China's wind power preparation for bidding "big test"

"Whether you like it or not, the era of cheap wind power has arrived."

From October 17th to 20th, at the 2018 International Wind Energy Conference held in Beijing, the topics of all forums could not be avoided in the big context of “parity Internet access”. In the speeches of the guests and exhibitors, they revealed the anxiety about future uncertainty and mixed expectations.

“Fair Internet access” has truly become the focus of discussion in the wind power industry. It originated from the “Notice on the Relevant Requirements for Wind Power Construction Management in 2018” issued by the National Energy Administration in May this year (hereinafter referred to as the “Notice”). The "Notice" requires that all parts of the country implement a competitive approach to deploy wind power projects. From 2019 onwards, the newly approved centralized onshore wind power and offshore wind power projects in all provinces (autonomous regions and municipalities directly under the Central Government) will all be configured through competition and determine the on-grid tariff.

This means that China's wind power industry will face the "bidding" test next year.

In accordance with the “Guidelines for Competition Configuration of Wind Power Projects (Trial)” issued with the “Notice”, regardless of the market competition-based allocation method, the on-grid price should be regarded as an important competitive condition, and projects with low subsidy intensity should be given priority. Inclusion in the annual construction plan. The on-grid tariff promised by the enterprise should not be higher than the on-grid tariff of the wind power benchmark in the project area.

“An industry cannot always rely on subsidies to survive. The industries that have been relying on subsidies will never do much, and they will not go far.” Qin Haiyan, secretary general of the Wind Energy Professional Committee of China Renewable Energy Society (CWEA) made a statement at the wind energy conference: Unreasonable removal The non-technical cost, wind power has the ability to compete with traditional energy sources such as thermal power.

Meng Qingshun, director of market and product planning at Goldwind Technology (002202.SZ), said that wind power is now close to local thermal power costs in areas with good wind resources such as “Three North”.

According to Zhang Lei, founder and CEO of Vision Group, more than half of the regions in China can achieve wind level or even low price.

In 2009, China determined the on-grid tariffs for onshore wind power in four major resource areas, which were 0.51 yuan, 0.54 yuan, 0.58 yuan and 0.61 yuan per kWh respectively. The wind power subsidy era officially opened.

Since the "Thirteenth Five-Year Plan", the on-grid tariff of onshore wind power has been lowered once in two years. By 2018, it has been adjusted to 0.4 yuan, 0.45 yuan, 0.49 yuan, and 0.57 yuan per kWh, which is 0.04-0.11 lower than that in 2009. yuan. The grid price of offshore wind power with a slow start is not adjusted for four years, which is 0.75-0.85 yuan/kWh.

According to the current situation, the reduction of onshore wind power of 0.04-0.11 yuan for the target of “parity” has only completed about 30% of the tasks The demand is completed in the second half of the “Thirteenth Five-Year Plan” and it is expected that the potential for on-grid tariffs of onshore wind power will reach about 10%-20%.

All the guests interviewed by the interface journalists said that “fair price online” is the trend of the times. This is the process that wind power must go from “waste” energy to step energy and then to the future.

However, the shrinking of the terminal electricity price will cause wind power operators to directly lose some of their profits. This pressure will also be transmitted to the equipment manufacturers along the industrial chain. Both equipment manufacturers and operators have tightened their nerves for “flat price online” and need to prepare for a new round of competition.

a new round of shuffling

According to the statistics of the Prospective Industry Research Institute, by the end of 2017, the top seven machine manufacturers in the country had a total market share of 67%; the top ten development companies had cumulative installed capacity of more than 130 million kilowatts, accounting for 71%.

A number of industry insiders told the interface journalists that there is still room for improvement in industry concentration, and competition for reshuffle will become the norm, especially among the lower ranking equipment vendors and developers.

A major background proposed by “parity wind power” is the sharp drop in the cost of kilowatt equipment for wind power units in recent years. Especially this year, the decline has increased.

Wind power construction costs have four major factors: main equipment prices, land costs, construction costs, and power generation benefits. Among them, the price of the main equipment occupies half. In the early days, the cost of kilowatt equipment for Chinese wind power units was as high as 9,000 yuan.

According to Qi Jingchun, the chairman and general manager of Guodian United Power Technology Co., Ltd., the latest 3 MW wind turbines, including the latest ultra-high tower wind turbines, are priced at around 3,723 yuan per unit of kilowatts, down 25% from last year. And the power generation of the unit is greatly increased.

“In the past year, the average price of wind turbine equipment has dropped by more than 10%. This is the effect of the whole machine manufacturer to preheat the net price and bidding online.” Jin Xiaolong, president of Shanghai Electric Wind Power Group, said that this has prompted developers to invest in project income. A substantial increase.

