This article comes from Make Consulting and is authored by Market Analyst Xiaoyang Li.
The 10-year wind power outlook for China consists of steady annual capacity additions from 2017 to 2026 resulting in a cumulative grid-connected capacity of 403GW by the end of 2026. Annual grid-connected capacity from 2017 to 2020 will be less than 25GW due to curtailment and policy restraints. However, annual grid-connected capacity will increase post-2020, benefiting from an expanded availability of grid capacity.
Annual capacity additions in the short-term will decrease due to the depressed wind market in the traditional wind provinces in the Northeast and Northwest sub-regions. The NEA published the wind warning mechanism in January 2017 and assigned a red warning to provinces with severe curtailment. Nearly all the provinces that received red warnings are located in the Northeast and Northwest sub-regions. The level of curtailment in certain provinces is very high and will be difficult to decrease it to an acceptable level in the short-term. Therefore, wind growth in 2017 and 2017 will be concentrated in the few provinces in the Northern region with low levels of curtailment and in provinces in the Southern region with good wind resources and very little curtailment.
Development of China’s offshore wind resources is accelerating and will add GW-level capacity annually starting in 2018. Cumulative grid-connected offshore capacity will reach 26GW by the end of 2026, representing a CAGR of nearly 24% over 10 years. Most coastal provinces have set ambitious offshore targets in their respective local Thirteenth Five-Year Plans, and IPPs are becoming more active in offshore investment.
The National Energy Administration (NEA) set the wind power grid-connected capacity target at 210GW and the wind power generation target at 420TWh by the end of 2020 in the Thirteenth Five-Year Plan for Wind Power published in November 2016. The NEA also introduced a green certification system to support the non-hydro RPS target by 2020. Capacity growth is no longer a government priority, with focus turning to the wind power generation target and to reducing the curtailment of wind power.
The NEA has reduced the onshore wind feed-in tariff (FIT) levels in three consecutive years from 2014 to 2016 to lighten the burden of subsidy funding for renewable energy. The government will publish at least two to three additional reductions to the onshore wind FIT level before 2023. Therefore, MAKE expects wind power to reach grid parity with high on-grid coal prices in certain provinces by the end of the 10-year outlook.
MAKE’s China Wind Power Outlook 2017 is a 50+ page report containing 60+ charts, tables and graphs providing in-depth analysis of the wind power market in China. The report studies the key drivers and barriers for new wind power installations in China with a focus on specific national and sub-regional markets. The analysis focuses on macro conditions, regulatory frameworks, as well as a 10-year market outlook along with three forecast scenarios (bull, base, and bear) or market models. These illustrate the critical forces shaping demand for new wind power generation assets.