China is going big in offshore wind
(Data: IRENA)

China is going big in offshore wind

As Chinese turbine makers move out into international markets, what impact could this have on prices and profits? Focus: Renewables, offshore wind, China.

Summary: Battery storage has an increasingly important role to play as we build out an electricity grid dominated by renewables. The sector is at a tipping point. Current revenues from filling the generation gaps left by variable renewables are actually small, with the main income stream being from the smaller grid stability market. Is change coming and when?

Why this is important: From a financial perspective, as we shift to the electricity grid of the future, the risks and opportunities will change. The notion of an electricity utility being a safe investment needs to be rethought. Some of the new services will have "merchant " type characteristics, taking more market and price risk than before. This is not a bad thing, its just going to be different from before.

The big theme: 100% (or close to) renewable/low carbon electricity generation systems are looking more viable with each passing year, based on a combination of wind, solar and hydro/nuclear, supported by long distance interconnectors, demand management and storage. Offshore wind, while more expensive, has better operating characteristics. After being slow to start, China is accelerating into this theme, which could have material consequences for the profitability of global wind turbine makers and installers.

The details

An article in Electrek (22nd October 2022) says that the city of Chaozhou, in China’s Guangdong province, is planning to build an offshore wind farm so large that it is expected to provide more power than all of Norway’s power plants combined. The city intends to start work on the 43.3-gigawatt (GW) offshore wind farm before 2025, according to the city’s five-year plan, which is published online. The plan does not disclose how much the offshore wind farm is expected to cost.

The wind farm will be built between 47 and 115 miles (75 and 185 km) off the city’s coast, on the Taiwan Strait. “The area has unique topographical features that mean wind will be strong enough to run the turbines 3,800 to 4,300 hours a year, or 43% to 49% of the time, an unusually high utilization rate.”

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