The last round of “price war” of wind power manufacturers occurred in 2010-2011, with 1.5MW models as the main battlefield. In this round of competition, domestic wind turbine manufacturers have rapidly declined from 60 to about 30. Affected by this, China's wind power in 2012 fell into a loss across the industry.

“This is a vicious competition that is carried out when the technology is not fully prepared.” Jin Xiaolong said that the competition of this round of wind turbine manufacturers is different from the previous one. In the future bidding, the tricks of some machine companies to play "price wars" are no longer feasible. At that time, the on-grid tariff of wind power is completely determined by the way of competition, and enterprises need to assess the comprehensive benefits.

Qin Haiyan also said that the competition of this wheel manufacturer, the technical and comprehensive strength of the competition, who can survive, that is the last strong.

As for whether the wind power industry will undergo mergers and acquisitions, an analyst who asked for anonymity said that the possibility of annexation in the upstream manufacturing end of wind power is not great, because the sector is a light asset and only needs to survive the fittest.

In this round of competition, “power cost” has become one of the high-frequency terms mentioned by wind power manufacturers. Because the core of "fair price Internet" is the compression of electricity costs.

In the opinion of the above analysts, the space for the reduction of the cost of electricity in the wind power industry is still relatively large. He pointed out that first, there is room for improvement in technology. At present, the technology trend of high power in the industry or improving wind efficiency is very obvious, so as to increase the cost of power generation. Second, there is compression space for financial costs, and the inherent installation rhythm of the wind power industry leads to At present, there is a certain phenomenon of stamping in all links of the industrial chain, which is equivalent to a part of the utility has not been exerted, resulting in a certain financial cost in the middle, which can be reduced in the later stage with the release of the installation rhythm.

The key to reducing the cost of electricity and improving the efficiency of wind power is to improve power generation efficiency.

This idea was recognized by Zhang Lei, founder and CEO of Vision Group. “It is an unsustainable and irrational method to reduce the cost of wind turbines from the industrial chain. The rational method is to increase the amount of electricity generated.” Zhang Lei said that after initial estimation, the fan will increase the annual power generation by 1%, corresponding to a reduction of 150. The initial investment cost of the yuan.

Under such circumstances, the development prospects of small companies are not optimistic due to the lack of funds and capacity to establish a complete solution from resource assessment to operation and maintenance.

"In addition to the integration of complete machine manufacturing, wind measurement, wind farm management, operation and maintenance, micro-viewing and other difficult technologies, these are not small businesses can do." Qin Haiyan said, Goldwind Technology, Vision Energy, Ming The wind resource team of large enterprises such as Yangzhi Energy Group is close to 100 people.

Meng Qingshun provided evidence for the above statement: At present, many evaluation calculation models pay more attention to the static attitude of the project in the early stage, and the evaluation of the operation and maintenance cost is insufficient. Large companies like Goldwind Technology are definitely not relying on lowering equipment prices to reduce costs, but relying on increasing power generation and providing operation and maintenance services.

Development model shift

In the context of bidding, it also brings new issues for manufacturers and developers: that is, the benefits and costs must be examined from the perspective of the whole life cycle, and the role played by manufacturers is by no means limited to the “manufacturing” field.

The relationship between manufacturers and developers is undergoing subtle changes.

"We will face the unsubsidized market. From the marketing model, it is no longer the previous divisions, there will be a situation in which power producers, power sellers and service parties roll out to participate in the competition." Shanghai Electric Wind Power Group Co., Ltd. Deputy Chief Engineer Ma Wenyong said.

The current wind farm development model is that the developer does the preliminary work, the feasibility study, the investment review after the completion, and then the host bidding, and finally the installation. Xiao Shuai, deputy general manager of China Shipbuilding Heavy Industry Group Haizhuang Wind Power Co., Ltd. believes that this model may no longer adapt to wind power development under the era of parity.

“The wind power development model needs new innovations, and the wind turbine manufacturers can do more things. For example, from the wind resource assessment, they will intervene.” Xiao Shuai said that future wind turbine manufacturers will be based on the special wind resources of wind power plants. The customized design is based on the existing model to ensure the maximum power generation of the fan.

Qin Haiyan also believes that the relationship between manufacturers and developers can not only be the relationship between product sales. Manufacturing companies should extend their business scope and provide services from pre-wind resource assessment, micro-site selection, unit selection, installation, commissioning, and operation and maintenance to the entire life cycle.

"When developers choose wind turbines, they can no longer lower the purchase price of equipment. They should pay more attention to the cost of electricity during the whole life cycle and consider the power generation efficiency of wind turbines," he pointed out.

