China to lay down benchmark prices for projects

Top NEB official wants to accelerate large-scale developments

China is considering benchmark prices for offshore wind projects to ensure the industry develops sustainably, Liu Qi, vice-minister of the National Energy Bureau (NEB), told his colleagues last week.

"We must take large-scale development of offshore wind power as a priority for China’s wind power expansion," Liu said. His remarks follow a recent decision by the Chinese economic planning agency to include offshore wind in a list of industrial categories to be officially promoted.

"We must accelerate offshore wind power projects that have been approved or are undergoing early-stage preparations," Liu said. He urged support for large-scale projects and the creation of a coordination mechanism to facilitate offshore wind power planning and construction.

China introduced four benchmark prices for onshore wind projects in July 2009. They range from CHY 0.51/kWh ($0.08/kWh) to CHY 0.61/kWh. Winning bids for China’s first four offshore wind concessions stood between CHY 0.62/kWh and CHY 0.74/kWh.

"Considering the high construction and maintenance costs of offshore wind farms, developers have no way of making profits with these prices," said Feng Xuepei, deputy general manager of the project development department of Shenhua Guohua Energy Investment, which participated in the 2010 tender.

The four concessions, totaling 1GW in Yancheng, east China’s Jiangsu province, stalled because of many factors, including poor expected profit margins.

The 102MW Shanghai East Sea Bridge Offshore Wind Farm, a demonstration project completed in August 2010, enjoys a feed-in tariff of CHY 0.978/kWh. The 150MW Longyuan Power inter-tidal demonstration project in Rudong, Jiangsu province, completed in November 2012, receives CHY 0.778/kWh.

Because offshore wind farm costs are much higher than for onshore, the existing price policy is apparently inadequate, Liu said. Establishing benchmark prices for offshore wind power will guarantee profits for project developers and attract more businesses to the sector.

To date, China has installed about 300MW offshore wind, far less than its 5GW target for 2015.

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