China’s offshore wind resource is significant and will be critical for the country to help meet its rising energy demand through developing low carbon energy sources. The UK has an important role in offering its experience and learning to ensure that China’s vast resource is efficiently exploited. Innovation across a number of areas will be essential to ensure targets are met and to drive cost reduction across the whole sector.

- Al-Karim Govindji, of the Carbon Trust

The new research proposes a number of policy instruments, developed to accelerate the roll out of offshore wind in the UK, be applied to China to speed up their offshore programme and help ensure government targets are met in a cost effective way.  The research was undertaken working closely with the wind industry in China and involved participation of over 20 Chinese companies and undertaking two workshops in Beijing.

The new research concluded that China should consider:

• Developing an effective publicly funded research and demonstration programme to commercialise new cost reducing innovations.

• Developing an offshore wind capital grants scheme to improve the government’s awareness of the commercial realities of developing offshore wind in Chinese waters and support R&D and technology testing

• Developing an effective on-going price support mechanism to balance developer incentives with government costs to ensure value for money for electricity consumers and tax payers.

• Developing an effective zoning policy to accelerate planning by relaxing constraints in identified development zones;

For further information please contact the Carbon Trust press office on 020 7170 7050 or email press@carbontrust.com.

About the Carbon Trust

The Carbon Trust is an independent company with a mission to accelerate the move to a sustainable, low-carbon economy. The Carbon Trust:

• advises businesses, governments and the public sector on opportunities in a sustainable, low-carbon world;
• measures and certifies the environmental footprint of organisations, products and services;
• helps develop and deploy low-carbon technologies and solutions, from energy efficiency to renewable power

Notes to Editors:

A series of three reports were undertaken under the one research project.  The work was funded by The British Embassy in Beijing and was supported by the Chinese Wind Energy Association (CWEA) and CECEP Wind-Power Corporation.

Copies of the reports can be downloaded here:
Offshore Wind in China - Sharing the UK’s policy experience (PDF)
Mapping existing technology solutions to barriers identified in China's Offshore Wind industry (PDF)
Detailed appraisal of the offshore wind industry in China (PDF)

Three key recommendations for action:

• Collaborate on European Joint Industry Projects: Engage with European demonstrator programmes to enable better understanding of innovations to reduce costs of offshore wind. For example, the Carbon Trust’s Offshore Wind Accelerator has demonstrated several innovations, including: twisted jackets and gravity based foundations, sea trials for access vessels and floating LIDAR validation. For example, the use of floating LIDARs for wind resource data capture instead of traditional met masts can bring the cost down from up to  €10m to under €1m
• Develop Operational Experience through Co-Investment: Invest with European developers to both get a return on investment but also to build operational capabilities for cost reduction. An example is Marubeni’s co-invested in Gunfleet Sands offshore wind farm in the UK with Dong Energy.
• Establish Offshore Wind Farm Zones to give Confidence to the Market: Deploy a marine spatial planning tool to support the creation of leasing zones for future rounds of offshore wind development in China and to avoid delays in the consenting process. In the UK, the Crown Estate led this activity. In China, a combination of the National Energy Administration , State Oceanic Administration  and the Chinese Meteorological Administration could be entities to take this forward.

Detailed findings and overview of barriers facing the Chinese offshore wind programme:

China’s energy demand continues to grow rapidly, most of it met by coal (70%) and oil (19%). Electricity supply is dominated by coal, though hydro already makes an important contribution. However, the government has committed to reduce energy intensity and increase use of renewables. To date, China has focussed on driving the development of onshore wind as a key contributor to its renewables targets, with total capacity at 75GW, a CAGR growth of 69% from 2001 to 2012. However, the challenge of connecting a lot of this capacity to the energy hungry eastern coastal regions as well as a desire to diversify energy sources has led to an increasing focus on offshore wind as a potential new source of renewable energy close to the demand. Indeed, the government has set ambitious targets of 5GW of installed offshore wind capacity by 2015 and 30GW by 2020 that would eclipse capacity in other countries. However, China faces numerous challenges to the development of the offshore wind industry, highlighted below.

Policy

While targets provide a market signal of the seriousness the government takes, it has not been met with clear guidance on the feed in tariff rates that have been set too low and do not offer a definitive timeframe for developers to be able to make effective investment decisions. Given the relative immaturity of the offshore industry in China and the lack of commercial projects, it is not surprising that the government itself needs more clarity about the likely costs of project development to enable the appropriate tariff to be set. A reliable study around the future costs of deployment would help both government and developers. 

Cost

The proximity to shore of China's farms (typically less than 15km) makes them similar to Round 1 and Round 2 sites in the UK, where typical capex ranged from around £1.2m/MW to £1.5m/MW (BWEA and Garrad Hassan, 2009a). Analysis we have reviewed indicates that the deployment costs in China are similar, at around £1.3m/MW to £1.4m/MW. While in the UK over the last five years costs have escalated dramatically due to the more challenging conditions of farms further from shore and in more difficult met-ocean conditions, where capex has doubled to £3.0m/MW. So any assessment of future costs in China must account for changes in farm location.

Consenting & Connections

The process of granting consents to developers can take two years. In an effort to speed up approvals, the National Energy Administration (NEA) has delegated some authority to the regional government; however, local authorities often lack the skills to effectively evaluate proposals, thus shifting the approval process back to central government.

As most of the farms are off the eastern coast where grid infrastructure is robust, there is little issue here. However, connecting farms to shore via cables is a challenge given that grid companies have limited capabilities and experience in this area, which will become more acute as farms move further from shore.

Technology

China faces a number of challenges around the technical deployment of offshore wind farms:

Turbines: European offshore wind turbines are moving to beyond 95% availability, a key factor for achieving satisfactory project returns. Reliability of Chinese turbines is thought to be less than this, with a key issue being the gearbox. Some OEMs are moving to gearless turbines but these also have challenges around weight and hence additional cost of fabrication and installation. Corrosion and heat Is also a major challenge given the unique conditions off the China coast.

Foundations: The sea bed off China’s east coast (within 5-30m depth) is characteristic of soft, silty soils which are unlike soil conditions in Europe. This causes difficulty with regard to foundation type and installation techniques. Selecting appropriate foundations will therefore be crucial, and while there may be available solutions from existing European technologies, there is likely to be scope for local R&D to develop bespoke solutions for China, such as suction buckets.

Installation: The lack of expertise as well as bespoke vessels makes installation the key cost in Chinese offshore wind development. Additionally, China lacks skills in hammering techniques as well as offshore assembly. 

Operations & Maintenance: Poor turbine reliability significantly adds cost to O&M and so can greatly reduce developer margins over time. A lack of expertise around transfer vessels also limits the operation window for conducting repairs.

Above all, China has leveraged its skills and capabilities from the onshore wind industry to the offshore wind market but where the technical challenges are much greater and where the weather conditions more impactful on turbine performance. Furthermore, initial demonstrations in China have focussed on the inter-tidal range; given that the NEA has insisted that future farms be at least 10km from shore, a rapid learning is now taking place that will take time to flow through to improved capabilities, technology and equipment. But given the rapid growth of the onshore market, there can be confidence that China can achieve its offshore wind targets, perhaps not by 2015, but perhaps by 2020.