Zhang Lei said that the policy background of bidding online requires developers to have technical judgment. “Investment developers must not only have development insights, but also have technical insights, transform them into technology-driven enterprises as early as possible, and have the ability to accurately evaluate electricity, wind farm system engineering cost control capabilities, and assessment and verification technology capabilities,” Zhang Lei said. This is also the shortcoming of the current wind power development operators.

In the future, wind power developers will face the dual challenge of lowering the benchmark price and bidding online. Recently, many power central enterprises have slowed down investment in the wind power industry.

When talking about the reasons, He Wei, deputy general manager of Huaneng New Energy Co., Ltd. said frankly, "It is not that developers are not willing to develop, but there are many changes in the situation at home."

He pointed out that the current requirements for environmental assessment, water conservation, land, forest land and other aspects of wind power development are constantly improving, and the non-technical costs of some compensation are also increasing, which requires the project resources and the economics after construction. Reanalysis.

Scenery racing

In addition to the competition within its own business, wind power is also facing competition from photovoltaics. "One of the reasons for the price cut of wind power is that due to the decline in the price of photovoltaics, the new energy industry has been squeezed, and the industry has realized the crisis and implemented a price reduction strategy. This is the competition between new energy sources." Jin Xiaolong said that wind power The industry needs to pay attention to how to avoid the current relatively rapid ups and downs of photovoltaics.

The photovoltaic industry is also facing “de-subsidy”. The Chinese government is working to accelerate the maturity of the renewable energy industry, and promote wind power and photovoltaics to an independent track. “Subsidy” has become the most important means.

The Renewable Energy Law, which began in 2006, marks the landing of the FIT (Feed-in-tariff) system in China. FIT is a new energy support policy initiated by European and American countries. It stimulates the development of the industry by subsidizing the difference between new energy generation costs and conventional on-grid tariffs.

According to the regulations, the on-grid tariff of China's renewable energy power generation projects shall be adjusted by the pricing department of the State Council according to different types of power generation characteristics, the situation of different regions, and the development of development and utilization technologies. The subsidy funds are derived from renewable energy tariffs.

As the sole source of subsidies, the renewable energy price has been increased from 0.01 yuan/kWh in 2007. After three upward adjustments, it has reached the current level of 0.19 yuan/watt hour, and the annual fundraising amount has soared from 5.6 billion yuan to nearly 90 billion yuan.

Since it is difficult to collect all the subsidy funds, it is difficult to cover the funding needs of all renewable energy power generation projects by mentioning the additional price of electricity.

According to the National Energy Development and Reform Commission Energy Research Institute Renewable Energy Center, from 2006 to the present, the national renewable energy energy price subsidy funds totaled more than 320 billion yuan, of which more than 50% of the funds used to subsidize wind power. From the perspective of subsidy demand, the national demand for renewable energy tariff subsidies in 2017 (excluding tax) is about 125 billion yuan, and the demand for wind power accounts for 45%.

Shortly after the announcement of the wind power bidding online, the photovoltaic industry ushered in a similar new "531" policy. Due to the unprecedented control of the new scale and the reduction of subsidies, the industry was in a state of turmoil and strong reaction. This is undoubtedly a big roller coaster turn in the photovoltaic industry, which will achieve a growth of 50 million kilowatts in 2017.

In the past, at the same time as the Beijing International Wind Energy Conference, a photovoltaic conference will be held in the same exhibition hall. But this year, the photovoltaic conference has quietly disappeared.

Compared with the fluctuations caused by the “de-subsidy” policy in the photovoltaic industry, the wind power industry is relatively stable. This has a lot to do with the relatively stable development of the wind power industry in recent years and the timing of the policy.

Four years ago, in December, the State Council issued the "Energy Development Strategic Action Plan (2014-2020)" proposed that by 2020, China's wind power installed capacity will reach 200 million kilowatts, and wind power and coal power on-grid electricity prices are equivalent. This has given the wind power industry an expectation of “parity online”.

At the end of December 2015, the wind power industry began a gradient of electricity price declines every year. In the following years, the wind power industry has maintained an annual growth rate of about 19 million to 20 million kilowatts, which is in a relatively steady state of development.

According to previous statistics of the Renewable Energy Society, in 2017, the country's newly added grid-connected wind power installed capacity was 15.03 million kilowatts, and the accumulated wind power installed capacity reached 188 million kilowatts. Among them, the grid-connected capacity reached 164 million kilowatts, accounting for 9.2% of the total installed capacity.

Looking at it now, the wind power industry's goal of the "13th Five-Year Plan" of 200 million kilowatts set by the State Council will most likely be realized two years ahead of schedule and achieved in 2018.

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