China's Influence on APAC Wind Energy Market

Over the past five years, EPCI spending has been dominated by mainland China with a 90 per cent market share.

FREMONT, CA: Using market intelligence from its WindLogix programme, Westwood Global Energy Group claims to have investigated Asia-Pacific (APAC) offshore wind engineering, procurement, construction and installation (EPCI) spend over ten years. The findings indicated that spending will total USD 199 billion from 2022 to 2026, up 123 per cent from the preceding five years (2017-2021). With a 90 per cent market share, mainland China has dominated EPCI spending during the last five years. In keeping with the offshore wind targets that Japan and South Korea have set for 2030, Westwood anticipates increasing spending from both countries from 2022 through 2026. A rapidly evolving policy landscape has contributed to Mainland China's steady increase in offshore wind power. A new policy for the gradual elimination of government subsidies for both onshore and offshore wind was published by the National Development and Reform Commission (NDRC) in May 2019.

According to this legislation, offshore wind projects that had already received approval by 2018 will still be eligible for the Feed-in-Tariff (FiT) provided they connect fully to the grid by the end of 2021. The tariff for projects that are approved in 2019 and 2020 will be decreased. Offshore wind projects are to be built at grid parity pricing based on the regulated price for coal plants, which varies by province and region, if no assistance is available from the provincial government, as of January 1, 2022, the central government's offshore wind subsidies were cancelled. Due to the sudden rush to construct capacity in 2021, there was an increase in EPCI spending authorised in 2019. Despite the massive offshore wind construction buildout in 2021, onshore China's development of wind farms continues unabatedly. Mainland China has 82 GW of planned projects up until 2030 and expects to spend USD 130 billion on EPCI between 2022 and 2026.

China's ambition to achieve carbon neutrality is another significant policy that has a significant impact. President Xi Jinping stated that China's mainland "aims to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060" in September 2020. By 2030, mainland China likewise aspires to have 1,200GW of installed wind and solar power. The main factor driving future offshore wind investment in China will be the central government's carbon neutrality goals and regulations that favour the deployment of renewable energy sources.  Provinces in mainland China have established challenging goals for offshore wind and their contribution to the overall net-zero aim under the direction of the central government. The most challenging goal for Guangdong's 14th Five Year Plan is 18GW. Jiangsu comes next with 15GW, followed by Fujian with 6GW. With the majority of their projects in EPCI mode and a sizable percentage already operational, these provinces are very much on target. It is important to note that provincial policies have lagged in replacing the central government subsidy that has expired. Guangdong was one of the first to develop extremely thorough subsidies that are intended for projects that were approved in 2018 and go online between 2022 and 2024.