the Year 2035, http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm
- (14) National Energy Administration, 2021, The "Notice on Matters Concerning the Development and Construction Plan for Wind Power and Photovoltaic Power Generation in 2021, http://zfxxgk.nea.gov.cn/2021-05/11/c_139958210.htm
- (15) National Development and Reform Commission, 2019, Notice on Improving the Policies for On-Grid Wind Power Prices, http://www.gov.cn/xinwen/2019-05/25/content_5394615.htm(http://www.gov.cn/xinwen/2019-05/25/content_5394615.htm)
- (16) National Energy Administration and State Oceanic Administration, Notice on issuing the Measures for the Administration of the Development and Construction of Offshore Wind Power, http://zfxxgk.nea.gov.cn/auto87/201701/t20170104_2417.htm(http://zfxxgk.nea.gov.cn/auto87/201701/t20170104_2417.htm)
- (17) 2020 Annual Report: Cecep Wind-power Corporation, http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=9900029306&stockCode=601016&announcementId=1209358601&announcementTime=2021-03-10
- (18) 2020 Annual Report: Jiangsu New Energy Development Co., Ltd., http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gfbj0833368&stockCode=603693&announcementId=1209810338&announcementTime=2021-04-27
- (19) in-en.com, 2021, Offshore wind power is the trendsetter of the times, https://wind.in-en.com/html/wind-2409182.shtml
- (20) 2021 Insight: Competitive Landscape and Market Share of China Wind Power Industry, https://www.qianzhan.com/analyst/detail/220/210804-5fafc548.html
- (21) Ningbo Daily, 2021, Ningbo's first offshore wind power project was put into operation, https://www.ningbo.gov.cn/art/2021/12/24/art_1229196404_59042026.html
- (22) https://wind.in-en.com/html/wind-2409182.shtml
- (23) National Development and Reform Commission and National Energy Administration, 14th Five-Year Plan for Modern Energy Systems, http://zfxxgk.nea.gov.cn/2022-01/29/c_1310524241.htm(http://zfxxgk.nea.gov.cn/2022-01/29/c_1310524241.htm)
- (24) Ministry of Finance and State Administration of Taxation, 2015, Notice on Value-Added Tax Policies for Wind Power Generation, http://www.chinatax.gov.cn/chinatax/n359/c1521611/content.html(http://www.chinatax.gov.cn/chinatax/n359/c1521611/content.html)
- (25) 2021 Joint Report on Multilateral Development Banks' Climate Finance, https://www.isdb.org/sites/default/files/media/documents/2022-02/MDBs%20Report%20on%20SDGs_vf.pdf
- (26) in-en.com, 2021, The offshore wind bottleneck is here, https://wind.in-en.com/html/wind-2399283.shtml